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EDITORIAL: In Balochi language ‘Reko Diq’ means ‘sandy peak’. The federal government via the President has sent a reference to the Supreme Court for its opinion on Reko Diq project under Article 186 of the Constitution which stipulates that “if at any time, the President considers that it is desirable to obtain the opinion of the Supreme Court on any question of law which he considers of public importance, he may refer to the Supreme Court for consideration.

The Supreme Court shall consider a question so referred and report its opinion on the question to the President.”

Reko Diq is known to possess the world’s largest copper and gold deposits with the capacity to produce 200,000 tons of copper and 250,000 ounces of gold for more than 50 years with a cumulative revenue of over 100 billion dollars.

Three observations are relevant. First, it was agreed back in March 2022 when Imran Khan was the Prime Minister that Barrick Gold Corporation will restart stalled Reko Diq project with the then government revealing to the media (though without releasing any supporting documents) that the agreed framework of the settlement constituted the following: (i) the Chilean partner Antofagasta will exit the project and withdraw its claim of 3.9 billion dollars in return for payment of 900 million dollars; Barrick will hold 50 percent of the project with a mining lease, exploration licence and surface rights, the federal government and Balochistan government will have one quarter each; (ii) the 11 billion-dollar award by an international arbitration court against Pakistan for denying the two companies the licence to develop Reko Diq; and (iii) create 8,000 jobs for Pakistanis.

Secondly, not revealed at the time was the justified insistence by Barrick Gold to get the stamp of approval from both the Supreme Court (no doubt due to earlier court decisions that visibly dampened the inflow of foreign direct investment (FDI) including reversal of the privatisation of Pakistan Steel Mills) and parliament.

Thus the presidential reference seeks to ask the court to give its opinion on whether the constitution, the laws or the public policy prevent the federal and Balochistan governments from entering into the Reko Diq agreement or affect its validity.

However, details of the agreement are still not available as it is unclear whether Barrick Gold will set up a refinery in Pakistan or take the precious metals out of the country like the Chinese operator in Saindak project, and if there is to be a cap on excavation especially if the company is allowed to export the minerals in raw form.

Needless to say that there is a global competition to attract foreign direct investment (FDI) and emerging economies like Pakistan have to compete with other destinations available to foreign investors. FDI is essential for us to strengthen our external account and continue to finance our import and development needs.

However, for FDI to materialise in a substantial manner we have to ensure development of the requisite infrastructure that includes manpower with needed skill sets and above all continuity of state policy with political stability. For this to happen in any meaningful way, all stakeholders will have to find common ground and pursue this objective irrespective of whoever is in government to ensure provision of the needed safety and comfort to foreign investors.

Mere articulation of policies and enactment of legislations without strict adherence to them in execution would be meaningless and the country would remain mired in the present difficulties on its external account and continue to be a perpetual borrower from multilaterals, bilaterals and other creditors.

A mere look at the foreign reserves of Bangladesh and India and the number of Fortune 500 companies that have directly invested in those economies would suffice to highlight the importance of FDI for our country.

And finally, it has to be clearly understood that FDI would not come to a war zone or a destination that is prone to terrorist activity. In fact, in such a situation the existing FDI, if any, in the country would bail out without much loss of much time.

Copyright Business Recorder, 2022

Comments

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Rebirth Oct 20, 2022 04:40pm
The company will have to pay $1 billion to “persuade” Balochistan and Federal lawmakers of both houses to enact legislation. And which Pakistani company or entity owns Antofagasta’s stake? A government cannot possibly own a mining company’s stake unless it plans to replace it using a mining company of its own. It’s no different than a government buying up defunct car plants but not producing any cars themselves. Doesn’t really help the government’s investors, who have placed their trust in them: the taxpayers.
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Ali Oct 21, 2022 08:44am
What good are the Indian foreign currency reserves, if the populas is in such a pethatic state. Most developing countries of Asia and Africa are the same. No use of FC reserves if human resources is in dismal state.
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Khadijah Oct 22, 2022 09:51am
It is a very intelligent move, made by PM Shehbaz Sharif and President Alvi, that will in Sha Allah protect and secure Pakistans largest asset from being manipulated. The lease and the cap are crucial to define, further no minerals should be taken out of Pakistan, as the actual profit would then not be accurately processed. Therefore a refinerary should be established in Pakistan to monitor and ensure all processes and profits are streamlined accurately.
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