Regulating The Mining Sector In Pakistan Amid The Global Resource Race

• Published date: 08 October 2025
• Law Firm: Yousaf Amanat & Associates
• Author: Yousaf Amanat

Introduction

Pakistan is endowed with substantial mineral resources, particularly in frontier provinces like Balochistan. Historically, issues such as regulatory uncertainty, sovereignty concerns, legal risks, and fiscal burdens have discouraged large-scale foreign investment in mining. In recent years, legislative reforms have attempted to address these challenges. Two of the most relevant pieces of legislation in this regard are:

1. The Foreign Investment (Promotion and Protection) Act 2022 (FIPPA 2022), which aims to provide a more secure incentive-based framework for large foreign investments in Pakistan; and
2. The Balochistan Mines & Minerals Act 2025, which seeks to modernize mineral governance in Balochistan, define licensing regimes, institutional structures and balance provincial autonomy with investment facilitation.

This article explains key provisions of FIPPA 2022, how these benefit mining investors, and how the Balochistan Mines & Minerals Act 2025 complements or clashes, with particular attention to legal risks, opportunities, and recommendations.

Key Provisions of FIPPA 2022

The FIPA 2022, is a federal law that aims to create an enabling environment for "qualified foreign investments" through incentives, guarantees, and legal protections. Although the Federal Government denies the direct link but fact remains that the FIPPA 2022 came into existence of the out of court settlement between the Government of Pakistan and Barrick Gold Corporation regarding the Reko Diq Project in Balochistan. The law however applies to not only Barrick Gold but all those who would qualify under this law.

Some of the legal provisions of the FIPPA 2022 relevant to the mining sector are as follows:

1. Qualified Investment & Threshold
   • Section 3 empowers the federal government to notify an investment, sector, industry, or project as a Qualified Investment which will benefit from special protections and incentives.
   • The law sets a threshold that generally no investment qualifies unless the amount (equity or debt) is USD 500 million or equivalent. However, the federal government may waive this threshold in writing for investments below it under certain conditions.
2. Protected Benefits and Incentives
   • FIPPA defines Investment Incentive broadly, including exemptions, reductions, or concessions in duties, taxes, levies fees, etc., federal, provincial, or local.
   • Benefits granted under certain schedules (Second and Third Schedules) are designated as Protected Benefits, i.e., once granted, these cannot be withdrawn unilaterally. This provides stability and legal guarantee to investors.
3. Tax Exemptions and Fiscal Incentives
   • Under FIPPA, qualified investments are eligible for exemptions or special treatment regarding income tax (including capital gains), turnover tax, withholding taxes (interest, dividends) minimum or final taxes, etc.
   • For example, Section 44A was introduced in the Income Tax Ordinance in Finance Bill 2023 to give effect to certain exemptions under FIPPA.
4. Protection of Banking Transactions Confidentiality
   • The law provides that the banking transactions of qualified investors are to be kept secret by all banks and financial institutions.
5. Ease of Transfer and Repatriation
   • FIPPA ensures that investors in qualified investments have rights to transfer funds and repatriate profits, dividends etc., under the terms of the Act and as per international agreements. This mitigates currency risk and regulatory risk.
6. Stability and Legal Safeguards
   • Protected benefits cannot be removed or altered in a manner adverse to the investor. Also, the Act provides mechanisms for redress or grievance handling, reducing exposure to unpredictable legal or regulatory changes.
7. Special Schedules and Application...