Pakistan and Kuwait to create $1 billion fund

Islamabad:

As the government looks hard at the mining sector to give a new boost to the economy under an out-of-court settlement of the Reko Diq project, Pakistan is set to establish a $1 billion mining fund in partnership with the Gulf Arab state of Kuwait.

Sources told The Express Tribune that a Pakistani state-owned company had been named as the lead entity to partner with Kuwait on the mining fund.

The two sides held initial discussions on the matter. A Kuwaiti company has shown interest in mining metals and minerals used in renewable energy sources.

According to sources, a detailed work plan with timelines will be presented to a joint working group in a bid to make further progress on the proposed fund.

A Minerals Cell has already been set up under the supervision of the Petroleum Department and the government is working on revising the National Mining Policy to boost foreign investment in the mineral-rich province of Balochistan.

The government seems determined to remove all obstacles in the old policy and introduce some measures in line with the demands of foreign investors.

In this regard, work is underway on the second draft of the National Minerals Policy. In addition, the first draft to update the Mining Act of 1923 has already been prepared.

Officials revealed that a gap analysis is being conducted to update the Provincial Mineral Concession Rules, which will be finalized in the coming months.

The government is considering making certain amendments to the Mines and Petroleum Regulation and Mineral Development (Government Control) Act, 1948 to attract foreign investors.

Experts were of the view that policy inconsistency and activism among anti-corruption watchdogs were the key factors behind the withdrawal of foreign investment from Pakistan.

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For example, an anti-corruption body’s activism at the Reko Diq copper and gold mining project led to the case being brought to the International Court of Arbitration.

To meet the demand of the foreign partner in the Reko Diq project, the government had introduced the Foreign Investment Act to protect investors.

Now, Pakistan is seeking capital injection in the mining sector from the United Arab Emirates (UAE), Saudi Arabia and Kuwait.

During the caretaker prime minister’s visit late last year, Pakistan and Kuwait signed a memorandum of understanding for investment cooperation to carry out water projects for mine development in Chagai and surrounding areas in Balochistan.

It has been a big challenge for Pakistan to organize water for mining development in Chagai and its nearby areas. In this situation, Kuwait will help start water projects, which can be part of the $1 billion mining fund.

Chagai is an important region that has large deposits of precious minerals and to exploit the potential of mines and minerals, one of the key requirements is to supply water to the region.

The Balochistan Irrigation Department approached the federal ministry of water resources on November 15, 2023, requesting it to provide technical and financial assistance, design a suitable plan to meet water storage requirements and explore domestic and foreign funding avenues.

The agreement between Pakistan and Kuwait aims to facilitate investment in Pakistan and to promote and strengthen brotherly relations between the two countries.

Sources said the Pakistan government was also in talks with the UAE government for cooperation in the mining sector. Both sides identify mining projects that require investment to develop.

Pakistan is also seeking investment from Saudi Arabia, where a conference on the mining sector was recently held.

Published in The Express Tribune, January 20^u2024.

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