Barrick Gold Corporation and the governments of Pakistan and Balochistan have reached an agreement on a framework that provides for the reconstitution of the Reko Diq project in the province.

The development was confirmed by Prime Minister Imran Khan on Sunday in a Twitter post. "I 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. Penalty of approx $ 11bn is offset, $10bn will be invested in Balochistan, creating 8,000 new jobs,” he wrote.

“RekoDiq will potentially be the largest gold and copper mine in the world saying it will liberate Pakistan from crippling debt and usher in a new era of development and prosperity," the premier mentioned in another tweet.

Separately, Barrick Gold Corporation issued a press release, which said: “The project, which was suspended in 2011 due to a dispute over the legality of its licensing process, hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits.

A statement issued in this regard cited that the reconstituted project will be held 50 percent by Barrick and 50 percent by Pakistan stakeholders, comprising a 10 percent free-carried, non-contributing share held by the government of Balochistan.

"The reconstituted project will be held 50% by Barrick and 50% by Pakistan stakeholders, comprising a 10% free-carried, non-contributing share held by the government of Balochistan, an additional 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises. A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties."

Barrick’s president and chief executive officer Mark Bristow hailed the agreement as an important step towards the development and operation of Reko Diq.

“Barrick has successfully partnered with host countries worldwide and our philosophy of sharing the economic benefits our mines generate equitably with core stakeholders is also evident in the ownership structure of the new Reko Diq. This is a unique opportunity for substantial foreign investment in the Balochistan province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come. In addition to local employment and skills development, local procurement, infrastructure upgrades and improved medical and education systems, Reko Diq could also be the springboard for further exploration and other mineral discoveries along the highly prospective Tethyan Metallogenic Belt,” he said.

As per the new agreement, Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period.

"The process to finalise and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan," Gold Barrick's statement noted.

"If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce," it said.

Last year, Pakistan initiated talks with Barrick Gold to settle the dispute on Reko Diq as M/s Antofagasta of Chile was seeking financial settlement of their share in the award of $6 billion, well-informed sources told Business Recorder.

Sharing the details, the sources said, on July 17, 2019, a Tribunal of the World Bank’s International Centre for Settlement of Investment Disputes (1CSID) found Pakistan to have violated the Pakistan-Australia Bilateral Investment Treaty and awarded $6 billion (approx.) plus interest against Pakistan to Tethyan Copper Company Pty Limited (TCC), that is jointly owned by Barrick Gold PLC of Canada (Barrick) and Antofagasta PLC of Chile.

The tribunal had found that Pakistan unlawfully denied the TCC a lease to mine copper and gold deposits at the Reko Diq Mine, located in the Chagai district of Balochistan.

The sources said, on the directions of Prime Minister Imran Khan, a process of settlement talks with TCC was initiated. On August 22, 2019, the Prime Minister constituted a committee to steer the negotiations.