Chiniot — from a dream ‘treasure trove’ to steel mills promise

ISLAMABAD: In early 2015 the Punjab government claimed to have successfully explored and documented a treasure trove in the form of iron ore and copper in Chiniot worth hundreds of billions of dollars.

Two years later, now the Punjab government on the basis of hectic work on the ground maintains that the Chiniot iron ore deposit is approximately 150 million tons on Canadian Standards and almost 200 million tons on Chinese Standards which seemed sufficient to run a steel mill of 1-million-ton capacity for next 33 years.

The previously estimated “hundreds of billions of dollars” worth “treasure trove” is so far “confirmed” just around a few billion US dollars. 

“It’s the beginning and we are expecting to explore more in Phase-II of the project,” Secretary Mines and Mineral Department Dr Arshad Mahmood told The News. He revealed that the Punjab government has developed a detailed business case through internationally acclaimed third party to define the commercial potential for the steel mill. Besides, he disclosed that the project of establishment of mining, processing and steel mill complex at Chiniot has been included in the CPEC portfolio, in principle, during the 6th JCC meeting held in Beijing recently.

In 2015 it was reported that “unimaginable resource” was found through technical services of Chinese, German, Swiss and Canadian mining experts. It was also reported, “The Punjab government has secured 500 million tons of shipment grade iron ore in Chiniot-Rajoa. Initial results of scientific geological studies have shown substantial copper reserves also.”

The secretary mines is though sounded perturbed over how it was reported in 2015 that Chiniot contains “treasure trove” worth “hundreds of billions of dollars”, he takes the credit of shaping Chiniot into a business model for future discoveries and investments.

Regarding what the Punjab government has really achieved so far, Dr Arshad explained that the work started in October 2013 for selection of Chinese contractor (MCC) and German Consultant to execute and supervise the work. 

“Since July 2014, it took continuous working of 21 months, round the clock, to complete 62,000 meters drilling through 71 boreholes. To assure quality control, more than 10,000 core samples were analyzed at SGS labs (Switzerland & ACME labs, Canada),” the Secretary Mines said, claiming, “This is the pioneer work in the history of metallic minerals exploration in Pakistan where NI 43-101 Canadian Standards are followed to meet the international best practices.”

He said that a detailed 3-D resource model is available for potential investors for mine designing.

The secretary said that by June 2016, it had become clear that the Chiniot iron ore deposit was approximately 150 million tons on Canadian Standards and almost 200 million tons on Chinese Standards. It seemed sufficient to run a steel mill of 1-million-ton capacity for next 33 years. 

For the government, he said, the next challenge was to develop a detailed business case through internationally acclaimed third party to define the commercial potential for the steel mills. For this purpose, the services of transaction advisor were engaged through global competition. 

He said the government’s transaction advisory team under DMT (Germany), Mines & Metal (Germany) and Endeavor Financial (UK) has been working on the comprehensive feasibility study for the steel mills plant. He said, “Last one year has been consumed in detailed study of steel market, ore deposit analysis, selection of mining technique, processing technology and metallurgical route for steel making.”

He said that the Chiniot deposit comprising hematite and magnetite iron ore can easily be smelted into steel by blast furnace or DRI techniques. 

He disclosed that after it has been decided in principle to include this project in CPEC and following the instruction from the chief minister Punjab, the phase-II exploration work at Chiniot has already been launched in March 2017. “Leading German geo-consultant Firm Fugro has been mobilized to search for resource corridors in the whole of Punjab through a very structured and organized exploratory program,” he said.

He added that Punjab Government Mines & Minerals Department is also in the process of finalizing the arrangements to conduct road shows in Beijing and Dubai for technical launching of the project for potential investors. 

“International consultants working under Punjab mineral company in the domains of geology, geophysics, mining, metallurgy, environment, legal and financial would be addressing the queries of technical teams of the investors,” he said, adding that local steel sector investors are also keen to form joint ventures with foreign investors in this regard. 

He said the Punjab government intends to offer all the incentives to this industrial complex, which are available under special economic zones i.e. tax holiday and concessions on import duties.

He hoped, “With the establishment of 1st iron ore processing plant at Chiniot, all the eligible iron ore in Pakistan would rush to this site for beneficiation under market given commercial terms. The location of steel mills in vicinity of railway line and motorway near the steel consumption centers has given it strategic advantage.”

Regarding the presence of Copper, he said that out of 71 total boreholes drilled at Chiniot and adjoining areas, more than 50 boreholes have shown presence of cooper and allied metals in various ranges.

Further systematic scientific work is under way on these precious metals during the on-going phase-II of Exploration, he said.