Celebrating iron ore discovery

THE discovery of a large iron ore deposit in Chiniot is indeed good news but it is useful to keep in mind that the hard part begins now. By itself, the discovery is actually not new.

The deposits were identified as early as 1989 by the Geological Survey of Pakistan, and verified in 1999 by the Department of Mines and Minerals of the Punjab government in a study using samples from 14 bore holes around the Chiniot area. Each bore hole yielded high-quality iron ore deposits at depths ranging from 120 to 160 metres below the surface, which make these the deepest deposits in Pakistan where all other iron ore extraction is done on the surface.
The study found verified reserves of iron ore of around 13m tons. In 2010, the Punjab Board of Investment and Trade began the process to develop a bankable estimate of the total deposits using scientifically proven methodologies that would be acceptable to the global mining community. That work got under way in 2013 and has just concluded, and the results authenticate the findings of the earlier study done in 1999. Total proven and estimated reserves of iron ore are larger than 100m tons, with another 500m tons of anticipated deposits, making this a large find indeed. The quality of the iron ore is also comparable to some of the better deposits being mined around the world as well as in Pakistan.

The hard part comes now as Punjab moves to chart a mining methodology, and determines the cost of extraction for these deposits. Given the depth at which the seam sits, and the fact that multiple water tables lie between the surface and the seam, mining these deposits is going to pose significant technical challenges and will likely require a large initial capital outlay. This will have to include the cost of erecting a steel mill near the mines since surface transport of iron ore is very costly. Complicating matters is a steep drop in the international price of iron ore in global markets since 2012, when the request for proposals for the study just concluded was sent out. With iron ore prices plunging, and cost of extraction likely to be very high, the commercial viability of mining these deposits could prove to be dif ficult, trace findings of copper in the samples extracted thus far notwithstanding.

Clearly, it is far too soon to be rejoicing over this find. The road ahead is still fraught with too much uncertainty. Pakistan has a poor track record in developing its mineral resources, as evidenced from the failure to tap Thar coals or develop Saindak or Reko Dik mines. Far from celebrating the find in such overwrought terms, the government`s energies would be better used by accelerating the search for a commercially viable route to utilise the deposits.