LAHORE: The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has welcomed the govt’s efforts to escape a penalty of $11 billion after reaching an out-of court settlement on the Reko Diq project in the Chagai district of Balochistan.
The BMP chairman and FPCCI former president Mian Anjum Nisar observed that following the new deal the project would make Balochistan the largest recipient of foreign direct investment (FDI) in the country, as the agreement has been reached after several rounds of negotiations over the last three years. It is appreciable that the government is also considering setting up a smelter to ensure optimal utilization of the nation’s mineral wealth.
It is a right step in the right direction that the Balochistan government would not incur any expenses in development of the mines after this agreement. Its share of expenses shall be borne by the federal government. In developing the project, nearly $10 billion will be invested in Balochistan, including $1 billion for social uplift projects — roads, schools, hospitals and creation of technical training institute for mining. The investment will create over 8,000 new jobs.
He said Reko Diq would potentially be the largest gold and copper mine in the world and it will liberate Pakistan from crippling debt and usher in a new era of development and prosperity.
The businessmen congratulate the nation and people of Balochistan on successful agreement with Barrick Gold for development of Reko Diq mine after 10 years of legal battles and negotiations, he said. Penalty of approximately $11 billion is offset while $10 billion will be invested in Balochistan creating 8,000 new jobs, he added.
Anjum Nisar said some $10 billion would be invested in the province under this project, creating 8,000 new jobs for the locals.
The government was actively engaged with Tethyan Copper Company — a consortium between the Canadian based mining company Barrick Gold and Chile’s Antofagasta to work specifically on the Reko Diq project — to reach a settlement as the country was threatened with facing a penalty of $6.5 billion because of its top court’s decision to deny a mining lease to the firm.
According to settlement, 50% of the new project’s shares will be owned by Barrick Gold, while the remaining shares shall be owned by Pakistan, divided equally between the Centre and the Balochistan government.
The federal government’s shares of 25% will be divided equally among three state-owned entities — namely the Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan Limited (GHPL). As per the terms of the new agreement, the Reko Diq project will be revived and developed by Barrick Gold in partnership with Pakistani entities.
The agreement has been reached after several rounds of negotiations over the last three years.
In August 2019, the prime minister had set up a committee to steer the negotiations with an aim for early development of the mines. In this effort, the federal and provincial governments were assisted by international advisors including a law firm, White & Case, and an investment bank, Lazard.
To ensure the deal is compliant with all the laws, the government will submit the matter before parliament and the Supreme Court. It has been learnt that future governments would continue this project wherein $100 billion would be earned.
On July 29, 1993, the BHP Minerals (BHP) and the Balochistan Development Authority (BDA) had signed the Chagai Hills Exploration Joint Venture Agreement (CHEJVA). Subsequently, on Nov 23, 2006, the TCC had bought the BHP’s interests in CHEJVA for $240 million. On August 26, 2011, the TCC had submitted its feasibility report and an application for mining lease which was rejected by the licensing authority on November 15, 2011. On November 6, 2011, a petition was filed before the Supreme Court asking the top court to order the Balochistan government to refrain from issuing a mining license in an arbitrary and unlawful manner.
Copyright Business Recorder, 2022