SIFC orders probe into $5 million KP mining deal after Chinese investor flags irregularities

The Special Investment Facilitation Council (SIFC) has directed the Auditor General of Pakistan (AGP) to conduct a special audit into a mining lease dispute in Khyber Pakhtunkhwa following allegations by a Chinese company of irregularities and political influence in contract allocation, The News reported. 

The move comes after the company raised concerns with federal authorities, stating that its mining lease was cancelled despite investing over $5 million and completing excavation work.

According to official correspondence, the company had applied for a mining lease in 2013 and was granted permission to operate in Chitral. It carried out extraction and export of minerals but was later fined $200,000 for exporting without a valid license. Despite settling the fine, its exploration license was subsequently cancelled.

The company has alleged that the lease was later awarded to another firm on political grounds after years of legal and administrative delays. 

In 2024, the Peshawar High Court had directed authorities to resolve the matter within two months, but the lease was eventually transferred to another entity in March 2026 following a decision by the Mineral Title Committee.

The SIFC noted that the prolonged delay and contract reassignment have affected investor confidence, foreign exchange inflows and employment opportunities, while also causing financial losses to the national exchequer.

It said multiple meetings were held over the past year and a half to address the issue, but no resolution was reached. The matter was subsequently referred for an independent audit review following a decision at a recent meeting of the Apex Committee.

The Auditor General has been asked to form a team to determine responsibility, assess financial losses and examine the broader economic impact of the delay. The review will also identify procedural gaps and propose measures to prevent similar cases.

Officials in the Khyber Pakhtunkhwa Mines and Minerals Department said the company’s license had been cancelled in 2013 and could not be renewed under existing rules. They stated that the case remained under litigation for several years and that decisions were taken in accordance with legal requirements.

The department added that it had not received formal communication regarding the audit directive and would respond once contacted.