The government on Tuesday extended the lease contract period of Saindak copper-gold project between Saindak Metals Limited (SML) and China Metallurgical Construction Corporation (MCC), informed Minister for Energy Hammad Azhar.
The Saindak copper-gold project is located in District Chagai, Balochistan.
“[The] Cabinet has given approval for the extension on duration of Saindak Mine lease to the same Chinese company,” said Azhar in a tweet post.
It is pertinent to mention that SML is a public sector company wholly-owned by the Government of Pakistan (GoP) and is engaged in managing affairs of Saindak copper-gold project.
The project was developed for local ore exploration, mining and processing to blister copper. The federal government has invested more than Rs29.234 billion in the project and it has been declared an Export Processing Zone (EPZ) up till October 31, 2022.
The operations of the project were entrusted to a state-owned entity of China, namely MCC under a lease contract with SML on November 30, 2001, awarded through international bidding process. Subsequent to the approval of the Federal Cabinet, the contract was initially for a period of ten years starting October 2, 2002 along with a provision for extension on the mutually agreed terms. Thereafter with the approval of Federal Cabinet, the contract period was twice extended in 2011 & 2017 for five years each time.
Currently, the contract was valid till October 31, 2022.
The minister informed that as per the newly negotiated agreement, Government of Pakistan's share in profit has increased from 50:50 to 53:47 in favour of Pakistan.
Meanwhile, royalty to the Government of Balochistan (GoB) enhanced from 5% to 6.5% of sales revenue. “Social uplift support to GoB from 5% to 6.5% of net profit & increase in annual rent by up to 40% (indexed with price),” said Azhar.
The minister informed that the agreement has been concluded in consultation with all stakeholders including the Balochistan government.
Furthermore, the cabinet has decided that Pakistan Petroleum Limited (PPL) will be taking over operation and working share from China Zenhua Oil in the Baska Block that covers 2500 sq kms in the DI Khan, DG Khan and Musa Khel area.
“The previous company was unable to carry out exploration for oil/gas in this terrain since 2007. PPL will do so now,” said Azhar.
Back in 2007, the government granted two petroleum exploration licences to China ZhenHua Oil Company Limited over block No 3070-13 (Baska) and No 2971-5 (Bahawalpur East) covering an area of 2442 and 2495.45 Sq. Km respectively on government to government basis.
Bahawalpur East area lies in Bahawalpur, Multan and Lodhran districts of Punjab (Zone II), whereas Baska Block lies in D.I. Khan, Musa Khel Bazar and D.G Khan districts in Khyber Pakhtunkhwa, Balochistan and Punjab provinces respectively (Zone -II).