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Pak-China accord on Saindak.

Pak-China Accord on Saindak

President Ghulam Ishaq Khan's visit to China has added a new dimension to friendship between the two countries. It has opened up fresh vistas of economic collaboration. Particularly, the Pak-China accord on Saindak represents a significant milestone in the field of mutual understanding and co-operation. The belated signing of work contract with the Beijing-based Metallurgical Construction Company (MCC) has at long last paved the way for exploration of copper and gold in metal-rich Saindak field. The 180 million dollar project will mark the dawn of a new era of economic development in the backward region of Balochistan. China will provide equipment, machinery and services of technical personnel against a credit of 84 million dollars. The project will not only prove a boon for Balochistan but will also signify a major breakthrough in Pakistan's mineral industry. Under the accord, China will implement the project on turnkey basis at Saindak in Chagai district of Balochistan close to Afghanistan and Iran borders.

Needless to stress that China has played an important role in Pakistan's economic development since '60s. Liberal provision of aid by China both in the form of grants and loans and credits has gone a long way in facilitating the establishment of some basic metal industries in Pakistan such as the Heavy Mechanical Complex. The Saindak Copper Project which has been a victim of official neglect and antipathy for years has at long last seen the light of the day. It is common knowledge that Balochistan is rich in mineral resources. The Saindak project will not only yield copper but gold and silver as well. This will help speed up industrialisation of the country as also build up its defence. The previous governments had been dragging their feet on the project mainly on the plea that the necessary funds were not available. Now with the provision of liberal Chinese credit, the impediment has been removed.

Besides foreign exchange component, the Saindak project would also involve a sum of more than four billion in local currency for next four years plus Rs. 1.12 billion for the development of basic infrastructure facilities at the far-flung and inhospitable site. The total cost of the project thus works out to over Rs. 6 billion or about 316 million dollars. Although Romania and Yugoslavia had also shown interest in developing the Saindak field and initial proposals had been sent by the relevant Ministries to the Federal Ministry of Natural Resources, the Chinese Company offered much better terms and conditions and therefore finally the deal was struck with it. During the last 16 years, Pakistan was not able to get a better offer than given by the Chinese firm. It is also a foregone conclusion that any further delaying of the signing of the contract would have led to the escalation of the project cost, making the terms and conditions more harsh.

Even though the PPP Government made Saindak project part of its election manifesto in 1988 elections, and one of the first decisions taken by its government in February 1989, it failed to implement it for reasons best known to it. The martial law government also adopted an indifferent attitude towards it consigning the project to the limbo. The Junejo government gave top priority to it and got its approval from ECC. Its Minister for Petroleum and Natural Resources also visited the site but the entire exercise proved unproductive. It redounds to the credit of President Ghulam Ishaq Khan that the issue has been clinched.

It is a pity that the project so vital for Balochistan's development did not go into effect during the last 16 years. Even the infrastructure work could not start at the site although the Federal Government had been providing funds during past years in the Annual Development Programme mainly because of want of signing of the contract. Now that the contract has been signed, the Federal Government is expected to start work for installation of power generation plant, laying down of 22-mile railway track, construction of roads and laying down of water pipeline without delay.

The project once completed, should yield 16,000 tonnes of copper 1.5 tonnes of gold, 2.75 tonnes of silver, 359 tonnes of molybdenum in addition to pyrites and sulphuric acid. Experts believe that the exploration at Saindak will open up fresh vistas in mining technology in Pakistan and would immensely benefit the country and Balochistan where Chagai and other districts have rich potential of hidden minerals.

Thus the contract, an event of extra-ordinary significance, has given a new dimension to Pak-China friendship. However strong the political bonds between the two countries, they always need the underplanning of economic cooperation to realise the full potential of their bilateral ties. These ties which have become stronger over the years have been further reinforced after the signing of Saindak contract. By agreeing to foot nearly half the foreign exchange bill for this huge project, China has provided the much needed boost to Saindak which has been in doldrums for decades. The accord, like the one under which China will supply a 300-MW nuclear power plant to Islamabad, is bound to deepen Sino-Pakistan relations and reaffirm the enduring quality of their friendship.

That Balochistan abounds in rich, varied mineral resources needs no stress. It has been established by geologists that the province has gigantic reserves of coal, limestone, quartzite, flourits, barytes, marble, iron ore, chrome and copper. This mineral belt is mostly located in the Chagai district which is rich in sulphur, iron ore, marble and copper. Way back in 1962, rich copper deposits were discovered at Saindak by the Geographical Survey of Pakistan. Late Zulfikar Ali Bhutto, former Prime Minister of Pakistan, set up Resource Development Corporation in 1974 to undertake detailed investigations, evaluation and development of Saindak copper deposits. Mr. R.D. Habib, a renowned banker and industrial tycoon, was appointed as Chairman, RDC. Assisted by a dynamic team. RDC carried out its job most efficiently and dedicatedly during the last sixteen years bringing the project to the implementation level.

RDC completed the work on the exploration and evaluation of the copper deposits in 1976. The investigation proved the existence of three main prophyry copper deposits of economic and commercial value. According to the RDC's study, the site has 412 million tonnes of copper and other precious minerals valued at over 9 billion US dollars. An area of 45,367 meters was drilled, over 130,000 chemical analysis undertaken and three bench scale metallurgical tests were carried out which showed that these deposits were spread over two and half square kilometers, adjacent to each other. It has been established that out of 412 million tonnes, 273 million tonnes are in the East, 111 million tonnes in South and 28 million tonnes in North.

According to RDC, recoverable quantity of copper from all the three ores stands at 1.69 million tonnes valued at 3726.45 million dollars, gold at 2.24 million ounces valued at 1008.00 million dollars, silver at 2.49 million ounces valued at 37.35 million dollars, molybdenum at 20,374 tonnes valued at 359.33 million dollars, steel billets at 2.1 million tonnes valued at 575.40 million dollars and sulphuric acid at 37.77 million tonnes valued at 2,643.90 million dollars. Prices have been calculated at 1984 level. The experts have placed the mine life at 17 years. Geological Survey of Pakistan has found the existence of four more copper deposits in the same vicinity. These deposits are much larger than Saindak and are of much better grade which will help place Pakistan on the copper map of the world.

During the 11-year martial law rule, only lip service was paid to the project. Albeit Junejo government did try to revive and restore the vital project, seeking foreign support for its implementation. It tried to overcome the man-made impediments in the way of the project's implementation. But Mr. Junejo could meet only with partial success. Saindak project was given a new lease of life by Benazir Bhutto's government which sought Chinese support for it. In fact, the deal was going to be signed in July last but was delayed for one month for some reasons. The main reason for the delay in the signing of the accord was Centre-province confrontation. Although many offers were considered for the implementation of the project, the Chinese offer was considered to be the best because the latter had agreed to implement it on turnkey basis.

The feet-dragging of successive governments on this project has caused the nation a colossal loss. The project cost has escalated from Rs. 400 million rupees in early '80s to around Rs. 6.4 billion in 1990. It includes Rs. 4 billion for infrastructure - rail road, telecommunications, gas, water, power and refuelling station. The remaining Rs. 2.4 billion would be the cost of the project itself.

On completion, the project will yield an annual revenue of 130 million dollars, half of which will be in foreign exchange. Within seven years, the project will be able to pay back the entire foreign and domestic credits. Its main significance, however, lies in the fact that it is going to open a new chapter in Pakistan's economic history. It will pave the ground for rapid mineral development. Pakistan can now look forward to a chain of metallurgical and industrial complexes in not too distant a future. The project will provide job opportunities to no less than 10,136 people. Above all, the hitherto neglected district of Chagai will leap into life humming with brisk industrial activity. This will lead to the integration of this mountain locked backward area into the mainstream of national life, Chagai which is rich in zinc, iron ore, marble, sulphur and copper deposits is bound to attract investors in large numbers who will be too keen to set up metallurgical and industrial complexes in and around it. This will change the face of Balochistan's economy ushering in an era of progress and prosperity for the rugged Balochis. In a nutshell, an enchanting revolution is going to be brought about in Balochistan by Pak-China investment in its mineral sector which is most productive and lucrative.

The Saindak mines, once fully operative in four years' time after being launched, would give the national economy a tremendous boost. The Chinese credit of 84 million dollars which will meet half the foreign exchange component of the project, has been obtained as a loan with 7.5 per cent interest and is repayable from the income of the project itself. There cannot be two opinions that the project is going to be great enabling Balochistan to turn a new leaf in its life. For the initial stage of the project, the total cost has been estimated at over 180 million dollars. The balance would be met by Pakistan through its own or other foreign sources. Resource Development Corporation would be responsible for the implementation of the Saindak project in collaboration with the Chinese.

The agreement will undoubtedly bring the two friendly countries still closer and further strengthen their existing relationship. China has already assisted Pakistan in taking a significant step towards self-reliance in defence production. Its offer of nuclear power plant is yet another positive gesture and can go a long way in meeting Pakistan's acute power shortage through production of nuclear energy for our large and increasing industrial and domestic needs. This is probably the only viable alternative which holds the key to the country's growing energy crisis. No less significance attaches to the Saindak project which has heralded Pakistan's entry into the metallurgical era.
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Title Annotation:Pakistan-China accord in the exploration of metal-rich Saindak field
Author:Jabir, Rafique
Publication:Economic Review
Date:Oct 1, 1990
Previous Article:Gulf crisis impact on Pakistan economy.
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