Msc Research Thesis Work Asghar Zeeshan-Amended
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IDENTIFICATION AND T H E STRATEGIC ROLE OF STAKEHOLDERS ALONG MINING VALUE CHAIN IN PAKISTAN ZEESHAN ASGHAR A research project submitted to the Faculty of Engineering and the Built Environment, University of the Witwatersrand, Johannesburg, in fulfillment of the requirements for the degree of Masters of Engineering Johannesburg, 2015 DECLARATION I declare that this thesis is my own unaided work. Where use has been made of the work of others, it has been duly acknowledged. It is being submitted for the Degree of Masters of Engineering in the University of the Witwatersrand, Johannesburg. It has not been submitted before in any form for any degree or examination in any other University. Signed: _________________ Zeeshan Asghar This ________ day of _______________ 2015 i ABSTRACT Pakistan set up two national mineral policies in 1995 and 2012. The first mineral policy was introduced after the discovery of Thar Coal to address the issues regarding mineral assets. After twenty years, it was observed that the National Mineral Policy of 1995 could not address the core issues faced by the mineral industry of Pakistan and there came a need to address the gaps in the policy. Therefore, a new mineral policy with new aims and objectives was introduced in 2012. Furthermore, it was identified that one of the major gaps of both mineral policies was that they were made without the realization and consultation of stakeholders along the mining value chain. With the identification and assessment of the strategic roles of stakeholders in the mineral industry being vital for the formulation of a mineral policy, the purpose of this research was to identify and analyze the role of stakeholders in the mining value chain in Pakistan. Forthwith, a critical review of the mineral policies in general was carried out in this report to analyze the contributing factors towards the failure of the first mineral policy. The result of the second mineral policy was not analyzed because no major FDI has been injected in mineral sector yet. The results of the absence of stakeholders were also compared with the expected outcomes of the mineral policy and the disparities were identified. Strategic and tactical interactions of stakeholders were analyzed to create value loops and virtuous cycles and the presence of positive and negative boosters were also identified. After analysing Pakistan's business environment, a stable business model was created in order to facilitate the formulation of a stable, transparent and equitable mineral policy. ii ACKNOWLEDGMENTS I would like to acknowledge my colleagues at the School of Mining Engineering and the following individuals for their guidance and encouragement. Ms. Tomi Oshokoya, my supervisor throughout this journey. Dr Farhat Abbas Bhatti, Ehsan Qadir and Nazarat bashir my brothers, who are my inspiration. Mr. Raja Imran Sultan, who remained a pillar of support throughout my life. My wife, Dr Shaista and my two beloved kids, Aqsa and Talha for selflessly giving me their love and patience while I undertook this research. This research work is dedicated to Almighty Allah. I cannot express how grateful I am to Him. He has never left me alone for a day as He guided me through life’s ups and downs. He has blessed my life with the realization of right and wrong and given me the strength to defend the right in every sphere of life. iii TABLE OF CONTENTS CHAPTER ONE ......................................................................................................... 1 1. Background, Literature Review and Aims of Research .............................. 1 1.1 Introduction.......................................................................................................... 1 1.2 Literature Review ................................................................................................ 3 1.2.1 Mining Value Chain ..................................................................................... 3 1.2.2 Zachman Framework .................................................................................... 6 1.2.3 Tools for Analysis ........................................................................................ 8 1.2.3.1 Scorecard Analysis ....................................................................................... 8 1.2.3.2 Leading and lagging indicators in Policy ..................................................... 8 1.3 Justification of the study ...................................................................................... 9 1.4 Aims and objectives of the research .................................................................. 12 1.5 Structure of report .............................................................................................. 14 1.6 Conclusion ........................................................................................................ 16 CHAPTER TWO ...................................................................................................... 17 2. History of mining in Pakistan ...................................................................... 17 2.1 Introduction....................................................................................................... 17 2.2 Pakistan - An Overview ..................................................................................... 18 2.2.1 Brief History of Pakistan - A glimpse ........................................................ 18 2.2.2 Geography of Pakistan ............................................................................... 19 2.2.3 Climate of Pakistan ..................................................................................... 20 2.3 The Cultural dynamics of Pakistan ................................................................... 21 2.4 Religious Dynamics ........................................................................................... 22 2.5 The mining industry of Pakistan ........................................................................ 22 2.5.1 National Mineral Policy Environment - A critical review ......................... 26 2.5.2 Challenges for mining sector in Pakistan ................................................... 28 2.5.2.1 Management and effective governance ...................................................... 29 2.5.2.2 Environmental sustainability ...................................................................... 30 2.5.2.3 Local involvement and community development ...................................... 30 2.5.2.4 R & D and Human Resource Development ............................................... 31 2.6 SWOT analysis of Pakistan ............................................................................... 31 2.6.1 Strengths of Pakistan .................................................................................. 32 2.6.2 Weaknesses of Pakistan .............................................................................. 33 iv 2.6.3 Opportunities for investment in Pakistan .................................................. 35 2.6.4 Threats against Pakistan's business environment ....................................... 36 2.7 Conclusion ......................................................................................................... 38 CHAPTER THREE .................................................................................................. 40 3. Stakeholders along the Mining Value Chain .............................................. 40 3.1 Introduction....................................................................................................... 40 3.2 Types of stakeholders ........................................................................................ 40 3.3 Stakeholders analysis and identification ............................................................ 41 3.3.1 Government and its subsidiaries ................................................................. 43 3.3.2 Law Enforcing Agencies (LEAs) ............................................................... 44 3.3.3 Religious Monarchs .................................................................................... 45 3.3.4 Indigenous People ...................................................................................... 46 3.3.5 Communal Mining Institutes ...................................................................... 47 3.4 Conclusion ......................................................................................................... 51 4. Outcome of Stakeholders' absence in Policy-making ................................ 52 4.1 Introduction........................................................................................................ 52 4.2 Evolution of Pakistan's mineral sector in absence of stakeholder consultation 53 4.2.1 Organizational Issues .................................................................................. 53 4.2.2 Functional gaps of the mineral policies ..................................................... 54 4.2.3 Technical gaps and lack of standardization ................................................ 57 4.2.4 Fiscal gaps for attracting FDI ..................................................................... 58 4.2.5 Explicit fiscal impediments ........................................................................ 60 4.3 Conclusion ......................................................................................................... 62 CHAPTER FIVE ......................................................................................................