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Mineral exploration and development - a suggested approach.

The evolution of the human civilization has been dependent upon the exploitation and utilization of mineral resource. Had we not learnt to exploit mineral resources to our advantage we may still have been living under the trees. The firt industrial revolution commenced when human beings started making use of stone and metal implement. Today minerals have so intimately permeated our lives that we have ceased to feel their presence or our dependence upon them. There is nothing in this roo that does not owe its existence to minerals in one for or another. And yet, how often do we think of the labour, technical skills and financial resources that go into producing finished metals or glass or ceramics which are foundation blocks of human civilization? An ordinary computer uses 18 to 20 metals and an aircraft over a dozen. The multiplying effect of the benefits of using minerals is brought into focus by the following calculation given by Brown (1989). In 1988 American miners produced an estimated US $30 billion worth of raw materials-unprocessed ores, sand, gravel, stone etc., as they came out of the mines. These ores/minerals were used to turn out a total of US $300 billion worth of finished metals, fertilizer, cement, glass, ceramics and other processed materials. These were the essential buildig blocks for all goods and services making up the Gross National Product estimated at US $480 billion. Thus each dollar's worth of mineral mined added 162 dollars to the GNP. Such a contribution is not made by even the most prevalent industry-agriculture, which receives by far the greatest attention of all governments, particularly in the developing countries.

Despite this, mineral raw materials are not viewed as particularly relevant to an advanced technological society and mining of minerals is considered destructive of environment. This in general may explain the lack of consciousness about the true role and importane of mineral sector to national economy. Here I would like to briefly mention a few reasons for the slow rate of mineral exploration and development. Having been associated with the mineral industry of Pakistan for the last forty years, I will naturally, cite examples from my own country to project my thinking on mineral exploration and development work. Some of these remarks may also be applicable to other ECO-SAARC countries.

Mineral Exploration

About 20 years ago Pakistan was considered to be a country of industrial minerals only. However, the discovery of Saindak porphyry copper deposit, application of plate tectonic concepts and reinterpretation of the geology of the country have enable Geological Survey of Pakistan (GSP) and other mineral exploration agencies to identify substantial new potential for metallic minerals in the country. It is now accepted that application of modern geophysical techniques, filtration and correlation of data may lead to discovery or large metallic deposits. We, therefore, need to adopt a conceptual model approach to mineral exploration work. Sillitoe (1978, 19799) and Khan (1985) have proposed a conceptual model approach to mineral exploration, particularly of porphyry type deposits. Similar conceptual approach can be applied to exploration for metallic in mineral deposits formed under different environment and structural domains. The following domains of environments for the formation of metallic deposits have been tentatively defined by Sillitoe (1979) and Khan (1985, 1991).

The Island Arc System

Several manifestations of porphyry type polymetallic deposits have been identified in Chagai Kohistan Island Arc System. Except for Saindak, the others have not been investigated in detail. It is postulated that detailed geophysical and geochemical investigations will reveal several polyetallic deposits of better grade and larger tonnage than at Saindak. Occurrence of several massive and Kurokotype sulphide deposits in Chagai and Kohistan regions has been reported but not investigated. These chalcopyrite, hypogene chalcocite and lead bearing veins type deposits, even if of small size, will be valuable addition to porphyry ores which are usually of lower grade.

a) Volcanogenic Iron Ore Deposits: Volcanogenic iron ore deposits have been proved in Pachin Koh and Chiken Dig areas in Chagai district, Balochistan. Aeroagnetic survey over this district has indicated substantial potential for iron ore, whih in volcanic are as develops as capping over volcanic vents. The extent of such capping depends not only on the size of the volcano but also on the paleoslope and duration of the volcanic activity. In case of prolonged activity of large volcanoes the possibility of coalescing adjacent volcanic caps may give rise to large and continuous deposits. In Chagai district substantial sized cappings of ireon ore have been located and appear to be dipping under Koh-e-Sultan and Damodin volcanoes. It is, therefore, likely that larger deposits may be found under these extinct volcanoes.

The Chagai Island Arc started to develop during late Triassic to early Jurassic period. Investigations by GSP have revealed that there are at least 18 volcanic volcanogenic iron ores of several ages from Jurassic to Pleistocene may be found. The Cretaceous volcanic activity having been of a major magnitude may be expected to have resulted in the formation of larger iron ore deposits, a fact confirmed by geophysical and ield evidences. Further exploration of iron ore deposits on the basis of the above assumption may, therefore, lead to disovery of larger deposits.

b) Skarn Type Deposits: Skarn type chalcopyrite-megnetite deposits have been located in Ras Koh area, around Saindak porphyry and other places in Waziristan and Northern Areas of Pakistan. Such skarn zones also offer good potential for gold, tungsten copper mineralization.

c) Gold and Tin Potential in Volcanogenic Environment: Occurrence of gold in association with iron ores and sulphide minerals has been confired in the fumerolic centres in Chagai district. Occurrence of tin has also been reported from the area and needs to be investigated in detailed Semilar occurrence may also be found in Northern Areas and possibly in the Kohistan Island Arc.

d) Mineralisation Associated with Carbonate Sediments of the Axial Zone: The Axial Belt which extends fro North to South of the country offers the best potential for the location of Mississippi Valley type poly-metallic deposits, in particular lead-zinc-silver-barite assemblages. The Jurassic rocks o the area were deposited under conditions similar to those of Gulf of Mexico and may, therefore, be expected to host similar deposits, a fact confirmed by field evidence. Hot water systems were available to promote the formation of lead-zinc deposits. The Axial Belt being a zone of compression was conducive to mineralisation in bedded, fractured and brecciated rocks, Diagenesis led to shrinkage porosity which together with bedding and fracturing provided a favourable environment for the mineralization in the carbonate rocks. Such deposits can be expected to extend for several hundred meters along the strike and gradually taper out. It is postulated that below Gunga and Duddar root-like deposits similar to Surmai (Chagai district), though of smaller size, may be found. Existence of pipe-like or chemney type bodies below Gunga and Duddar cannot be ruled out and this possibility may be kept in view during further exploration work. Extension of the carbonate belt to the NWFP (iR.Zhob-Waziristan-Chitral areas) is expected to yields lead-zinc deposits similar to those of Bela-Khuzdar area of Balochistan, a fact substantiated by field evidence.

The Oceanic Crust Systems

Segments of oceanic crust are extensively distributed throughout Pakistan though emplaced in various environments. In the Zhob Valley, Wazristant and KhuzdarBela areas these are considered to have abducted over sediments of Indo-Pakistan continental margin. In the Northern Areas the ophiolites have been emplaced along the suture zones between Eurasian and Indo-Pakistan continents and long fault slices. In this area are piles of lava flows which were considered "Green Stones" but actually are ohiolites of several thousand meters thickness. These ophiolites are considered segments of oceanic crust emplaced during crustal shortening. Repeated faulting and thrusting have resulted in repetition of these oceanic crust segments. Chromite bodies occurring in these slices of oceanic crust have been broken up and squeezed in many places. This has also had a filtering effect whereby the interstitial olivine/serpentine has been squeezed out giving rise to generally higher grade of chromite deposits in his area. It is postulated that detailed field investigation will reveal substantial tonnage of high grade chromite ore in the Norther Areas.

In the Ras Koh area the ophiolites are associated with strongly deformed sediments dipping Chagi Isand Arc. Small scaled chromite mining has been going in the area for more than 30 years and lava flows, often showing pillow structure, are associated with most of the above occurrences. In the Zhob valley the ophiolites are hosts to several thousand Alpine Type chromite deposits most of whih are small (only a few hundred tonnes) though larger bodies containing as much as 150,000 tonnes have also been mined. Geographically the oceanic segments are distributed over an area of ore than 4000 sq. kms in this region alone. Although chromite mining has been going on in the Zhob valley for more than 90 years, new deposts are being discovered even today, pointing to the enormous potential of the area.

Metaorphic Deposits

Mineralisation associated with deep seated metamorphism an be expected to yield small deposits of ireon ore in association with certai sulphide minerals. Sillitoe (1979) has attibuted the metamorphic mineralization in the Northern Areas of Pakistan "Precipitation in dilated sites by fluids expelled fro sedimentary rocks undergoing regional metamorphis either during thrusting and/or during uplift. However, large size metaorphic deposits are not expected to be found since "magma may have been poor in metals" (Sillitoe 1979). Accumulation of metallic minerals due to remobilization can be expected along planes of weakness as has been observed in this area. The Krinj stibnite and Awirath Gol boulangerite ocurrences, both in Chitral, are good examples of mineralization along thrust planes. Norris and Henly (1976) have proposed expulsion of fluids during thrusting by hydraulic fracturing and subsequently by uplifting of the metamorphic complex. Thus, mineralization in the two above named localities is not related to felsic intrusives located a few kilometers from Krinj and Awirath Gol. In Hazara, Calkins and others (1975) have attributed the lead and barite mineralization in low-grde metamorphic zone to fluids expelled during deformation.

Shields Areas

Arhaen rocks have very limited geographial distributed in Pakistan and are prominent in Sindh and Punjab only. Gold and iron ore mineralisation has been reported in these rocks and GSP has located what appears to be promising occurrence of bedded iron ore deposits in Archaen rocks of Jhang district (Punjab). These occurrences merit details evaluation on priority basis of other shield areas.

The Pegmatites

Pegmatite emplacement is prominently observed in Shield areas and to a small extent in Island Arc areas. The pegmatites of Chitral, Dir and Gilgit are part of Afghan Archaen syste and can be a rich source of lithium bearing and precious and semiprecious minerals. In Gilgit, these pegatities arry pockets of mica which can be mined on a small scale.

Energy Minerals

In connection with energy minerals I would like to mention only two small points: i) The possibility of the occurrence of oil and gas in the Fore-Arc and Back Arc areas of Chagai district should be critically examined because of their comparison with the Andean system. The Kharan Basin offers good potential for oil and gas exploration. ii) The Sindh coal fields are the most promising source of energy in Pakistan. It would be desirable to make a detailed study of the paleo- slopes during our geological history. The position of the shoreline over the ages may be precisely demarcated by sequence stratigraphy and interpretation of geophysical data. This will enable us to identify areas of fan deposits where larger and continuous coal beds may be found. The deltaic regions are considered to have been favourable areas for large scale growth of flora extending 30 to 40 kms inland. By determining the nonactive segments of the fans, areas favourable for the formation of coal deposits can be outlined. By drilling in these areas and a study of the ores further refinement of target areas for exploration can be made.

It may be mentioned that coal reserves of Pakistan have been estimated by GSP at 19 billion tonnes, of which 90 per cent are located in Sindh. There is, thus, an urgent need for extensive exploration of coal resources of Sindh area for large scale energy requirements of the country.

Mineral Development

Mining industry suffers from certain inherent disadvantages which, coupled with a lack of appreciation of its importance not only by the public but also the planners, slows down its development. The high risk nature of the mineral industry, the long gestation period of mineral projects, the location of many mineral deposits in isolated areas devoid of essential infrastructure, lack of reliable data, wide fluctuations in metal prices and more recently linking of mineral development with destruction of environment all tend to slow the development of this most basic industry. These factors are well known to the geoscientific community all over the world but are not appreciated by the planners. A concerted effort has therefore to be made to make them and the public aware of the contribution of this industry not only to the Gross National Product but also to the very existence of the human race.

Data on per capita mineral/metals consumption is not available for most developing countrie. However, for USA, Brown (1989) has estimated that a new born citizen in his life time will use the following minerals:

Sand, Gravel, stone,
 clay, cement, etc. 1.2 million lbs.
 Coal 365,500 lbs.
 Iron & Steel 91,000 lbs.
 Aluminium 3,593 lbs.
 Copper 1,500 lbs.
 Lead 795 lbs.
 Zinc 757 lbs.

But since identities of these minerals is hidden in the finished product we use, we do not appreciate their contribution to our daily comforts, in fat our very existence. The mining community ha, therefore, to make concerted and sustained efforts to bring home to the public the importance of minerals to the prosperity and well being of the human race. Even though our future generations have done nothing for us we do owe it to them to leave behind a well organized and scientifically developed mineral sector.

I would like to briefly mention, again with reference to Pakistan, but which may be equally applicable to ECO-SAARC countries some problems which are serious impediments to the development of mineral resources.

Non-availability of Critical Data

Topographic maps, aerial photographs and satellite imagerie are the basic essentials for mineral exploration work. Similarly, unpublished reports of the National Geological Surveys and geochemical and geophisical data with interpretation are essential for selection of target areas for mineral exploration. Most of this data is stored in the headquarters of the National Geological Surveys and is not easily available. Also to encourage mineral exploraton all such data and maps should be available fro the regional offices of the National Geological Surveys for that particular region as a matter of right.

Prospector's Rights

It is a well known fact that many mineral deposits have been discovered by lone prospectors. To encourage development of a permanent class of mineral prospection their rights must be protected by law. Any one reporting a minerasl discovery to the licensing authority or a revenue officer should have the right to a mining lease over the area, which he should be allowed to sell or mortgage to banks for obtaining loans. Alternatively he can be given a lump sum financial reward or his discovery.

Lack of Co-Ordination

There is a general lock of co-ordination between the National Geologial Survey and various public and private agencies engaged in mineral exploration and development work. The data on new mineral discoveries and potentially prospective areas is not publicized and when requested not made available as matter of right. The National Geological Surveys should issue a quarterly bulletin reporting minerals finds and newly identified prospetive areas for mineral exploration.

Discovery Development Gap

The National Geological Surveys are responsible for routine geological mapping of the country during which many new mineral occurrences are noted. Usually the survey does not go beyond preliminary investigation, classiying the discovery as promising or otherwise. This, however, in itself is not enough to attract investment by private sector in mineral exploration and development work.

National Geological Surveys being well equipped to extend the mineral exploration and development work to a level where-from an investor can take over should be charged with the responsibility of preparing pre-investent feasibility studies as well. The Surveys have the most highly qualified staff, drilling equipments, mineralogical and chemical laboratories, in short, the basic essentials required for proving mineral deposits. Help can be sought from the Counsils of Scientific and Industrial Research or other organizations engaged in research on minerals, like the M.T.A. in Turkey, for mineral beneficiation studies on prospective mineral deposits.

Publications of such pre-investment feasibility studies will attract local and foreign private sector to mineral industry. In addition to evaluation of deposits and determining beneficiation characteristics of deposits, the studies should also deal with the use of the particular minerals, their marketability in domestic and foreign markets. In short the reports should be such as to give the prospective investor a fair idea of the economic potential and financial viability of working the deposits.

Techno-Economic Appraisal of the Mineral Projects

Mineral projects submitted to Planning Division for approval to obtain government funding are evaluated in the same manner and measured by the same yardstick as other industrial projects. Mineral development projects do not lend themselves to this kind of evaluation since there is little common between say a textile mill or a cement plant and a mineral project. In the case of say a textile mill an agricultural produce which does have a market value in its unprocessed form is being processed to produce, a value added product. In mineral processing in most cases low grade ores which cannot be used or exported are processed to produce finished metals. Thus useless rock is being converted into valuable foreign exchange. Now, if the financial viability of the project is judged solely on the basis of cash flow the project may be declared "non-viable". However if the socio-economic benefits of developing a mineral project in an isolated and undeveloped area of the country are also taken into account and credit given to the projet for earning/saving of foreign exchange, transfer of technology and independence in the supply of a critical metal, say copper, the desirability of developing the particular mineral deposits will become quite clear. It is, therefore, suggested that a separate set of criteria are developed for the evaluation of mineral projects. It is also clear that since the mineral industry is assuming some of the responsibilities of the government-development of infrastructure in isolated areas, provision of housing, jobs, health care and education, the government should pay the cost of these services to reduce the financial burden on the mineral project and make it financially viable as well.

In most cases the domestic prices of metals are much higher than the international prices but the mining company may have to export its product even if it is being imported in the country to pay the foreign loans. Thus the sale proceeds are lower adversely effecting the financial viability of the project. If, however, the government makes available the necessary foreign exchange for the repayment of foreign loan instalment the profitability of the project will dramatically improve.

In short, innovative and sympathetic approach in evaluation of mineral projects should be adopted with the objective of deliberately making them viable.

Mineral Policy

Many of the problem of the mineral industry can be solved or minimised if a development oriented mineral policy is introduced. The policy should provide a broad framework within which the provinces, in whom the mineral rights are vested, can formulate their own regulations for the promotion of mineral industry.

In Pakistan, except for radio-active minerals and oil, mineral rights are vested in the provinces. This is not a unique situation. In Canada and Australia mining legislation is a provincial subject though taxation is federally controlled. We can thus benefit from a number of models that have been developed and are operating successfully for a long time. In Pakistan a number of mineral policies have been drafted covering all possible aspects of the mineral industry with the result that unanimity between the federal and the provincial governments could not be reached. It is suggested that the Mineral Policy should be confined to providing broad guidelines particularly on:

i) Incentives for the Exploration of Minerals: Keeping in view the high risk nature of the mining industry, the domestic requirements, the desirability of import substitution and future requirements of the country, a set of incentives should be built in the mineral policy. It is essential that iron clad guarantees of the right of lessee providing protection against future arbitrary cancellation of mining leases and imposition of new restrictions be made an integral part of the policy. Exploration expenses should be subsidised and losses allowed to be carried forward for say, 10 years.

ii) Investment incentives: Because of the high risk of the industry special tax incentives are needed to attract investment. The revenue departments and even the leasing authorities are interested in collection of maximum revenues without any regard to future prospects. We have a number of models of incentives provided by countries like Ireland, the UK, Canada, Australia, Indonesia, etc. which have developed very flourishing mineral industry. Adoption of these incentives can encourage investment in the mineral sector. An indirect incentive can be provided by granting mining leases over deposits which have been proved by the national Geological Surveys in exchange for a nominal equity of the government in the project. This will greatly reduced the time for development ofo mineral deposits. Special incentives can be given for the development of minerals of strategic importance.

iii) Finance: The ever increasing cost of money is big hurdle in the way of large-scale investment in mineral sector. Like agriculture and machinery fabrication industries, mining industry should be given loans on low rate of interest, say a maximum of 6 per cent. However, to protect the loaning agency, the mining title can be mortgaged and the loan sanctioned only after the soundness of the mineral exploitation scheme authenticated by a qualified economic geologist or mining engineer with long experience of operating mineral projects. The proposal for a mineral bank on the lines of Eti Bank in Turkey has been under consideration of the Government of Pakistant for the past 25 years but its establishment is not in sight yet. Without a specialized bank financing of the mineral projects will remain difficult. As an incentive, the mineral bank may be given the responsibility for collection rent and royalty thereby relieving the licensing authority of this routine work which detracts it from its primary responsibility of issuing exploration licences, mining leases and encouraging mineral development.

iv) The Role of Government Corporations: In most developing countries the state has established specialised corporations for the development of minerals. In Pakistan such corporations are run by Federal as well as the Provicial Governments. The role of corporations is usually not confined to one mineral or set of minerals but they are allowed by their character to work on almost all minerals found in the country. However, due to a number of constraints their performance does not compare favourable with private sector.

To begin with, a policy decision should be taken on the role of Government Corporations. They may be assigned the task of developing certain strategic minerals the mining of which may not attract private sector. An evaluation of the past performance of these corporations will provide a basis for stream-lining performance and removal of undue controls on their mode of operation which may, at least in past, be responsible for their low productivity. At the same time, the preferential treatment given to State-owned corporations in the grant to exploration licences and mining leases should be done away with. They should be encouraged to compete with the private sector and set up joint venture with local and foreign mining companies.

v) Small Scale Mining: The role of small scale mining in the development of national mineral resources has been recognized even in countries like Canada and Australia which have well developed mining industry. However, the small scale miner needs special incentives by way of technical assistance, low interest loan, availability of mining machinery on rent from a pool created for this purpose and assured market for its produce. Many small mineral deposits are amendable to operation on cottage industry basis and can provide sizeable mineral production which can be processed by centrally located plants.

vi) Incentives for Foreign Investment: Few developing countries have resources to develop large scale mining and mineral processing industry. Also, the national resources are preferentially allocated for the development of infrastructure, health care, education, defence etc.

To begin with, the term foreign investment should be clearly defined since a variety of criteria are used for its definition in various countries. While as the host government has a right to supervise and guide the foreign companies it must lay down firm and attractive guarantees for foreign investment. In addition to permission for free repatriation of profits and capital, the rights of the investors should be clearly defined and enforced. Imposition of harsh terms will discourage investors who may be attracted to other countries with better incentives. There should be no restriction on majority share holding in mining ventures by foreign investors. Successful investment in mining by one foreign company will attract others and accelerate the overall development of mineral sector.

vii) Environmental Protection: Mining and mineral processing, if not properly controlled, can lead to environmental degradatio exceeding nature's regenerative capability. The existing Mineral Concessional Rules require the lessee to submit an exploitation scheme for the approval of the licensing authority. The scheme should include the measures that will be adopted by the mining company to reduce environmental degradation. The National Environmental Protection Ageny in each of the ECO-SAARC countries should specify the environmental protection measures that exploitation of various minerals demand. It has now been amply demonstrated that it is possible to bring the demands of ecology and mining industry in harmony. IN some cases, e.g. the use of coal ash for construction purpose, the environmental protection measures may even improve the project economics. The Licensing Authority as well as the Inspectorate of Mines should both monitor the mining projects to ensure enforcement of environmental protection measures.


Before ending this address I would like to suggest a few measures for accelerating the development of mineral resources in the ECO-SAARS countries. i. A standing committee on mineral development shoulc be formed with representation from national Geological Surveys, Mining Industry, Planning and Development Department, Environmental Protection Agencies and Educational Institutions. The Committee should, in the first instance, address itself to the following tasks: a) Develop a standad set of definitions

of or reserves and resources keeping

in view our economic and socia

requirements. Even though these

terms appear to be well defined, their

usage in by no means uniform.

Considerable confusion exists not only

in their usage by the industry but also

by the lay investors. b) Develop a standard proforma for the

reporting of mineral development,

production and usage date. c) Prepare a list of minerals that can be

traded between ECO-SAARC

countries, preferable on a barter basis. d) To promote co-operation between the

region countries in the mineral industry,

preparading and circulate a list of specialists

in fields of mineral evaluation,

development, benefication and

metallurgy. e) Facilitate exchange of specialists in

the member countries for providing

technical assistance on particular

problems. f) Prepare and circulate list of mineral

projects ready for development and

requiring investment or technical

cooperation with a view to develop joint

venture. g) Arrange regular seminars and

workshops on common problems of

mineral development in the region

countries. h) Facilitate visits of specialists of the

member countries to sites of their

interest. ii) All the region countries are endowed

with industrial minerals which receive

scant attention. If exploited properly

these can improved the quality of life

and reduce costs e.g. use of lime mortar

for construction of houses, roads and

bridges. iii) Encourage small scale and mineral

processing by providing special

incentives as described above.
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Title Annotation:Pakistan's mineral industry
Author:Bilgrami, S.A.
Publication:Economic Review
Date:Jul 1, 1992
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