Reko Diq mine lease: TCC starts arbitration process

Tethyan Copper Company (TCC), working on development of one of the major copper-gold mines at Reko Diq, Balochistan, announced on Tuesday that it has started international arbitration process to protect its rights after the provincial government rejected its mining lease application.
According to the feasibility report submitted by TCC to the provincial government, the mine has total reserves of 22 billion pounds of copper and 13 million ounces of gold, and its life is 56 years. A sum of $3.3 billion would be needed as investment initially, after which the mine may start production. The major cost includes development of a 682 km long pipeline from the site to Gwadar for transport of goods to international markets.
"Following the summary''s formal refusal of the Mining Lease Application (MLA) originally submitted in February 2011, Tethyan Copper Company (TCC) on Tuesday filed for international arbitration to protect its legal rights" said a statement.
Tim Livesey, CEO of TCC, said in a statement: "We are disappointed we have not yet been given the opportunity to resolve this by negotiation. We firmly believe that our feasibility study and MLA submission are in accordance with the Balochistan Mineral Rules 2002, and that there should be no regulatory or legal obstacle to the granting of the MLA. We have to initiate arbitral proceedings to protect our legal rights, but we remain open to meeting with the Government of Balochistan and its regulatory body to work towards an amicable, negotiated resolution to the dispute."
TCC, in partnership with Government of Balochistan, is evaluating the development of a world-class copper-gold mine at Reko Diq, District Chagai of Balochistan. The Company has already invested over $220 million on the project since 2006.
Tethyan Copper Company Pakistan (Pvt) Limited is a fully owned joint venture company of Barrick Gold of Canada and Antofagasta Minerals of Chile; both gold and copper mining leaders globally. The government of Balochistan last month rejected the application of the TCC. The provincial government itself wanted to complete the project. In its annual budget 2011-12 it has allocated Rs 8.5 billion for establishing a gold/copper refinery.
According to top provincial officials privy to the developments following the criticism from by media and deliberations with Pakistani experts it allocated Rs 8.5 billion for the development of the project. "Rs 8.5 billion would be invested in different sectors through an investment board which would generate resources for setting up a refinery at Reko-Diq Copper-Cum-Gold Project site" said a top provincial official.
According to officials, noted scientist Dr Samar Mubarakmand has started preparing the feasibility report for the refinery. "The Government of Balochistan, in pursuance of the orders of the Supreme Court of Pakistan, dated 25-05-2011, was dealing with the issue of grant of mining lease to TCCP strictly in accordance with the prevailing rules ie the Balochistan Mineral Rules 2002", the official said.
These provincial official has alleged "the TCC of violating the terms and conditions of the licence for exploration," adding that the company was not licensed to explore the entire area as per the agreement. "The company also failed to provide reliable data on the life of the mine and total gold and copper deposits as well as quality of the material".
When contacted, a top official of the provincial government said the company gave a presentation to the provincial official regarding the deposits, quality and life of the mine in early 2010, and according to that presentation the total life of the mine is 90 years, which implies the value of copper and gold at the site at around $60 billion. He added that some quarters raised objections on the findings and claims of the company and the company later on increased the value of the deposits.