New mineral policy in Balochistan highlights lopsided Chinese agreements

QUETTA -- The Balochistan government's new mineral policy and its refusal to renew mining contracts with foreign companies could lead to a major blow to Chinese investment, officials and political analysts say.

The government has formulated a new and stringent mineral policy for mining of gold, copper and other minerals in the province.

Under the new policy that went into effect in November, the Balochistan government must be a major partner in every future deal in the mineral sector of the province.

The minimum percentage of revenue allocated to it was not disclosed, but previously the provincial government received only a small percentage of the revenue generated from minerals.

"The new mineral policy adopted in Balochistan was our most awaited legislation in the province. If it is contrary to the interest of Balochistan, going forward, no agreement will be made with any foreign company, including Chinese companies," Chief Minister Balochistan Jam Kamal said at a news conference December 16.

"In the past, all deals made with foreign companies in the mineral sector and for exploration of oil and gas in the province were proved to be against the larger interest of Balochistan," he said.

"We want the province to get the maximum benefit of its natural resources," Kamal said. "Our decisions today will affect our future generations; therefore, we will never compromise the province's interests in any deal."

"From the contracts signed in the past with Chinese and other companies, Balochistan received a very small percentage of income. Via this new mineral policy, Balochistan must be a major partner in every future mining deal," he noted.

New deal

Chinese companies have been working in different sectors of Balochistan.

One project, the Saindak Copper-Gold Mine, has been leased to the Metallurgical Corporation of China Ltd. (MCC) since 2001.

When MCC approached the government to renew the contract, officials demanded that the government be made a major partner as part of the new policy.

"Pakistan is receiving billions of rupees in revenue from the Saindak project, but Balochistan was never paid a full share of the income. We are thrilled to know that now the Balochistan government is taking a direct interest in the rights of the province," he said.

"Our soil has immense potential for the development of the coastal [economy], mining and alternative resources of energy, and these resources are rarely found anywhere in the world," he said. "In Balochistan, the people's sovereignty over the province's resources has not been recognised yet."

"We have reports that several Chinese and other foreign companies had recently approached the government to invest in mining, energy and other sectors. The provincial government must safeguard the interests of the province in any upcoming deal," he added.

"In Balochistan, Chinese and other foreign companies' investment is causing massive human-rights violations and creating an anarchic situation," said Sher Muhammad Bugti, a spokesman for the Balochistan Republican Party.

"Chinese investments without the consent of local leadership and local residents will never result in any benefit for Balochistan," Bugti said.

"Those areas where Chinese companies are trying to invest in Balochistan are made into no-go areas for locals. They are being forced to migrate to pave the way for Chinese companies," he added.

Presently, Islamabad handles all investment deals affecting Balochistan without weighing the benefits to or disadvantages for the local population, he said.

"The undeniable fact is that the double standard of the current government has given a special immunity to Chinese investors in Balochistan," he added.

'Prowling' for resources

"If implemented as claimed by the current government... the new mineral policy of Balochistan will have a very negative impact on any Chinese future investments in our mineral and other sectors, as the new policy has very strict terms and conditions for investors," said Malak Abdul Wali, senior vice president of Balochistan National Party Mengal.

"The state policies regarding Balochistan always remain discriminatory, and in the past the true leadership of Balochistan was kept far away from agreements signed with foreign companies," he said.

All foreign investments in Balochistan have geopolitical dimensions; therefore, they cannot be overlooked, he said.

"If the authorities [both federal and provincial] want to address the reservations of local residents, the agreements with the Chinese government must be subject to the interests of Balochistan," he added.

"The Chinese companies are prowling through our resources, and relevant government authorities remain silent on this misappropriation because of kickbacks and other favours," Wali said.

"The federal government is making different claims for the development of Balochistan, but in reality, this province is always deprived of its rights," he said.