Balochistan government may not award the licence of Reko Diq Copper and Gold project to any foreign company, said Provincial Finance Secretary Dostain Jamaldini on Thursday. Talking to Business Recorder, he said that Rs 8.5 billion had been allocated in the budget 2011-12 for setting up a refinery through an investment board at the project site. He added that noted scientist Dr Samar Mubarakmand was preparing a feasibility report for establishment of the refinery.
"The investment board would also consider other measures to generate resources for the proposed refinery," he said. However, other sources in the Balochistan government told Business Recorder that to decide the future of Reko Diq project, a meeting of the provincial cabinet would be held next week.
They said that Balochistan Chief Minister Nawab Aslam Raisani along with some key provincial ministers had spent more than a week in the federal capital and discussed the awarding of Reko Diq project to a foreign company, including TCC. Sources said that the provincial government intended to run the project, however, no decision had so far been taken about giving mining licence to any company.
"The government of Balochistan, in pursuance of the orders of the Supreme Court of Pakistan, dated 25-05-2011, is dealing with the issue of granting mining lease to TCC strictly in accordance with the prevailing rules ie the Balochistan Mineral Rules 2002," sources added. To a query, sources said that Balochistan government would decide the TCC's application for the grant of mining lease in a transparent manner in accordance with the law and the rules.
The Provincial Finance Secretary accused the TCC of violating the terms and conditions of the licence for exploration, saying that the company was not licensed to explore the entire area as per the agreement. He alleged that the company had also failed to provide reliable data on the life of the mine and total gold and copper deposits as well as quality of the material.
He said that the company had given a presentation to the provincial official regarding the deposits, quality and life of the mine in early 2010, and according to that presentation the total life of the mine was 90 years, which implies the value of copper and gold at the site at around $60 billion. He added that some quarters had raised objections on the findings and claims of the company and later the company increased the value of the deposits.
According to the feasibility report submitted by TCC to the provincial government, the mine has total reserves of 22 billion pounds of copper and 13 million ounces of gold and the mine life is 56 years. US $3.3 billion investment would be needed initially to start mining production. The major cost includes development of a 682 km long pipeline from the site to Gawadar for transport of goods to international markets. When contacted, TCC's Manager Corporate Communications Samia Ali Shah said that investors like Barrick Gold Corporation and Antofagasta were committed to transparency and complying with the relevant mining laws.
"The TCC Reko Diq project shall lay the foundations of a world-class mining industry in Pakistan, with cutting-edge technology and skills transfer, health and safety standards and nurture the value chain for sustaining the mining industry and contribute towards the development of Balochistan economy," Samia stated.She claimed that the investors would end up with less than 50 percent of shares when royalties, profit share and federal taxes were taken into account.
She said that 25 percent profit share of the provincial government was reasonable when compared with international mining practices especially considering the fact that the provincial government would not be spending a single penny or sharing the risks with the investors. "Further, Reko Diq exploration agreement, if compared with other licenses awarded by the provincial government under Balochistan Mineral Rules, reveals that in no other agreement, government of Balochistan has a profit share in the production," she said.