The federal and provincial government of Balochistan have signed a new agreement with Barrick Gold Corporation of Canada for extraction of gold and copper reserves from Reko Diq with an investment of US$10 billion.
According to the Prime Minister Office, PM Imran Khan on Sunday witnessed the signing ceremony between the federal government, the government of Balochistan and Barrick Gold Corporation of Canada after successfully resolving the longstanding dispute with Tethyan Copper Company (TCC) concerning the development of copper and gold mines in Chagai, popularly known as the Reko Diq dispute.
A new agreement was signed by representatives of the federal and Balochistan governments with a delegation of Barrick Gold, led by Chief Executive Dr. Mark Bristow. As per the terms of the new agreement, the Reko Diq project would be revived and developed by Barrick Gold in partnership with Pakistani entities. The new project will be owned 50 percent by Barrick Gold and the remaining 50 percent shareholding will be owned by Pakistan, divided equally between federal government and the provincial government of Balochistan.
Federal government’s 25 percent shareholding will be divided equally amongst three state-owned-entities (SOEs) – Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL). Balochistan’s share will be held by a company wholly owned and controlled by the government of Balochistan.
As part of the prime minister's vision for Balochistan, the government of Balochistan’s share of capital and operating expenses for the project will be borne by the federal government which means the provincial government would not incur any expenses in development of the mines.
For developing the project, nearly US$ 10 billion would be invested in Balochistan, including US$ 1 billion that will be invested to socially uplift the area, including roads, schools, hospitals and the creation of technical training institutes for mining.
The investment will create over 8000 new jobs. This project will make Balochistan the largest recipient of foreign direct investment in Pakistan and the Reko Diq project will be one of the largest copper and gold mining projects in the world. To ensure optimal utilisation of nation’s mineral wealth the government is also considering setting up a smelter.
The agreement was reached after several rounds of negotiations over the last three years. In August 2019, the prime minister had set up a committee to steer the negotiations with an aim for early development of the mines. In this effort, the federal and provincial governments were assisted by international advisors.
To ensure the deal is compliant with all the laws, the government would submit the matter before the parliament and the Supreme Court. While speaking at the occasion, the Khan stressed on the emphasis his government places on development of Balochistan and on the uplift of underdeveloped areas.
He expressed hope that the investment will change the quality of lives of ordinary citizens in Balochistan. He appreciated the efforts of the negotiating team for a transparent and favourable agreement for the people of the province.
Earlier, the delegation of Barrick Gold Corporation called on Khan. Canadian High Commissioner to Pakistan Wendy Gilmour was also present.
Later, addressing a news conference Finance Minister Shaukat Tarin along with the Minister for Energy Hammad Azhar and Chief Balochistan Abdul Quddus Bizenjo stated that that an award of $5.9 billion was given against Pakistan with per day fine of $700 million. Along with that London Court of Arbitration also opened a case against government of Balochistan and $4 billion dollar is ready against Pakistan.
Tarin said that if the government had not reached an agreement, Pakistan would have to pay $11 billion. He further stated that after since 2019, the prime minister started working on a solution for the problem and an Apex body was formed which made a deal with previous company at $900 million which nullified their claim of $3.25 billion.
The finance minister said that Barrick Gold would continue in the project with 50 percent share, adding that 25 percent has been given to the Balochistan without taking any money from the province and remaining 25 percent shareholders are SOEs – PPL, OGDCL and GHPL.
The minister said that this deal has nullified $11 billion damages and Barrick and other partners would invest $10 billion in the project. Not only will Balochistan benefit from the project for 100 years to come but it will also create at least 8000 jobs. The income flow of the project is more than $100 billion and the Balochistan and federal government will receive taxes and royalty. He also credited Prime Minister Imran Khan for bringing the issue to a close and said it would not happen if Khan was not in power, he said.
However, federal minister Hammad Azhar said that extraction of Reko Diq, biggest gold and copper reserves of the world, will now start and all doors to litigation have been closed and damages and process of attaching Pakistan foreign properties would end now.
He said that PPL, OGDCL and GHPL would pay $900 million and would be shareholders of 25 percent. He said that last time Balochistan government share was 15 percent, adding and Pakistan single largest investment of $10 billion would be made in the province of Baluchistan. He said that this is not the only thing the present government led by Prime Minister Imran Khan has done but before this Karkey Company award was done away with, FATF blacklisting was avoided whose 32 points out of 34 are complete now and IPPs agreements were renegotiated. He said to make this agreement more comprehensive, the agreement would also be submitted in the Supreme Court and Parliament, as well.
The story was originally published in Business Recorder on March 21, 2022.
