Pakistan’s mineral resources are abundant and varied, making the mining sector a significant contributor to the national economy. The regulatory framework governing this sector has evolved over time, aiming to attract both local and international investment while ensuring sustainable development. The Mineral Law Regime in Pakistan encompasses a comprehensive set of rules and policies designed to regulate mineral exploration, development, and production. This article provides an in-depth overview of the legal framework governing the mining sector in Pakistan, highlighting key aspects such as mineral titles, environmental standards, and dispute resolution mechanisms.

Regulatory Regime

Objectives

The 2002 Provincial Mineral Concession Rules, emanating from the 1995 National Mineral Policy, were a significant step towards modernising the regulatory regime for the mining sector in Pakistan. The primary objectives of the current policy include:

  • Ensuring the grant and renewal of mineral titles for sufficient periods to allow full commercial exploration, development, and exploitation of mineral deposits.
  • Eliminating discretionary powers, providing clear timeframes, and ensuring transparency and simplicity in procedures and decisions.
  • Updating mining laws to accommodate international mining practices, such as open-pit mining and modern working methods.
Mineral Titles

The mining concession rules in Pakistan provide for the following mineral titles:

  • Small-Scale Mining:
    • Mineral Permit
    • Exploration/Prospecting License
    • Mining Permit/Lease
  • Large-Scale Mining:
    • Reconnaissance License
    • Exploration License
    • Mineral Deposit Retention License
    • Mining Lease

The principle of first-come-first-served generally applies for granting concessions for small-scale mining, whereas merit-based criteria are used for large-scale mining.

Environmental Considerations

With a growing focus on environmental sustainability and international obligations, Pakistan is committed to ensuring that mining operations are conducted in an environmentally acceptable and safe manner. The following measures are integral to the environmental management of mining operations:

  • Implementing regulatory environmental management measures, including Environmental Impact Assessments (EIA), environmental management systems, plans, and audits.
  • Complying with national environmental protection laws and international standards, codes, guidelines, and policies.
  • Ensuring effective post-mining rehabilitation.
  • Promoting the recovery, recycling, and reuse of minerals and mineral-based products.
  • Implementing effective mine waste management measures.
  • Promoting the use of best mining practices, public disclosure, and corporate social responsibility (CSR).
Performance Guarantee

Applicants for mineral titles must provide a performance guarantee at the time of grant or renewal to ensure compliance with the obligations of the mineral title.

Rights Conferred

Holders of mineral titles have exclusive rights, subject to payment of dues and compliance with prescribed obligations. These rights include entering the licensed/leased area and conducting reconnaissance, prospecting, exploration, or mining operations. The detailed rights and obligations are specified in the governing laws.

Termination

Mineral titles may be terminated on specific grounds, such as breach of terms, bankruptcy, or misrepresentation. The specific events leading to termination are detailed in the relevant rules.

Grant of Mineral Titles to Foreign Nationals

Foreign companies are allowed to apply for mineral titles, but such titles will only be granted after the foreign company is incorporated locally.

Mineral Agreements

Provincial Governments may enter into agreements with investors to define terms or predetermine procedures related to operations under a license/lease. If substantial foreign investment is expected, the Federal Government may also become a signatory to such agreements. A model mineral agreement will be developed to provide additional comfort to mining companies and their lenders, protecting the economic feasibility of projects and stabilising the legal and fiscal regimes.

Dispute Resolution

Disputes between foreign mining investors and the Government are to be settled amicably, or through arbitration at the International Centre for Settlement of Investment Disputes (ICSID) or the International Chamber of Commerce (ICC). For disputes involving Pakistani nationals, arbitration will be conducted under Pakistan’s arbitration laws.

Joint Applications and Areas Not Available for Grant

Mineral titles can be granted jointly to multiple applicants, with joint and several liability. Mineral rights will not be granted over areas of historical interest, national or public parks, cemeteries, defence-sensitive sites, or other specified areas.

Competitive Bids and Public Notices

Mineral titles with proven reserves may be awarded through competitive public bids. Notices of all grants, renewals, assignments, and revocations of mineral titles will be published promptly in the Official Gazette.

Proprietary Rights Over Data

All geological data obtained by mineral title holders will be owned by the Licensing Authority and must be deposited as specified in the rules.

Reporting Standards and Tenements

Mineral title holders must estimate and evaluate mineral reserves according to international reporting standards, such as the Australasian Joint Ore Reserves Committee (JORC) standards. The national cadastre will maintain a digitised record of resource inventory and tenement registry.

Restoration and Rehabilitation

Mineral title holders are required to carry out adequate restoration and landscaping of mine sites, aiming to return them to their original state as far as possible.

Conclusion

The Mineral Law Regime in Pakistan is designed to facilitate the exploration, development, and exploitation of the country’s mineral resources while ensuring environmental sustainability and compliance with international standards. The regulatory framework aims to attract investment, promote transparency, and safeguard the rights and obligations of all stakeholders involved in the mining sector. For detailed legal advice and assistance in navigating the complexities of Pakistan’s mineral law regime, please contact Josh and Mak International.

By The Josh and Mak Team

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