The Economic Future of Pakistan Through Reko Diq
The Economic Future of Pakistan Through Reko Diq
The Reko Diq copper and gold mining project in Pakistan Baluchistan has come to be an inspirational language to what the country has got to do with in terms of economic power strategic resource development and cooperative federalism. With the help of the World Bank as well as International Finance Corporation (IFC) where a difference of $700 million concessional loan had been raised the project has now had a fine international financial backing and hence is declared as a much internationally acknowledged investment in economic future of Pakistan.
The financing will be provided as part of the financing of the initial stage of a 5.6 billion project which preconditioned a bigger 2.5 billion of this amount of financing of the private sector and confirmed the trust of investors in the imminence of the Pakistani resources. Reko Diq is situated in the mineral rich Chagai district of Baluchistan and will not only reshape the extractive industry in Pakistan but will also recondition the long-neglected province of Baluchistan both in economic as well as social terms. The project is generally considered to be amongst the biggest untapped copper and gold mine all around the globe and it is expected that the operations will increase drastically through two separate phases.
In the first stage the ore will be processed at the rate of 45 million tonnes per a year whereas in the second stage this rate will be doubled to 90 million tonnes per annum. The mine which has been conservatively estimated to have a working life of 37 years, but which can extend to 80 years will continue to yield revenue to the future generation of Pakistanis and in this case the Baluchistan. This very long-term perspective demonstrates the strategic nature of the project which is going to remain one of the pillars of the national economic planning over decades.
Another great element of the Reko Diq financing structure is its inclusiveness and provincial equity. The Baluchistan Government is interested in the project with 25 percent (with the free carried interest of 10 percent and funding contribution of 15 percent). Importantly, the federal government has undertaken to provide the 15 % of the funds needed by Baluchistan so that the province would get all financial gains and have no responsibility. Not only this found in the middle of an exceptional model of the equitable allocation of resources of the Pakistani federation but also represents the idea of provincial autonomy within the development of the whole country.
It also helps Baluchistan which has been marginalized and failed to partake regularly in the economic actions in Pakistan to be an equal share holder in the areas of the biggest mineral development in the country. The model has been hailed as one of the most comprehensive and progressive public private resource projects in Pakistan history where the nations abroad are working together with the federal and the provincial governments of Pakistan towards mutual prosperity. In addition, the actual presence of the mine in Chagai district draws much awaited publicity to one of the most backward districts of the country that is likely to have new infrastructure, jobs and social investment. It would only raise local populations to a great height.
The project is not only mining in nature. It is an all-round development agenda which has plans of expanding its social investment into the areas such as health education, clean and safe water and an improved transportation network. Besides economic dividends of royalties, taxation and revenues.
The long-term commitment of Reko Diq to corporate social responsibility is bound to have a direct impact on the people of Baluchistan. According to principles of World bank project partners have promised to refurbish health care centres invest into quality education, build local roads and make more potable water available. Such infrastructure-based transformation is part of the World Bank agenda since in the next ten years it plans to spend 2 billion dollars yearly in the infrastructural development of Pakistan. These parallel investments generate a good investment environment with such mega projects as Reko Diq serving as anchor investments on which the wider development can be based. It is also in opposition to a long-lived tale that bigger projects extracting resources in Pakistan usually avoid local communities. Nothing is being left to chance to see that profits are not only national but very local.
The employment strategy at the project has become one of the most renowned parts of the project. When the construction is at its highest Reko Diq plans to implement more than 7,500 individuals where around 77 and 65 percent of the employees will be provided by Baluchistan and Chagai district respectively. This local employment consideration does not only solve the issue of chronic unemployment in the province but also gives the young generation the opportunity to learn in new mining technology, new engineering, modern logistics and new administration. This way the project is helping in developing the workforce as well as human capital which is vital in the long-term growth of the province.
It is more than jobs creation, it is the dawn of a new socio-economic phase in Baluchistan, where the land will be part of the national and international economic system with the generation of sustainable and skilled employment. Its joint venture with a world class mining operator Barrick Gold further guarantees that international best practices will be applied in the running of the operations. The environmental and the ethical integrity of the mining company worldwide adds transparency and ensures environmental and ethical integrity as a given right by the company. The presence coupled with the efforts of the institutions such as World Bank and IFC is a critical message that can be sensed by all international investors namely when they understand that Pakistan is ready to do business and when it comes to world level projects the country can be globally accountable.
