Iron treasure

Based on a detailed evaluation of the iron ore deposits found in the Chiniot and Rajoa areas (District Chiniot), Prime Minister Nawaz Sharif had announced on February 11, 2015, with lot of fanfare and publicity, the discovery of iron ore deposits in Chiniot District, along vast copper and gold deposits in the area, which, he committed, would be fully exploited on fast track for achieving the national progress and prosperity.

 Earlier, on April 2, 2014, Punjab Chief Minister Shahbaz Sharif had declared that huge mineral deposits of iron ore, suitable for steelmaking, had been discovered in Chiniot District, which would bring about an industrial revolution in the province. According to the reports, he had boasted that it would pave the way for setting up the first steel mill in the province to be run with the indigenous iron ore and, on completion, it would be one of the biggest steel mills of the world. But, sadly, no physical work has been done in this direction, in spite of tall claims by the government, and none of the project milestones has been achieved as yet.

 Punjab is endowed with large deposits of iron ore, one of the major national minerals, having small to medium reserve sizes. The iron ore reserves in Punjab amount to about 2,000 million tons, spread over an area of 240,975 acres, according to latest geological and geophysical investigations. The vast iron ore reserves are located in Makerwal-Sho, Mianwali (706 million tons), Chichali, near Kalabagh, Mianwali (369 million tons), in Dera Ghazi Khan (268 million tons) and Chiniot (610 million tons). Generally, the exploited resources are low-grade iron ore, with about 34 percent iron content. Most of these reserves are proven and established after extensive exploration and investigations in the area. Ironically, the current extraction/production of iron ore in the province is just about 25,000 tons annually, which is certainly not proportionate to the potential treasures.

These prospective resources of iron ore have great geological significance and are feasible for use in iron and steel industry, but, understandably, the large-scale iron ore mining methodology is still to be determined and implemented based on mineralogy and geology of the ore deposits. Iron ore deposits near Chiniot town were discovered in 1989 by the Geological Survey of Pakistan (GSP). It is a good quality iron ore (magnetite Fe3O4 and hematite Fe2O3), with the characteristics of high ferrous content, in the range of 41 percent —77 percent Fe2O3, according to the measured reserves study conducted by the GSP. Subsequently, the Punjab Mineral Development Corporation (PUNJMIN) had carried out detailed exploration studies and assessed about 110 million tons of proven deposits in the area.

 Grade-wise, these deposits in Chiniot city are classified as smelting grade 12 million tons, high grade 8 million tons, medium grade 33 million tons and low grade 57 million tons, approximately. A pre-feasibility study done later also declared these reserves to be feasible for use in the steel mills. Roadmap for iron ore development on modern geo-scientific lines was therefore initiated by the provincial government in 2010 when the government had invited the Chinese consultants for iron ore exploration and resource estimation in Chiniot and Rajoa towns. It was only in April 2014, however, that the China Metallurgical Corporation (CMC) carried out the detailed geological studies, to demonstrate quantity, quality and grade of iron ore deposits in the area.

Reportedly, the iron ore samples were tested at laboratories in Switzerland and Canada and were confirmed to be of high quality, comparable to those extracted in India, Brazil and Russia. Initial studies indicated that huge mineral deposits were present in a 2,000 sq. km. area of Chiniot city and in Rajoa, three kilometer south of Chiniot town. The detailed study by the Chinese has also devised an economic extractive mining and metallurgical process. The Chinese company was also given assignment to ascertain technical and economic feasibility for the establishment of small and mini steel mills using the indigenous iron ore.

Having established technical and commercial feasibility of mining project and use of iron ore for steelmaking, the government has decided to set up a green-field steel mill at mine-mouth based on the indigenous resources employing suitable technology.

According to the plan, an integrated steel mill of one million ton per year capacity would be set up, along a 200-MW captive power plant, at an estimated cost of over $662 million. The proposed project, to be developed as a joint venture of the Punjab Government and private sector investors, is projected to use three million tons of Chiniot iron ore annually.

For the purpose, development of essential infrastructure in the area was to be undertaken on priority though the proposed area is near population centers and has good infrastructural facilities including availability of skilled and semi-skilled workforce. Still, facilities for water, energy, transport and communications are required to be developed to cater to the requirements of the project. Other minerals required for operations of a steel mill including coal are also found in the vicinity.

According to project schedule, the structuring and documentation of mining for iron ore and associated minerals, and that of integrated steel mill is to be finalized by March 2016.

The Prime Minister had announced in February 2015 that several international mineral exploration companies had already shown interest in developing the mines. Therefore, grant of large-scale mining leases was to be done by the provincial government on a fast-track basis, which is not being done. In the first phase, a pilot demonstration steel plant of 25,000 ton per year is to be constructed at a cost of about $ 16 million, and after its successful trials the main project is to be undertaken.

Partnership with domestic and international investors, scheduled in June 2016, is also not likely to be achieved either, given the slow pace of work. A wholly-owned public sector entity, namely Punjab Mineral Company (Pvt) Limited (PMC), has been made responsible for the promotion, exploration and estimation of iron ore and other associated metallic mineral resources in the area, and to encourage domestic and international investments in the Chiniot project. Punjab Mineral Company, established as the special purpose vehicle/entity (SPV) for organizing the mineral sector, is mandated to develop mines and mineral oriented projects through public sector or under public-private partnership.

Nonetheless, the PMC, instead of developing the Chiniot iron ore-cum-steel project on fast track as envisaged, is currently engaged fully in developing a massive “coal stockyard” of 3,500 tons per day capacity primarily for the imported coal required for the 1,320-MW coal based power plant under construction in Sahiwal.

On the other hand, the role of erstwhile PUNJMIN has been limited to that of a facilitator in technical guidelines and provision of machinery and equipment to the miners. The development of the Chiniot iron ore mines and construction of a steel mill is put on the back burner, it seems.

The writer is former chairman of State Engineering Corporation