The mineral reserves were discovered at the foot of an extinct volcano called the Reko Diq mines in the western province of Balochistan along Pakistan’s borders with Iran and Afghanistan.
The Pakistan government has announced the resolution of a 12 years old dispute on mining gold and copper in the country.
The mineral reserves were discovered at the foot of an extinct volcano called the Reko Diq mines in the western province of Balochistan along Pakistan’s borders with Iran and Afghanistan. Reko Diq, meaning sandy peak in the Balochi language, is a small town in the Chagai district in Balochistan.
The government had leased the mines in 2006 to the two companies with mining giants Antofagasta plc of Chile and the Canadian mining company, Barrick Gold Corporation.
The agreement reached provides a framework for the reconstitution of the Reko Diq project that has been suspended since 2011.
The renegotiated agreement reconstitutes the shareholding of the project by drawing a pathway for Antofagasta to exit the project. Antofagasta will receive US$ 900 million in settlement and will be replaced by the Pakistani parties.
The agreement was suspended in 2011 due to a dispute over the legality of its licensing process. As a result, the International Court of Arbitration levelled US$ 6.4 billion award on the government of Pakistan while on the same time the London Court of Arbitration also imposed another US$ 4 billion fine on Pakistan.
The arbitration penalties had stirred emotion in Pakistan. Balochistan Senator Sanaullah Baloch said, “Multinational companies, having all the patronage and resources, use international arbitration institutions to avail out-of-the-way benefits and challenge the very fundamentals of the sovereignty of institutionally weak nations.”
The companies have now waived this penalty. In return, the Barrik Gold Corporation’s share in the project has been hiked to 50 per cent, up from 37.5 per cent earlier.
Addressing a hurriedly called press conference along with the Energy Minister Hammad Azhar and Chief Minister Balochistan Mir Abdul Quddus Bizenjo on Sunday, Pakistan’s Minister for Finance and Revenue Shaukat Tarin said that the Canadian corporation will invest some US $ 10 billion. This would create 8,000 new jobs for the local population.
Reko Diq is part of a huge gold and copper reserve, while there are many similar reserves in the area.
The reconstituted project will be held 50 per cent each by Barrick and Pakistani stakeholders.
Barrick will be the operator of the project upon being granted a mining lease, exploration licence, surface rights and a mineral agreement stabilising the fiscal regime applicable to the project for a specified period.
“The process to finalize 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,” a press release from Barrick said.
The issue of mining rights in Balochistan’s tribal region has caused much unrest in mineral-rich region.