Terming the settlement with Barrick Gold Corporation and Antofagasta for the revival of Reko Diq as a ‘major step’, Finance Minister Shaukat Tarin said that the project will generate $100 billion in revenue and boost economic activity in Balochistan.

The federal and provincial governments of Balochistan on Sunday signed a new agreement with Barrick Gold Corporation of Canada for extraction of gold and copper reserves from Reko Diq with an investment of $10 billion.

Under the new agreement, the project will be owned 50% by Barrick Gold and the remaining 50% shareholding will be owned by Pakistan, divided equally between the federal government and the provincial government of Balochistan.

The federal government’s 25% shareholding will be divided equally amongst three state-owned entities (SOEs) – Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL).

On the agreement, Tarin while talking to a private news channel, said that the life of the contract is 40 years. “During its lifespan, the project will generate over $100 billion in revenue, which will boost economic activity in Balochistan,” he said, adding that Reko Diq holds the world’s largest copper reserves, which remained unutilised.

He said that $900 million in settlement would be paid by the investors, “which is beneficial for them as well, as this is a huge project,” Tarin said.

The Reko Diq mine is located in the district Chaghi of Balochistan and is potentially one of the world’s largest undeveloped mine with an estimated copper and gold deposit of around 27,173mn Ibs and 16,098k oz.

Measures bearing fruit: Tarin

On economic fundamentals, the finance minister said that the tightening measures adopted by the government are bearing fruits.

“We were tightening the import bill since November, and the result of the measures was reflected in February, as our imports declined from $6.5 billion to $5.1 billion, registering a drop of $1.4 billion.

“Meanwhile, the exports have risen to $2.9 billion from $2.5 billion, and remittances recorded a growth. Combing all of these figures led to a decrease in current account deficit from $2.5 billion in January to just over $500 million in February,” he said.

Pakistan’s current account deficit registered a massive 78% decline month-on-month, clocking in at $545 million in February 2022, the lowest in the ongoing fiscal year, showed data released by the State Bank of Pakistan (SBP).

Tarin said that the trend would continue in the coming months as well. “We are moving back towards under a billion-dollar deficit, which is a result of economic growth.

“Our LSM sector grew by 8.2% in February, which translates into 7.6% growth in LSM in the seven months of the fiscal year,” he said, adding that the economy is moving towards sustainable growth.

On current inflation figures, Tarin said that the February CPI figure came in at 12.2%, which was mostly due to tomato rates, as it registered an exponential rise in prices.

“If we exclude this, the CPI rate has come down to 10.8%. The good news is that the weekly SPI has dropped by 1.17%, and is expected that the headline inflation would also reduce,” said Tarin.

The story was originally published in Business Recorder on March 22, 2022.