Reko Diq: gold for peanuts

The heat is on at Reko Diq. The controversial copper and gold mine in southwestern Balochistan has been a centre of attention for long. But, of late, it has acquired further interest.
News that Balochistans provincial government plans to annul the $3 billion joint venture copper and gold project, co-owned by Canadas Barrick Gold and Chilean copper miner Antofagasta, traveled fast across the continents.
Canadian diplomats have already started lobbying Prime Minister Yousaf Gilani and other government officials to honour the Canadian mining giants claim over the project. Balochistan officials, however, say the contract made by the previous government was not just - a view shared widely by Baloch and the public elsewhere, who see the deal as an exploitation of the provinces natural resources.
So, essentially there are two sides to the story.
If the contract is cancelled, it would deter foreign investors confidence to stay long and invest in real sector projects in the country, considering that millions of dollars have already been spent by the two companies.
Barrick and Antofagasta spent $200 million in 2006 to buy the exploration licence for project from mining rival BHP. Since then, the firms say, they have invested a further $200 million on drilling and feasibility and environmental assessment surveys.
They have already, reportedly, ordered some four hundred Volvo trucks for the project and in the meanwhile, are investigating to set up their own jetty at the Gwadar Port to export the ore containing copper and gold.
So after having invested so much, will they let the government to cancel the project? Thats a $25 million dollar question" says Noor-ul-Hasan, a Director at Rockmore Pvt Limited, who was involved in finding 500 million gallons of groundwater in the area, sub-contracted by the Barrick-Antofagasta joint-venture.
"Even if we assume that the government is able to negotiate and perhaps payback the amount invested by the firms, how will they deal with the $5 trillion worth of goodwill already proven by the companies" says Hasan.
On the other hand, however, if the contract isn reviewed, Pakistan would be throwing away gold for peanuts, as the deposit holds more than 11 billion pounds of copper and 9 million ounces of gold. Shaukat Tarin says, if the ore is smelted locally, it could earn Pakistan at least 10 times more of what the deal currently offers.
Yet, while the notion of protecting national interests is commendable, the question is can beggars be choosers. For a country, pressurized by the US to back off from the planned gas pipeline from Iran since many years, getting the Reko Diq agreement remade will be a real a test of diplomacy.