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Mining Sector: Balochistan government has notified an unprecedented increase of about 300 per cent

ISLAMABAD: In a surprising development, the Balochistan government has notified an unprecedented increase of about 300 per cent in fees, rents and royalties in the mining sector, which may adversely affect the business of various sectors involved in the industry.

The government, through a notification issued on March 3 this year, had shocked the industry by enhancing fee related to leasing process and rates of royalties without even taking the stakeholders on board.

Interestingly the Federal Board of Revenue (FBR), following the notification by the provincial government, has also subsequently issued new rates/fee/royalties for the mining sector.

According to officials of the All Pakistan Marble Mining, Processing Industry and Exporters Association (APMMPIEA), the unprecedented rise in royalties and fees would suppress already dwindling mining activity further as it would not only cause loss in revenues to the provincial government but also would depress overall mining activity.

In a province like Balochistan, the move would lead to more separatist sentiments and would not favor the environment of peace and reconciliation, the association feared.

According to the notification issued by the Balochistan’s Mines and Mineral Development Department, the license fee/renewal fee for minerals has been increased in the range of Rs0.5 million to Rs 2million. Previously, the same fee was in the range of Rs10,000 to Rs0.2 million.

As per the notification, the reconnaissance license (LSM) has been increased from Rs20,000 to Rs500,000; exploration license fee has been increased to Rs1 million from Rs0.24 million; fee for mineral deposit retention license increased from Rs350,000 to Rs1.5 million; while fee for mining license has been enhanced from Rs0.8 million to Rs3 million.

The government fee for mining lease has been set at Rs1million, increasing from existing Rs50,000. The security deposits for mineral title other than reconnaissance has also been increased from Rs2 million to Rs4 million.

In the annual rental category, there is a jump from Rs10,000 to Rs100,000 for different license holders. At least Rs50,000/ will be added to the normal rent for license holders in the coastal belt of the province.

The provincial government has also notified an increase in royalties three times for at least 42 different products including Asbestos, Antimony, Agglomerate, Barite, Basalt, Bentonite, Bajri, Coal, Clay, Gypsum, Granite, Gabbro Stone, Iron Ore, LimeStone (for manufacturing of cement) Marble Onyx, Magnesite, Ordinary Stone, Sulphur, Soapstone, sand, Shale, Quarts etc.

The royalties for precious stone, metal/other groups have also been increased from existing 5pc to 6.5pc.

Reacting to the sudden jump in the rates in the mining sector, APMMPIEA Chairman Sanaullah Khan said the notification had been formulated without any involvement of concerned stakeholders.

He said there had been a marked increase in fees related to the leasing process besides 300pc jump in the rates of royalties, adding an increase in royalties had no economic backing.

Balochistan’s biggest employer was commercial mining activity of various minerals, but the mining activity has witnessed suppression in recent times due to global recession and other unfavorable economic conditions, Khan added.

He was of the view that in such hard times, the government, instead of enhancing fees, should have actually assisted the industry through government incentives of reduced royalties and licensing fees besides streamlining licensing processes.

“Unfortunately the ill-advised Balochistan mineral department is making the poor situation even worse as the rates have been increased despite the fact that the provincial government has not announced any facility to the mining community through machinery pools, security for actual mining ventures, roads and other infrastructural inputs,” states a letter written by APMMPIEA to Chief Minister Balochistan, Ministry of Commerce, Industry and FBR.

“If this notification is implemented it will create havoc in the mining sector and suppress commercial activity further. It seems the decision of revising the rates/fee and royalties was made somewhere else as the sitting chief minister of Balochistan province is also associated with the mining business,” Sanaullah Khan said, adding that commercial activities would no longer continue if the said notification is implemented.

He said apart from the marble industry, other sectors like coal, Gypsum, Granite etc would also oppose the notification.

“We are also planning to observe strike or approach a court against the government’s initiative,” the APMMPIEA chairman vowed


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