From slurry to sovereignty

Pakistan is at a pivotal juncture with significant mineral discoveries at Reko Diq and other locations, including copper, gold, and critical minerals. These findings have rekindled optimism about alleviating the country’s external economic challenges. However, possessing mineral wealth alone does not guarantee progress.

The experiences of African nations highlight pitfalls to avoid, while Indonesia’s strategic actions offer valuable lessons. Pakistan faces a fundamental decision: whether to simply export raw materials or to pursue a comprehensive strategy that maximises value and drives industrial transformation.

Africa’s cautionary tale

The experiences of countries such as Zambia and the Democratic Republic of the Congo reveal three recurring issues that have hindered progress. Firstly, the development of enclave economies. Mining operations functioned as isolated, capital-intensive ventures with minimal integration into the domestic economy. Equipment and expertise were sourced from abroad, and the extracted ores were exported. As a result, industrial ecosystems failed to develop locally.

Secondly, exporting unprocessed raw materials led to limited value capture. Minerals like copper and cobalt were shipped overseas for refinement and returned to global markets as higher-value products. Consequently, the associated jobs, technology, and profit margins benefited other nations.

Thirdly, weak governance undermined the potential gains. Non-transparent contracts, rent-seeking, and exclusion of local stakeholders fostered mistrust and, at times, instability. While investors are drawn to mineral resources, their decisions are ultimately influenced by the predictability and stability of the operating environment.

If Pakistan settles for extraction and export alone, it risks remaining merely a quarry, rather than achieving broader industrial and economic transformation

For Pakistan, the clear lesson is that mining cannot remain an isolated, extractive activity. Instead, it must serve as a catalyst for broader industrial development, encompassing engineering, service sectors, chemicals, fabrication, and skill enhancement.

Indonesia’s strategic pivot

Indonesia, on the other hand, charted a different course. In 2014, the government enacted a ban on the export of unprocessed mineral ores, with a particular focus on nickel. This policy compelled investors to establish domestic smelting facilities; the policy was further strengthened in 2020.

Indonesia complemented this approach by developing industrial zones, upgrading infrastructure, and fostering partnerships with investors. Although there was initial resistance — such as challenges from the European Union at the World Trade Organisation and a temporary slowdown in investment — Indonesia remained resolute.

The outcome was significant: the country rapidly advanced up the value chain, moving from exporting raw ore to producing nickel pig iron, ferronickel, and battery-grade materials, thereby attracting substantial downstream investment.

The key takeaway is not to imitate Indonesia’s policies but to recognise the importance of purposeful action. Achieving value addition requires disciplined policymaking and the resolve to withstand short-term setbacks in pursuit of long-term benefits.

As for Pakistan, the country’s past experiences with similar major projects have been short-sighted. Examples abound — building the port in Gwadar without inland linkages, developing Thar coal fields without rail links, setting up power generation without distribution, incentivising independent power producers without regard to demand, establishing import-based coal plants difficult to convert to local lignite — the list is long. Pakistan can, however, do better with minerals.

Environmental and human safety

Africa’s experience also underscores the consequences of neglecting environmental and human safeguards. Issues such as polluted water, degraded land, and unsafe working conditions have imposed lasting burdens on local communities. Indonesia, too, faces challenges in ensuring environmental and human safety. Today, global buyers and financiers increasingly demand adherence to verifiable environmental, social, and governance standards.

For Pakistan, it is imperative that environmental and human safety considerations are integrated from the outset. As such, environmental impact assessments must be thorough, independently reviewed, and publicly disclosed. Aligning with international benchmarks is essential for access to global markets.

Mining is both a hazardous and water-intensive activity. Implementing closed-loop systems, secure tailings storage, and continuous monitoring is critical to avoid acute water shortages. Meanwhile, strict safety protocols, comprehensive training, modern equipment, and real-time monitoring should be compulsory lest the activity lead to catastrophic outcomes.

Health monitoring, fair compensation, and credible grievance mechanisms must be institutionalised. Projects must deliver tangible benefits to local communities to maintain security and legitimacy.

Furthermore, every project must include a funded plan for mine closure and land rehabilitation to ensure that economic gains do not leave behind environmental liabilities.

Failure to address these areas will not only harm people and ecosystems but also prevent Pakistan from accessing premium markets that require responsibly sourced minerals.

Building a sustainable mineral strategy

Pakistan’s mineral strategy should be founded on several key pillars, beginning with a time-bound pathway to domestic refining, even if initial exports consist of concentrates.

The sector needs competitive and reliable energy supplies to make mineral processing viable, transparent and stable fiscal regimes to anchor long-term investment, and local inclusion to enhance security and legitimacy.

Paired with an integrated industrial cluster that connects mining activities with downstream industries and world-class environmental and safety standards, these pillars could uplift the overall mining sector.

Standing firm under pressure

On the one hand, Indonesia’s experience reveals a difficult reality: there will be considerable pressure from traders, investors, and governments to prioritise rapid exports over long-term value addition. Once raw exports become established, reform becomes increasingly difficult. Fortunately, Pakistan still has time and opportunity to develop a robust processing ecosystem.

The global energy transition has intensified demand for copper and critical minerals, providing resource-rich countries with leverage — if used wisely.

On the other hand, Africa’s experience demonstrates the consequences of missteps, while Indonesia illustrates the rewards of strategic success. Our window of opportunity will not remain open indefinitely. Exporting raw minerals may bring short-term financial gains, but responsible refining will foster capability, job creation, and resilience.

The author, a former CEO of Unilever Pakistan and of the Pakistan Business Council, is an advocate of sustainable and inclusive economy.

Published in Dawn, The Business and Finance Weekly, March 2nd, 2026