One-stop shop: Pakistan unveils harmonised national minerals framework

A patchwork of regulations

One significant barrier to developing Pakistan's minerals sector is the lack of a unified minerals policy. The sector is governed by six regulatory frameworks, eight legislative instruments, and 36 sets of rules, making investment assessment challenging, especially for international investors.

To address this, federal and provincial mining departments collaborated with international advisers to prepare a national harmonised framework. This framework aims to be a one-stop shop for all investment-related matters in Pakistan's minerals sector. It is based on benchmarking against fiscal offerings and regulatory frameworks from jurisdictions including:

1. those which are considered to set the gold standard (that is, Western Australia and British Columbia);
2. those that have attracted substantial foreign investment in recent years (that is, Indonesia and Kazakhstan); and
3. those that have been considered mining powerhouses in the past (that is, South Africa and Chile).

The framework, in the form of the Mines and Minerals Act 2025, is now being considered at the provincial legislative level.

The legal regime

In terms of the legal and regulatory regime in the framework, the following have been proposed:

1. Licensing authority: Each province will establish a licensing authority within its department of mines, responsible for overseeing, approving, and monitoring mineral titles (including licences and leases).
2. Categories: Mining in Pakistan will mainly be divided into two categories across the provinces and other regions of Pakistan: large-scale mining (that is, for investment over PKR500 million is required) and small-scale mining (for investment between PKR25 million and PKR500 million). Each category will have specific terms and area limits based on the type of mineral title (for example, reconnaissance licence, exploration or prospective licence, mining lease).
3. Eligibility: Mineral titles will only be issued to tax-registered companies and firms, and no longer to individuals. The rationale is to ensure that there is the necessary technical expertise, financial capacity and organisational structure to construct and operate mines. The legislation will specify the evidence needed to prove these requirements, which will differ for large-scale and small-scale licences. For technical expertise, companies must show employment qualified personnel including registered geologists and mining engineers. To meet financial requirements, they must provide audited financial statements or bank statements. Additionally, to prevent frivolous applications, companies must submit detailed work plans, including an environmental management plan, a mine closure plan and, for some mineral titles, a social impact study and social impact management plan.
4. Number: There is no specific limit on the number of large-scale mineral titles that a company or firm can hold. However, small-scale mining mineral titles are capped at five per company. If more than five mineral titles were held before the commencement of the Mines and Minerals Act 2025, the company or firm must surrender excess titles unless authorised by the licensing authority to transfer such titles to another eligible company or firm.
5. District mining liaison committee: A district mining liaison committee will be established in each district of every province or other region of Pakistan. The committee will act as a comprehensive resource for assistance with administrative and dispute resolution tasks relating to the mining activities in the district. The committee's functions will include resolving land compensation and surface rent disputes, issuing orders to remove obstructions that limit titleholders' access to their licensed areas, mediating disputes with the Forestry Department or Environmental Protection Agency, issuing no-objection certificates from the local community for the grant or operation of mineral titles, and recovering government dues from defaulters through the district administration.
6. Appellate tribunal: An appellate tribunal will be established to hear claims or appeals from titleholders, applicants, and other affected parties against decisions made by the licensing authority and other related bodies. The tribunal will comprise five members, including one former judge of the High Court, two representatives from the legal and parliamentary affairs department, and two qualified mining engineers or geologists. Decisions will be made by majority opinion, with appeals directed to the High Court and subsequently to the Supreme Court of Pakistan.
7. Mines and Minerals Force: The Mines and Minerals Force will be established to address illegal mining and smuggling of precious minerals particularly in Sindh and Balochistan, with powers to investigate, prosecute and retrieve illegally mined minerals. An existing civil court judge/additional sessions judge will also be designated to act as the special court for mines and minerals to try offences lodged by the Mines and Minerals Force for speedy justice.

The fiscal regime

Mineral titles granted under the old regime will remain protected. However, titleholders will be required to achieve compliance with the new regime within 18 months of it coming into force.

In terms of the fiscal regime, Pakistan’s government has acknowledged that adequate incentivisation is necessary to attract international investment.

The benchmarking exercise revealed that the government's share of revenue in Pakistan is approximately 76 percent, higher than the average of 68 percent, such percentage being the average for the governments in the six countries against which the benchmarking exercise was done.

The IRR for companies in Pakistan is 14.5 percent, lower than the average of 17.5 percent, such percentage being the average IRR for companies in the six countries against which the benchmarking exercise was done.

Consequently, Pakistan’s government is aiming through incentives similar to those of special economic zones and export processing zones to achieve a company IRR of around 18 percent to give Pakistan’s minerals sector a competitive edge.

Furthermore, in respect of the minerals-related royalties being collected at a provincial level, based on a benchmarking exercise of the 90 minerals found in Pakistan, harmonised royalties have been suggested to the provincial governments. However, the level of royalties is determined by the provinces and it is ultimately up to them to determine if they would like to adopt this approach.

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Disclaimer: This article is based on information from the Pakistan Minerals Investment Forum 2025, held on 8 and 9 April in Islamabad. Norton Rose Fulbright operates a Pakistan desk internationally. Our lawyers have significant experience in transactional and contentious matters relating to Pakistan, but we do not advise on Pakistani law.

Norton Rose Fulbright has been ranked a Band 1 global mining practice, and we advise all major mining companies globally.