Tethyan Copper Company (TTC) has restated its interest in the development of Reko Diq copper fields. The joint venture company between Canadian Barrick Gold, Chilean Antafogasta and Government of Balochistan are the current owners of the $3 billion mega project.
There must be something huge, beneath the surface for companies across the two continents to be determined to move forward with a project in the troubled South West region of Pakistan.
Chagai, the small town, first hit the news as the site of Pakistans nuclear test. Perhaps, its glory will be remembered as home to some of the largest copper reserves in the world. Some experts believe there are 12.3 million tons of copper sprinkled with 20.9 million pounds of gold.
Though still in pre-feasibility stages, the project has hit a hurdle with the news that the Government of Balochistan plans to cancel the contract. The current contract, signed under the previous government, doesn safeguard the interests of the neglected province and its people.
A conference recently held in Islamabad on Balochis-tans Economic Development was a forum where provincial leaders put forth these grievances to the Federal Government. The lack of policy and planning, under developed infrastructure and financing constraints were cited as major hurdles to development in the province.
Putting the numbers in perspective might help understand the enormity of revenues from this project. In 2004, TTC was going to initiate its first project H4. This was considered to be one of the smallest mines in the region. Mining at an estimated 42,000 tons per year the project would have accrued revenues of $1.5 billion, as per the international copper prices during that time.
A big question that hangs over the fate of this project is how will the financing be raised. A project of this size cannot possibly be financed domestically. Internationally, there is a shortage of free flowing cash. Selling investors on the idea might not be impossible but poses a significant challenge given the prevailing uncertainty.
Can Pakistan just do it on its own?
Pakistan possesses technical expertise in conventional mining. Reko Diq is a project that requires advanced mining expertise. Involvement of a third party, claims a mining expert, is essential in training Pakistans human resource at the very least.
Tribal leaders will have to be taken on board if any progress is to be made on this and further projects in Balochistan. The rights of the land and people must be assured. Royalties and profit sharing must be negotiated in accordance with international standards, for which parallels can be drawn from mining efforts in Zambia.
In a twist to the tale, China has recently demonstrated interest in the project as well. Are the Baloch people more likely to trust the dear old friend? Its worth considering!
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