Reko diq is world 2nd Largest Gold, copper and silver mine. Its estimated value is around 65 billion dollars. But role of Past Pakistani governments was so careless that Pakistan couldn’t benefit from this project until now.
Reko Diq Gold Mine and related details.
Reko diq is located in the mountains of Chaghi in Balochistan. The mines have 12.3 million tonnes of Copper and 20.9 million ounce gold reserves. The value of 58% copper and 28 % gold reserves was estimated around 65 billion dollars few years ago. Reserves were discovered in 1978 by Pakistan Geological survey department.
In 1993 Chief minister Balochistan Zulfiqar Magsi given the contract to an Australian company BHP minerals. And established a joint project with the only interest of Baluchistan , at 25 percent and BHP at 75 percent in June 2000.
The TCC, had an alliance with BHP Billiton whom TCC had purchased Reko Diq exploration rights in April 2006, it assumed all rights and obligations of BHP under the Chagai Hills Joint Venture Agreement (CHEJVA). Thus Reko-Diq was then jointly owned by Antofagasta with 37.5 percent .Barrick Gold with 37.5 percent and Balochistan with 25 percent stake. At first the deal was done with BHP, but BHP sold its interests to TCC and latter sold it to Barrick Gold and Antofagasta. According to the TCC the company had spent $400 million on exploration and technical studies 2006.
According to the TCC the Reko Diq Mining Project was a US$ 3.3 billion investment project that promised to build and operate a world class copper-gold open-pit mine in the northwest area of Balochistan, where the project was planned to have an estimated mine life of 56 years.
The annual production of the TCC Reko Diq project was estimated at 200,000 tons of copper and 250,000 ounces of gold from 600,000 tons of concentrate. In order to achieve this production rate approximately 110,000 tons of ore was aimed to be processed daily.
In August 2010, the TCC completed the feasibility study in respect of the project and submitted that to the government of Balochistan. Earlier report TCC completed an extensive exploration program at Reko Diq with more than 300,000 meters drilling comprising mainly diamond and reverse circulation drilling.
The Feasibility Report was based on extensive world class engineering, technical and financial studies .The report named Environmental and Social Impact Assessment (ESIA) was submitted to further make ways for negotiations with the Government of Balochistan and Federal Government of Pakistan for future investment in the project.
On 15 November 2011, TCC was informed by the government of Balochistan that the government had rejected its application for mining lease .TCC began two international arbitration in order to protect its legal right. The TCC lost the cases in International Chamber of Commerce International Court of Arbitration (ICCICA) and in International Center for Settlement of Investment Disputed (ICSID) against government of Balochistan.
The court’s decision weakened the TCC’s case in the international tribunal as Chagai Hills Exploration Joint Venture Agreement (CHEJVA) was declared void. Which means that TCC had no rights to claim under the 1993 agreement in the international court. The apex court in its ruling said that the agreement reached on July 23, 1993 was in conflict with the laws of the country.
The supreme court of Pakistan had already declared the contract illogical with TCC that the company did not have any right over Reko-Diq. Finally on 10th May 2013 it appeared in media that Tethyan Copper Company (TCC) abandoned project.
Why Reko Diq deal is illegal:
TCC was disqualified by the Supreme Court of Pakistan in 2013 after a lengthy legal fight. In 2006, Maulana Abdul Haq and others filed a constitutional petition in the Balochistan High Court. Which challenged the legality of the Chagai Hills Exploration Joint Venture Agreement (Chejva), validity of the act of relaxation of BMCR 1970 by the government of Balochistan and the failure of BHP to complete the exploration at a reasonable pace.
The high court dismissed the petition and found CHEJVA, the ‘relaxation’ of BMCR 1970 and other acts of the government of Balochistan and the Balochistan Development Authority to be legal and valid.
However, subsequent other petitioners filed before the Supreme Court under Article 184(3) of the constitution, questioning the validity of the grant of licence(s) to BHP/TCC on the ground of absence of fairness, non-transparency, violation of laws/rules, and also alleged possible risks to the vital interests of the province of Balochistan and Pakistan in the grant of mining lease to BHP/TCC.
All the titled petitions and miscellaneous applications were heard together and in a final judgement the SC termed the Reko Diq mining lease ‘illegal’
And the following points explain better why the governments of Pakistan and Balochistan cannot enter into an out of court – or ‘under the table’ deal – with TCC.
On January 7, 2013 the Supreme Court of Pakistan declared that the agreement on Reko Diq signed on July 23, 1993 was void and in conflict with the laws of the country. The Supreme Court also stated that TCC no longer had any rights in relation to the Reko Diq agreement. In preview of the Supreme Court’s clear decision, the central and provincial governments’ decision to enter into a deal with a company that has been disqualified in a sixteen-page detailed verdict is a direct violation of the constitution and the Supreme Court.
The apex court had also declared invalid the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), the initial 1993 exploration agreement between the Balochistan government and Australian mining group BHP from whom TCC had purchased Reko Diq exploration rights.
All relaxation and leases were granted to TCC in a very hasty manner during the caretaker setup in Balochistan. The Supreme Court clearly mentioned in its decision that TCC attempted to take undue advantage of the political instability of the time. The foreign companies, by means of CHEJVA, Addendum No1 and other agreements, preyed upon the huge gaps in understanding on the part of the Balochistan government of large-scale mineral extraction and were in a distinct position to manipulate and dominate.
Clarification made by Supreme Court:
The Supreme Court further clarified that under Article 3.2.7 of the Rome-based International Institute for the Unification of Private Law (Unidroit) Principles of International Commercial Contracts under the title of gross disparity, a contract that has been conceived by a party seeking to take unfair advantage of the other party’s dependence, economic distress or its improvidence, ignorance, inexperience and lack of bargaining skill cannot be enforced.
Another big setback for TCC was when it also lost its case in the International Centre for Settlement of Investment Disputes (ICSID) on December 13, 2012 to block the government of Balochistan from any activity in 14 blocks of Reko Diq. The ICSID has allowed the government of Balochistan to continue with their mining project in Reko Diq. These developments were a landmark victory for the Balochistan.
The Supreme Court repeatedly lamented the Balochistan government’s ‘inefficiency’ and ‘haste’ in disposing of a multi-billion dollar project without exploring best possible deals in the public interest.
The Supreme Court raised the following valid questions: Were any steps taken by the Balochistan government to fully understand the nature of gold and copper mining in Reko Diq and the global business norms for large-scale gold and copper mining and the terms of agreement between national governments and foreign corporations?
Were competitive offers from successful mining companies operating in other countries obtained for comparison and negotiation? Were any tenders floated internationally for the extraction of gold from the Reko Diq mines, which were proven by the year 2000 when Respondent No 4 (TCC) bought the share of Respondent No 8 under CHEJVA for $60 million? Did the government of Balochistan make the decision on the basis of relevant facts brought on record related to rationality and competence, and technical and financial considerations?
In view of the Supreme Court’s clear stance and recommendation any deal without following global business norms – like floating an international bid through a competitive process – is against the roadmap drawn by the Supreme Court in its decision. Unlike Pakistan ‘gifting’ Balochistan’s copper-gold, in late 2007 Afghanistan awarded a $3 billion contract to China Metallurgical Group Corp through an international bidding process.
In desperation, after exhausting all legal venues, in May 2013 a frustrated TCC announced that it had withdrawn its request for ‘specific performance/ mining licence’ in both international arbitrations (ICC & ICSID) and was only seeking claims for monetary damages, including lost profits for the mining operations.
Indeed, without a clear CSR blueprint and plan natural resources become a curse for countries, as has happened in the case of many resource-rich African countries. The major challenge today’s Balochistan is facing is lack of accountability and the proper tools to translate resources into development. Pakistan Petroleum Limited sucked trillions of dollars worth of gas without leaving a single mark of human and economic development.
Saindak’s copper-gold was exploited beyond imagination – without helping a single Baloch. Saindak and PPL gas fields are barricaded and protected – completely no-go zones for Baloch people. The people of these areas live and sleep on empty stomachs and hundreds of thousands of children are without schools and books. The fate of Reko Diq will be no different from PPL and Saindak since everything has been decided far away in cities like Paris and London.
The last but most valid reason that invalidates any out of court settlement is that Balochistan is going through a live conflict and natural resources are the major reason. Before any political and economic settlement of the conflict such a shadowy deal will increase distrust and frustration among the already disgruntled Baloch masses.
In 2013, According to the Dr. Samar Mubarakmand basically a nuclear technologist and affiliate of the Planning Commission said_“the provincial government was going to implement the project. the government had plans to launch project herself. Under the project, as many as 15,000 tonnes of raw material, worth $411 million, were going to be excavated annually and the provincial government could have earned an annual profit of $321 million from it. “The provincial government had allocated Rs1, 400 million for the project, whereas the water supply for it estimated only cost Rs1, 980 million and could be completed within one-and-a-half year.”
The Reko-Diq project had proposed ancillary infrastructure development projects for future such as: 1) Power plant for mining for considerable amount of electricity in the area.2) The underground pipeline of 682 Km from Reko-Diq connecting to Gawadar port .3) Development of facilities for dewatering and pressure filters.4) Coverage belt arrangement and ship-loader.5) Project village in the area with all the basic facilities of life. But in last twenty years the TCC and government of Balochistan even remained unable to provide clean drinking water to the communities in the area.
But the bitter truth with deprivation of no opportunities in other projects such as , Sandak, in industries of Hub and Lasbelah and Sui Gas has already created despondency among the youth in Balochistan. can our scientist get success in this mining and producing the copper & Gold field.. is the billion dolor Question, Pak Govt has to bear all the cost and technology around the world.
On the other end Now we cant rely on foreign experts to invite fresh tenders for field blocks of copper and gold deposits in Reko Diq after experincing with BHP Billiton, TCC, Antofagasta, Barrick Gold & even China’s MCC who has been tangled in unnecessary excavation at Saindak that has abridged the natural life of the mine and fetched no monetary spillover but ecological dilapidation in the zone.
An international arbitration tribunal of the World Bank’s International Center for Settlement of Investment Disputes (“ICSID”) issued a decision on the arbitration claims that Tethyan Copper Company Pty Limited (“TCC”), a joint venture between the Company and Barrick Gold Corporation, filed against the Islamic Republic of Pakistan (“Pakistan”) in relation to the unlawful denial of a mining lease for the Reko Diq project in Pakistan in 2011.
20, March 2017 decision by the ICSID tribunal rejected Pakistan’s final defence against liability, and confirmed that Pakistan had violated several provisions of its bilateral investment treaty with Australia, where TCC is incorporated.
The damages phase of proceedings were begins on 22 March and the tribunal considered submissions from the parties to determine the amount that Pakistan must pay TCC. A ruling on the quantum of damages is expected in 2018.
Now recently The World Bank’s International Center for Settlement of Investment Disputes (ICSID) had rejected Pakistan government’s application to dismiss TCC’s claims on grounds of corruption and malpractices by the latter.
Both the federal and provincial governments submitted applications before the ICSID and the International Criminal Court (ICC) in The Hague during 2015-16, seeking admittance of new evidence showing TCC’s corrupt practices in Reko Diq affairs for illegal and undue gains.
The move was futile, however, as the court ruled against the government for unlawful denial of the mining lease for Reko Diq to TCC- a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold Corporation.
The arbitration claim had been submitted in 2012 by the TCC. Five years later, in 2017, it filed for compensatory damages amounting to $9.1 billion based on fair market value of its investments in the project till November 15, 2011. In addition, it also filed a claim of $2.3 billion as pre-award compound interest.
The government has to submit its reply to TCC’s damages claims by July 21, 2017. and Pakistan Govt already rejected TCC claim. Sourc.
It is around 30 years passed until now, but Pakistan couldn’t benefit from this huge treasure. Pakistan is asking IMF for only 12 billion dollars bailout. But on other hands our treasures are hanging between selfishness and greed of our politicians.
Current government has asked Saudi government to invest in the reko diq project. And issue of TCC claims can be handle outside of the court. But all we need a firm and strong loyal leadership.