The biggest Chinese-operated copper and gold mine in Pakistan has warned that a worsening insurgency in the restive province of Balochistan may force it to suspend operations.
“The prevailing law and order situation in the province has severely affected the transportation of essential project cargo,” the managing director of Saindak Metals Limited wrote in a letter to
Pakistan’s energy ministry, which was reviewed by the FT and has not been previously reported.
“If this situation continues unabated, the uninterrupted operation of the Saindak Copper-Gold Project may become unsustainable, and there is a serious likelihood that the Project’s operations may be forced to cease within a month owing to the non-availability of essential production materials and logistical support,” added the letter, which was dated June 29.
Saindak, Pakistan’s largest active copper and gold mine, was leased in 2001 to the state-owned Metallurgical Corporation of China, which has operated it under a joint venture with Pakistan’s state-owned SML. The project lease was extended for 15 years in 2022.
Almost all of the project’s output, which accounted for the majority of Pakistan’s roughly $750mn of copper products last year, is exported to China, according to official statistics.
China is also Pakistan’s largest bilateral lender, having provided Islamabad with billions of dollars in loans and grants to develop transportation and power infrastructure as part of the Belt and Road Initiative, Chinese leader
Xi Jinping’s signature overseas infrastructure drive.
Much of that investment has focused on Balochistan, a mountainous south-western region that is roughly the size of Germany and has been beset by a
separatist insurgency in recent years.
A
bombing near a railway track in the provincial capital Quetta in May killed more than 20 people, while another four dozen lost their lives in a co-ordinated assault throughout the province in January.
The letter says that the main issue for its operations is road travel, which has become “increasingly hazardous” as a result of the attacks.
“The situation in Balochistan is far worse than many in Islamabad realise,” said one person involved in the mine who requested anonymity. “Security is especially bad in the area where major projects like [the Barrick Mining-backed] Reko Diq and Saindak are located.”
Islamabad claims the insurgency is backed by Indian intelligence agencies, a charge New Delhi denies, and insists it can stamp out militancy and guarantee “foolproof security” for foreign investors.
On Wednesday, Pakistan’s military spokesperson told a press conference that 42 people, including security and law enforcement personnel, had been killed by militancy in the province just last week.
“We will hunt you, and we will hurt you everywhere,” said Lieutenant General Ahmed Sharif Chaudhry. He added that Pakistan Armed Forces would not show “rationality and proportionality” in its response.
Pakistani forces have killed more than 100 fighters from both separatist and Islamist groups since July 5, according to state media.
Pakistan’s deteriorating security situation has also
strained relations with China, its closest defence and economic partner, as insurgents have targeted foreign assets and personnel.
More than a dozen Chinese citizens
have been killed by militants in recent years, and senior officials in Beijing including Xi have warned their Pakistani counterparts that improved security is needed for further investment.
Saindak’s woes mark the latest blow to Pakistan’s ambitions to turn its western frontier into a hub for natural resource extraction and source of much-needed export revenue.
In late March, the FT revealed that
Barrick Mining was postponing development of the $9bn Reko Diq gold and copper mine as it reviewed the region’s security situation and supply chain disruption resulting from the US-Israeli war in Iran.
Reko Diq is roughly 50km from Saindak, and the projects share many transport links.
SML, Pakistan’s energy ministry and MCC did not respond to requests for comment.
