THE signing of an agreement recently between the Punjab government and Metallurgical Corporation of China for the exploration and development of iron ore in Chiniot district is a landmark decision. If implemented effectively and timely, it could help bring an industrial revolution in the province.

The Chinese will carry out full-scale investigations within a period of 10-18 months to demonstrate the quantity, quality and grade of iron ore deposits in the area. The detailed study would also devise an economic extractive metallurgical process.

If the technical and commercial feasibility of the mining project is established, the government plans to set up a green-field, mine-mouth based steel mill that would run on indigenous resources.

It is only in recent years that iron ore extraction increased to about 400,000 tonnes annually. Pakistan Steel Mills started using local iron ore by blending it with imported ore. Indeed, huge potential exists for commercial exploitation of iron ore reserves.

The Chiniot iron ore project will be a mega mining activity, as iron ore deposits are under alluvial cover. The district has an estimated resource of over 600m tonnes, including inferred or undiscovered resources of 500m tonnes, indicated resources of 100m tonnes, and measured reserves of 27.46m tonnes.

The iron ore is also of good quality (magnetite Fe3O4 and hematite Fe2O3), with the characteristics of high ferrous content, in the range of 41-77pc Fe2O3, according to a study conducted by the Geological Survey of Pakistan.

Subsequently, the Punjab Mineral Development Corporation carried out detailed investigations of mineralogy and geology of these deposits, and assessed 110m tonnes of measured reserves.

Out of these, 12m tonnes reserves were classified as smelting grade, followed by 8m tonnes as high grade, 33m tonnes as medium grade, and 57m tonnes as low grade, which are considered feasible for use in iron and steel mills.

A wholly-owned public sector entity, the Punjab Mineral Company (Pvt) Limited, is responsible for the promotion, exploration and estimation of iron ore and other associated metallic mineral resources in the area, and for encouraging domestic and international investment in the Chiniot project.

Punjab Mineral Company has been established for organising the mineral sector in accordance with international best practices. It is mandated to develop mines and mineral-oriented projects through public sector or public-private partnership.

Meanwhile, the role of the erstwhile Punjab Mineral Development Corporation has been limited to that of a facilitator in technical guidelines and provision of machinery and equipment to the miners.

German consultants have also been engaged by the Punjab Mining Company to reestablish economic feasibility for development of the Kalabagh iron ore reserves, known to be the largest in the country, with measured reserves of 350 million tonnes. Kalabagh iron ore is a surface deposit and is mostly of low grade, as its iron content varies between 32-34pc. But it is still usable for steelmaking.

The roadmap for iron ore development on modern geo-scientific lines was initiated by the provincial government in 2010, when it had invited Chinese consultants for iron ore exploration and resource estimation in Chiniot and Rajoa towns.

The area is near population centres and has good infrastructure, besides both skilled and semi-skilled workforce. Other minerals required for operations of a steel mill, including coal, are also found in the vicinity.

The government has alternately considered setting up a beneficiation plant for the enrichment of iron ore for utilisation by existing steel mills in the country, which will blend it with imported ore in some proportion.

The implementation of the project, which requires massive investment, will create a stable and enabling environment for domestic and foreign investment, resulting in enhanced economic contribution of the mining sector.

Other benefits include rapid industrialisation, import-substitution, self-reliance and improving international competition in mining and steel sectors.

Pakistan is endowed with large and diverse iron ore deposits, to the level of 1,427.17m tonnes, ranking it among the top five major minerals found in the country.

These deposits, which are of low and high grade, are concentrated in Kalabagh, Chichali, Rakhi Munh, Kirana, Chiniot and Rajoa in Punjab; Chilghazi, Chigendik, Pachin Koh, Dilband, Amir Chah and Uthal in Balochistan; Dammel Nissar, Langrial, Besham, Pezu, and Nizampur in Khyber Pakhtunkhwa; and Nooriabad in Sindh. And new discoveries are also being made across the country.

These iron ore deposits are of great economic significance. But, sadly, they have not been exploited on a larger scale. Development and extraction of iron ore remained low until recently, with average annual production in the range of 24,000-25,000 tonnes until a few years back.

The writer is a former chairman of the State Engineering Corporation.