Published: February 23, 2011
Apex court wishes to know if the project violates any defence concerns. PHOTO: ONLINE
ISLAMABAD: The Supreme Court on Tuesday directed the Deputy Attorney General to seek the army’s opinion on the Reko Diq project in light of national security, and inform the court on Wednesday.
A three-member bench of the apex court headed by Chief Justice Iftikhar Muhammad Chaudhary heard a number of petitions challenging the award of the contract to the Tethyan Copper Company (TCC), a Canadian consortium of Barrick Gold and Antofagasta Minerals for exploiting gold and copper in Reko Diq.
“There was no clause in the agreement on the protection of areas geographically sensitive from a defence point of view,” the chief
justice remarked during the hearing. “National Interest and sovereignty should
figure prominently in such agreements.”
The Pakistan army had no objection to mining after a briefing on the agreement, counsel for TCC Khalid Anwar apprised the court. Chaghi is a sensitive area but 20 other companies are operating there, he said, adding that TCC has given an application for a lease licence.
“No licence will be issued until the final judgment of the apex court,” Advocate General Balochistan said, adding he had yet to receive the application.The chief justice asked why the former governor of Balochistan relaxed regulations while awarding the contract for exploration and was informed by the counsel for BHP-Billiton Abdul Hafeez Pirzada that “the agreement was not approved by the Governor but the Balochistan government.”
Published in The Express Tribune, February 23rd, 2011.
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Multi-billion-dollar project placed at the mercy of consortium companies who may walk away with its riches. KARACHI: In what is being described as the most unfair business deal of the decade, the multi-billion-dollar Reko Diq copper-and-gold project has been placed at the mercy of a consortium of companies who may walk away with its riches, robbing the country of a golden opportunity to lift itself out of its growing external debt.
The consortium will take away 75 per cent of the income while the Balochistan government will get a paltry 25 per cent of share from the project as part of the terms of agreement.
Geologists have estimated that Reko Diq contains mineral deposits worth $500 billion and if the authorities did not take action immediately, this golden opportunity of turning around Pakistan’s fate will be lost.
Preparations are believed to be under way to sign agreements for mining and excavation with a consortium of foreign companies without any effort being made to estimate the actual worth of the vast gold and copper reserves found in the Chaghi district of Balochistan. According to geologists the actual worth of the reserves can be upwards of $500 billion. Economists say that the reserves are not only a solution to the nation’s economic woes, but can also help wipe out Pakistan’s debt.
Geologists associated with the Geological Survey of Pakistan had discovered huge reserves of gold and copper in Chaghi and adjoining areas in 1978-79.
After this discovery, international consultants of repute were commissioned to prepare feasibility studies about Saindak under the supervision of the Resource Development Corporation. They included Mountains Estates Enterprises (USA), Cel Trust Engineering (UK), Oto Kumpo (Finland), RTB Bor (Yugoslavia).
But after the Saindak study, instead of appointing international consultants for assessing the value and quantum of Reko Diq reserves, the Balochistan government entered into an agreement in 1993 with an Australian company having vast investments in oil and gas sectors under which 75 per cent of the reserves of Reko Diq were to be given to BHP Billiton, while 25 per cent share was to go to the government of Pakistan.
The drilling work for the feasibility study report was started under this agreement but in 2006, BHP Billiton suddenly sold its shares to Canadian company Barrick Gold which, in turn, sold half of its 75 per cent shares in Tethyan Copper Company (TCC) to Chile’s firm Antofagasta. This means that now Balochistan is owner of 25 per cent share in TCC while Barrick Gold and Antofagasta hold 37.5 per cent share each.
The TCC completed its feasibility report last year and claimed that the feasibility study and social and environmental analysis cost it $250 million while the overall estimate of the project – $3.3 billion – will be spent in the next 56 years.
According to geologists who played important role in the Saindak project, foreign companies make such agreements with developing companies to take advantage of their lack of funds and earn hefty profits by purchasing mineral reserves at throwaway prices.
They said that it was strange that the successful process of Saindak was not replicated in this case.
Analysts said that in Saindak, the drilling was done 91,000 feet deep while the cost was just $20 million while according to the TCC website, drilling on this project was only done till a depth of 21,000 feet.
They also contest the company’s claim about overall cost ($3.3 billion), calling it an exaggerated figure. They said it was not too late to get a consultancy firm hired to conduct a standard study. The services of Pakistani geologists can also be utilized for supervising the drilling work. According to the experts, the Balochistan government is not bound to assign the contract of mining and processing to the same firm which was given the licence for exploration.
Geology expert Dr Suhail M Qureshi said that Deko Riq reserves were being sold at very cheap prices. He said that according to the information received, the average price of gold and copper reserves is agreed to be $4,000 per ton which is too low. He said that an area of 25 square kilometers has been given on a 30 year lease.
Former finance minister Shaukat Tareen said that such conflicts can be averted if transparent procedures are adopted and national interest remains uppermost when concluding agreements for natural resources. He said that all the steps that the government of Balochistan is taking now to make the deal transparent should have been taken much earlier.
He said that according to his information, Reko Diq has the fifth largest reserves of gold and copper in the world and under the raw material agreement Pakistan will get $40 billion in 30 years. He said that if Pakistan makes the agreement for the refining process done in Pakistan, the price and income may increase by 7 to 8 times. He said that according to a safe estimate, the income can be raised to $500 billion.
According to Tethyan Copper Company spokesperson Ms Samia Ali Shah (Manager Corporate Communications) the total investment of the present co-owners of TCC is about $435 million, including the cost of acquisition.
Since 2006, about $220 million has been spent on exploration and technical studies. For mining and processing plant another “$3.3 billion will be required”
According to Ms Shah, once the Supreme Court hands down its verdict and all the negotiations are completed and necessary agreements signed, it will take about four years to build the infrastructure required to make the mine operational.
This means that any income from Deko Riq is not possible before 2015.
She confirmed that TCC is working under the same terms and conditions that BHP and government of Balochistan agreed upon in 1993.
She said that so far the feasibility study and environmental and social impact assessment reports have been completed and these are important milestones in the mining cycle which establish whether the project is financially and technically viable.
Published in The Express Tribune, January 12th, 2011.
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Govt not taking Reko Diq case seriously: CJ
The chief justice was visibly annoyed at the federation, the Balochistan government as well as the Petroleum Ministry for failing to submit their reply in the case.
ISLAMABAD: Chief Justice Iftikhar Muhammad Chaudhry on Monday admonished the government for not taking the Reko Diq case seriously.
The chief justice expressed these sentiments during today’s (Monday) hearing of the Reko Diq case in the Supreme Court (SC). The chief justice was visibly annoyed at the federation, the Balochistan government as well as the Petroleum Ministry for failing to submit their reply in the case.
He observed that the Reko Diq case is an important one but that the government is not taking it seriously.
The Deputy Attorney General informed the court that the government had not received any notice from the court for the submission of the federation’s reply.
The Supreme Court has adjourned the hearing till January 25. It also ordered the petitioners to submit their reply till January 19.
The Supreme Court had last week sought replies from all respondents in the Reko Diq case and decided to conduct a daily hearing starting from February 11.
Pakistan is reportedly likely to incur huge losses if the government signs the 30-year agreement with the company in February. The DG Minerals, ministry of petroleum, has already signed the contract in acceptance of the company’s terms and conditions. Members of the federal and provincial governments have yet to sign the agreement.
The new agreement is to be renewed by the government on expiry of the previous contract on February 11. The project manager of TCC informed the court that his company plans to invest another $3.5 million whereas $460 million have already been invested in Reko Diq.
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I don’t post much on here, but one point I did like from today's Petrohawk / BHP bid was this:
Dow Jones reported that BHP Billiton Limited's USD12.1 billion bid for Petrohawk Energy Corporation should be valued against the gas and oil assets in the ground rather than the company's share price, the chief executive of BHP said.
http://www.reuters.com/finance/stocks/HK/key-developments/article/2364270
LTV
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Reuters
BHP must drill deep to justify $12 bln shale deal
(Corrects gas price unit in paragraph 4)
-- (The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
BHP Billiton has found somewhere its cash is welcome -- U.S. shale gas. The Australian miner will spend $12 billion acquiring producer Petrohawk, building on its $4.8 billion purchase of a shale field in February. BHP generates about $30 billion of cash a year and shareholders should welcome the discovery of an opportunity to reinvest. But the logic of spending so much on shale when gas prices languish below 2008's peak rests on some bullish assumptions.
Shale, the great hope for U.S. energy self-sufficiency, suits BHP. For starters, it's a free market. That counts for a lot after the miner's $39 billion approach to Potash Corp in Canada was nixed by the local regulators. Shale also favours companies with big balance sheets. Petrohawk had some $3 billion of capital expenditure planned for this year, yet expected operating cash flows of around $2 billion. A financing squeeze was weighing on its valuation.
While Petrohawk needed a deal, BHP has paid up to get a recommendation. The premium of 65 percent to the target's prior-day closing price looks generous. But the valuation is in line with other deals, at $0.39 per million cubic feet of gas in the ground. It's a shade lower than BHP's purchase of Fayatteville in February, but for what is clearly a top-class asset. Its exposure to the liquids-rich Permian Basin also gives consolation if gas prices stay low but oil remains high.
Earning a decent return will nevertheless require some heavy lifting. With production of 950 million cubic feet per day, a gas price of $4.50 per thousand cubic feet and an oil price of $90 a barrel, Petrohawk would make around $700 million of operating profit. Tax that at the company's 35 percent rate, and the 3 percent return on investment looks meagre.(deficient in quantity or richness)
950 million cf per day, which includes both oil and gas, is 347 bn cubic feet per year (950 x 365).
89% of that is gas, at $4.5 per 1000 cubic feet, which means gas revenues of $1.4 billion.
11% is oil, at $90 a barrel, equivalent to $15 per thousand cubic feet. So oil revenues are $572 million per year.
Total production revenues are therefore just under $2bn per year.
Petrohawk’s production costs, as reported in Q1, are $3.6 per million cubic feet including depletion charge, total $1.2 billion
Deduct production costs from revenues, and operating profits are just over $700m
Part of the problem is that resource majors have piled into shale and seem content to keep uneconomic projects humming, so prices stay low. A Breakingviews analysis suggests that to juice returns up to a more acceptable 7 percent, BHP would need to grow Petrohawk's production by 150 percent, or gas prices would need to hit $8. Most likely is a bit of both. But even so, Petrohawk's payback will be some way off.
CONTEXT NEWS
-- BHP Billiton announced an agreed deal to buy Petrohawk Energy, a U.S. shale gas producer, for $38.75 a share in cash on July 15. The offer valued the company at $12.1 billion, or $15.1 billion including net debt, and represented a 65 percent premium to the closing price on July 14. 65 percent premium is cash value of offer per share, compared with the closing share price on the previous day.
-- Petrohawk has proven reserves of 3.4 trillion cubic feet of natural gas equivalent, spread across 1 million acres. Its total resource of 35 trillion cubic feet represents a price of $0.39 per unit.$0.39 per cubic feet of gas is the valuation for all of the resource in the ground. It’s not related to the annual production of 950 Mcf per day, but to the total volume of Petrohawk’s gas assets. You just divide the offer price (including net debt) by the total resource size. BHP and Petrohawk outlined this figure in their release.
BHP bought a stake in the Fayetteville shale field in February for $4.8 billion, equivalent to $0.43 per unit.
-- Resource majors have been buying up shale assets, as technology gains have made alternative sources of energy more economical to produce. Buying Petrohawk and Fayetteville would triple BHP's total oil and gas resources, the company said.
-- BHP attempted to buy Potash Corp of Saskatchewan in September for $39 billion, but the deal was blocked by authorities on the grounds it offered no net benefit to the country. BHP had previously attempted to form a joint venture with rival iron ore miner Rio Tinto, but that collapsed after regulators raised objections.
-- Graphics: Global shale deposits: http://link.reuters.com/vyf98r
Shale "fracking": http://link.reuters.com/ryf98r
(Editing by Chris Hughes and David Evans)
((john.foley@thomsonreuters.com))===============Canada worried about Reko Diq investmentBy Owais JafriPublished: December 16, 2011“Canada especially wants to make investment in mining industry, but response from the Reko Diq project is really disappointing,” Canadian Deputy High Commissioner Lajoas Andraaz said. PHOTO: ONLINE/FILEMULTAN: Canadian Deputy High Commissioner Lajoas Andraaz has expressed concern over investment worth $400 million stuck in Reko Diq copper and gold mining project, referring to the money injected by Tethyan Copper, a joint venture between Canada’s Barrick Gold and Chile’s Antofagasta.Early last month, the Balochistan government rejected a mining lease application submitted by Tethyan, which has a majority stake of 75 per cent in the mining project.“We do not have any political objectives in Pakistan, Canada wants an economically viable and strong Pakistan and we will keep supporting it,” said Andraaz during a visit to Multan along with a delegation.He also chaired a workshop on peace-building and interfaith harmony and met different social and political figures.“Canada especially wants to make investment in mining industry, but response from the Reko Diq project is really disappointing,” he said.He referred to a statement of Balochistan chief minister that foreigners would not be allowed to continue work on the project, which the diplomat said was a big worry as Canadian investors had injected $400 million into the project.He stressed that the Canadian government had always aimed to promote economic interests of the people of Pakistan beyond any political means and vested interests.Published in The Express Tribune, December 16th, 2011.
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The real victims in Balochistan!
By Danish Kazi - Feb 24th, 2012 (4 Comments)
5
I still remember the long barren stretches of roads during my trips of Baluchistan. The serenity gave a lot to think about. If I may share, I took the biggest decision of my life whilst on an official trip to the Rekodiq Gold mine project. Amazed as I was of for the black desert parallel to Black Chaghai Mountain, Koh-e-Suleman & Koh-e-Dalil volcanoes. No one told me that this province gives us not only gas but resources like iron ore, zinc, gold & copper etc. It was the night of 13th August whilst on my return to Quetta I heard loud explosions during my dinner in a place called Naushki; that I immediately headed to Quetta only 3 hours or more away. The hours of solitude due to lack of any communications all the way from Taftan to Lakh Pass gave a lot for me to think about.
There were several grenade attacks on 14th of August. I found minimal news on these incidents of serious nature on reaching Karachi. My friend Mr. Mengal told me the reason of these attack is hatred against Punjab. They felt that they were already an independent state in 1947, sense of deprivation, anger because of no access to the money linked to natural resources and top of that the gas reached Quetta only in 1984 though discovered in 1958 at Sui.
I always ascertained that the subsequent governments, establishment and Baloch Sardars were equally responsible for the plight of the poor Baloch brothers. Whilst the governments didn’t do much effort in the most resourceful province as this was a cash cow for them and the local Sardars also didn’t do much as well. I wonder how many hospitals, schools or any other facilities they can boast of?
The other political parties; rich or poor have ploughed back something at least for their people for welfare. It is something else that some are using it now days for their election campaign. Unfortunately, could not see the same done by the famous Sardars like Bugtis and Mengals especially in their areas of influence.
The real victims are the poor & educated Baloch who are no doubt the most deprived. I just met a dear Baloch friend who told me that even though there were over a hundred jobs for telecom engineers in Quetta. One talented telecom Engineer from Quetta had to go to Islamabad for a month if not more to move some strings to get what is rightfully for him; since I am sure there would not be many in the province.
Though Sardars are the important being a tribal society, but I wonder if some efforts are being done to talk to Mr. Allah Yar & co ; a survivor of brutality & who has inspired this movement. The common man has taken up arms to my knowledge like doctors, engineers & lawyers for their rights. I don’t think the Sardars are any more effective to reverse the cycle in Baluchistan; in fact would be afraid to go against the tide.
The time for intellectual APC is gone and it is time for action as rightfully said by Mr. Altaf Hussain. Start resolving the issue by announcing a relief package to the loved ones for the missing persons and by giving rights to the real victims of Baluchistan. The day a common Baloch irrespective of his tribe can get elected to the assemblies would the day the tide would change.
I think in the upcoming elections the Sardars should withdraw themselves from nominating for elections but bring forward the common Baloch to run the province if they are truly sincere to them. I wonder they call them their children on the TV but yet enslave and ruthlessly rule them. Establishment should start reconciliation; if they can talk to baby killers, soldier executors like Talibans why not the Baluch people. Pakistan would have to be patient and would need a big heart to await the resolution. I pray whatever happens the common Baloch people rise as they are the real victims of this decade’s old tyranny.
Danish Kazi
Bloggers Intro
Danish Kazi, a business graduate from Institue of Business Administration, keeps a close eye on the politics activity in Pakistan and wants empowerment of the masses in the country.
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Risk of inflating split-rim tires as was for Barrick-Reko Diq.
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To protect from outsiders, Raisani declares Reko Diq an Export Processing Zone
By Our Correspondent
Published: April 11, 2012
The Chief Minister pledged to use the sovereign right of the people of Balochistan in ensuring the implementation of the plan to exploit copper and gold for the benefit of the people of Balochistan. PHOTO: FILE
QUETTA: The Balochistan Chief Minister on Tuesday proposed that the Reko Diq mining area be declared an Export Processing Zone on the request of Balochistan Government and the Export Processing Authority.
The Balochistan Government is expected to sign a memorandum of understanding with the Export Processing Zone Authority in this regard soon. Samar Mubarakmand had informed Chief Minister Nawab Mohammad Aslam Raisani of the development during a meeting of the Board of Governors of Reko Diq Project in Islamabad. Rasani is the Chairman of the Board of Governors of the Reko Diq Copper and Gold Project.
The Chief Minister pledged to use the sovereign right of the people of Balochistan in ensuring the implementation of the plan to exploit copper and gold for the benefit of the people of Balochistan.
“Whether we remain in government or not, we will leave a valuable asset and a gift for the people of Balochistan and Pakistan in the shape of Reko Diq Copper and Gold Project,” the Chief Minister declared. “It will remain a gift for the people of Balochistan,” hinting at perhaps a continued longevity of the project which may remain unaffected by any change in the Chief Minister House on Zarghun Road.
Raisani said that he had experienced and bore tremendous pressure from various quarters to defend the sovereign right of the people of Balochistan on this Project. He said he and his colleagues would never surrender to those pressures, taking a jibe at the international arbitration to which the Reko Diq is now subject to.
“There was a pressure and demand that we sell this vital economic and prestigious project at a throw away price to interested parties which we refused,” Nawab Raisani said, adding,” some people from the surroundings also tried to create trouble for the Provincial Government and we frustrated all evil designs in this connection.”
Nawab Raisani disclosed that international forces were also opposed to the plan that Balochistan Government operates the project for which they used different means and pressure tactics against the Government. “The project will allow Pakistan to stand on its economic feet without foreign assistance or charity,” he added.
He said that all those elements constantly criticising the government should also appreciate the good work done including the decision to operate Reko Diq Copper and Gold Project in the public sector and not to sell it to a foreign company.
As Chairman of the Board of Governors, Nawab Raisani approved decisions of the past meeting. He also approved a budget of Rs1.8 billion of the project and the revised policy to recruit competent and technical people on various posts.
The Government of Balochistan had also approved the decision to use sub-soil water from the Upper reaches of Tal Ap from where water for the project would be fetched and used.
Dr Samar Mubarakmand also briefed the Chief Minister on the progress so far made on the project. The Geological Survey of Pakistan had pledged to help train manpower for carrying out a drilling survey of the mining areas of the Reko Diq Project. Raisani was also told that the applications received for technical staff were being processed. Chief Minister issued instructions that all recruitment should be made purely on merit and the local people should be given preference over others.
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Fool’s gold?: Reko Diq rift exposes investor risk
By Reuters
Published: February 18, 2012
Tethyan Copper Company (TCC), a joint venture between Chile’s Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit. PHOTO: FILE
ISLAMABAD:
Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the country’s mining sector, but it’s beginning to look more like fool’s gold to the companies involved. The project was expected to yield revenues of at least $60 billion over the 56-year life of the mine.
Tethyan Copper Company (TCC), a joint venture between Chile’s Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year. TCC says it never did get an explanation.
“It’s been difficult to define what their actual issues were,” Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. “We went back to them for clarification, as many of their issues are not covered in the Balochistan Mining Regulations.”
A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was “cheating” Balochistan by under-valuing the worth of the copper and gold.
“They are the monopoly,” the official said angrily. “They are the monopolists of the gold! They don’t want to disclose the worth of the gold in Balochistan.”
The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Balochistan government, meanwhile, has recently handed out 11 exploration permits in the area around Reko Diq to five new Pakistani and Chinese companies with no mining experience.
What’s the deal?
The Balochistan government received a 25 per cent stake in the venture for no money down. Adding in taxes and royalties, the total share of revenues to the provincial and federal governments would come to just over half.
According to documents filed with the Supreme Court, TCC projected the mine would produce at least $60 billion worth of ore over its lifespan based on long-term copper and gold prices of $2.2/pound and $925/ounce, respectively.
Higher spot prices would increase that sum significantly. Based on recent copper and gold prices, the mine would be worth almost $120 billion, with Balochistan getting a quarter of that after operating costs. It is this difference in long-term and spot prices that has led to angry allegations in the media and from Balochis that outsiders are exploiting their natural wealth.
Investment risk
Despite its remoteness, TCC’s Livesey said the project would add “percentage points” to Pakistan’s gross domestic product, which grew at just 2.4 per cent in fiscal 2010-11.
Indeed, the mining sector has been hit especially hard, posting only 0.4 per cent growth last year and contributing just 2.4 per cent of GDP, down from a peak of 2.7 per cent in 2004-5. TCC’s feasibility study alone was already the largest single foreign direct investment in Pakistan’s history.
The rejection of a mining license after an exploration permit had been granted is highly unusual, industry sources say, and has heightened perceptions of foreign investment risk in Pakistan.
The Balochistan government says it rejected TCC’s permit because the company didn’t complete the feasibility study on time and the study did not cover the entire area for which the exploration license had been granted.
But TCC and mining experts say it is normal to submit feasibility studies for a smaller area than originally explored.
Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list.
Published in The Express Tribune, February 18th, 2012.
========= Reko Diq case: Counsel admits Pakistan free to ink accords with foreign firms By APP Published: November 14, 2012 The petitioner had moved an application seeking initiation of criminal proceedings against provincial government for violating May 25, 2011 order of the court. PHOTO: FILE ISLAMABAD: The counsel for a petitioner in the Reko Diq mining agreement issue on Tuesday admitted before the Supreme Court that the government was free to enter into commercial agreements with foreign companies of those countries with which it had no treaties; but such accords will be operated within the framework of Pakistan’s legislation. Syed Raza Kazim, counsel for Dr Abdul Haq Baloch, one of the petitioners, resumed his arguments before the three-member bench including Chief Justice Iftikhar Muhammad Chaudhry. The petitioner had moved an application seeking initiation of criminal proceedings against the provincial government for violating the May 25, 2011 order of the court. Kazim argued that the Tethyan Copper Company Australia (TCCA) was not a mining company and subsequently the Tethyan Copper Company Pakistan (TCCP) was established to undertake the project. The chief justice observed that such agreements will fall within the jurisdiction of the federal government and not of provincial governments. He said the BHP Minerals – a mining company – in 1989 tried exploration in the area but failed and signed an agreement on February 7, 1998 with the TCCA. He questioned under which rules the relaxation was granted as the government was required to be in the picture under the relevant legislation. Kazim replied that the TCCA was not controlling anything in Pakistan as after the year 2000 as it was formally sold out by BHP Minerals to Tethyan’s Pakistan counterpart. The bench adjourned hearing and asked the counsel to conclude his arguments on Wednesday with relevant documents. Published in The Express Tribune, November 14th, 2012. ============= Apex court questions TCCP sub-lease for Reko Diq exploration By APP Published: November 27, 2012 TCCP claims they were allotted a 44,000 kilometere area for exploration. ISLAMABAD: A three-member bench of the Supreme Court on Tuesday questioned how the Tethyan Copper Company Pakistan (TCCP) been given rights by BHP unilaterally without obtaining consent from the Balochistan Government first despite having rights in the project only as a partner of the Joint Venture Agreement (JVA) made for the project in Reko Diq. Reko Diq is a multi-billion dollar project in the area of district Chaghi of Balochistan where millions of tonnes of copper and gold were identified in different reports prepared by world renowned companies. The three-member bench comprising Chief Justice of Pakistan Justice Iftikhar Muhammad Chaudhry, Justice Gulzar Ahmed and Justice Sheikh Azmat Saeed resumed hearing on the pending issue of grant of mining lease over exploration of gold and copper reserves in the Reko Diq area. Khalid Anwar, counsel for TCC said that Balochistan Government had enhanced the area for exploration of minerals and awarded contract for 44,000 kilometer area instead of 13,000 kilometer in its own interest. He added that the provincial government had failed to explore gold and copper reserves in the area. The counsel said that the foreign company has invested large amount of funds for exploration during the last ten years. Justice Gulzar said that the Balochistan government was not a part of amendments made in the license since there was no stamp of the governor on the agreement. Anwar responded that the Balochistan Government never refused that document either. The Chief Justice remarked that there was nothing on record that the governor had approved it and added that the governor was bound to follow the advice of the Chief Executive under PCO. Advocate General Amanullah Kanrani informed the court that TCCP had received documents before government of Balochistan and departments concerned. He said that he himself got copies from TCCP while original documents were in TCC’s custody and added that if the documents are produced before the apex court, a separate case could be registered against the company. The Chief Justice asked Anwar that the amendment on which he was depending should be checked for its authenticity. Kanrani told the court that the Balochistan government had no record. Anwar said that the Chief Minister had sent a summary with amendments for approval in May 1999 and it was included in the Balochistan Government documents presented to the apex court. The Chief Justice though observed that the summary was not approved but it was suggested that a committee should be formed to look into the matter. The Chief Justice remarked that the court knew validity of every document and added that the Balochistan government is part of this case and we could not exclude it from the case. The bench adjourned further hearing till Wednesday by advising TCCP’s counsel to conclude his arguments on Wednesday. ============== Myanmar protesters occupying mine ignore order to end rally Hundreds of Buddhist monks and villagers occupying a copper mine in northwestern Myanmar refused to leave by Wednesday. The protesters have set up six camps at the site and said they will stay until the project is halted. They blasted the Letpadaung mine near the town of Monywa for causing environmental, social and health problems, the AP reported. The project is a joint venture of a Chinese firm and a company controlled by Myanmar's military. Myanmar authorities had ordered protesters to cease their occupation of the mine or face legal action. ================= Reko Diq case: Supreme Court seeks lease documents from Balochistan government By Our Correspondent Published: November 28, 2012 Apex court aims to ascertain legality of contracts between Balochistan govt, mining companies. ISLAMABAD: The Supreme Court has sought documents of the Reko Diq mining lease agreement from the Balochistan government to ascertain the legality of the contracts between the Balochistan Development Authority (BDA) and international mining companies on Tuesday. A three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, was hearing identical petitions against the Balochistan government’s decision to lease out gold and copper mines in Reko Diq in Chagai district to foreign companies. Khalid Anwar, the counsel for Tethyan Copper Company Pakistan (TCCP), asked why the BHP and the provincial government entered into a new agreement in 2000 over the Reko Diq mining lease when an original agreement, known as CHEVJA, had already been signed with the BHP in 1993 – this agreement was eventually bought by the TCC. “Our interest is ensuring transparency in terms of law,” remarked Justice Chaudhry. “We do not go into issues pertaining to the transaction agreement between the parties. But we look into whether the agreements are valid,” he added. Anwar also informed the court that as many as 10 prospecting licences were issued to the BHP while the TCCP had spent millions of dollars on compiling a project feasibility report – which would go to waste if the agreement with the TCCP was cancelled. He also pleaded that no proficient engineer was available in Pakistan to handle the Reko Diq mining lease operation so his client had paid a huge amount of money to foreign engineers. Justice Gulzar Ahmed pointed out that the agreement has been signed by the BDA, not by the Pakistan government. Anwar responded that many agreements are signed by either a section officer or a deputy secretary on behalf of the government and the BDA was authorised by the then provincial governor to do so in accordance with the law. The chief justice replied that the agreement was made under the instructions of such a senior provincial functionary, but there was no mention of a date on the agreement and the governor cannot issue such directives to sign any addendum. “Tell us the importance of this agreement under Pakistani law. We also need the validity of every document in this agreement,” Justice Chaudhry remarked. The bench asked Khalid Anwar to complete his arguments and adjourned the hearing of the case till today (Wednesday). Published in The Express Tribune, November 28th, 2012. ================ Fool's Gold? Pakistan mine rift exposes investor risk Fri, Feb 17 01:52 AM EST 1 of 4 By Chris Allbritton ISLAMABAD (Reuters) - Pakistan's Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the country's mining sector, but it's beginning to look more like fool's gold to the companies involved. Set in one of the bleakest places on earth, a Baluchistan desert at the foot of an extinct volcano, Reko Diq was expected to yield revenues of at least $60 billion over the 56-year life of the mine. Tethyan Copper Company (TCC), a joint venture between Chile's Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit in the ochre sand desert, where temperatures reach 130 degrees Fahrenheit in the summer. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year. TCC says it never did get an explanation.
"It's been difficult to define what their actual issues were," Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. "We went back to them for clarification, as many of their issues are not covered in the Baluchistan Mining Regulations."A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was "cheating" Baluchistan by under-valuing the worth of the copper and gold.
"They are the monopoly," the official said angrily. "They are the monopolists of the gold! They don't want to disclose the worth of the gold in Baluchistan."The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Baluchistan government, meanwhile, has recently handed out exploration permits in the area around Reko Diq to new Pakistani and Chinese companies with no mining experience. Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list. WHAT'S THE DEAL? Reko Diq was supposed to be a model of public-private partnership and a means to lifting an impoverished area where Baluch insurrectionists have long operated. The Baluchistan government received a 25 percent stake in the venture for no money down. Adding in taxes and royalties, the total share of revenues to the provincial and federal governments would come to just over half. "From my experience, 25 percent to the government is extremely generous and it's not normal," said Vivienne Lloyd, a senior consultant at the U.S.-based Copper Research Group. According to documents filed with the Supreme Court, TCC projected the mine would produce at least $60 billion worth of ore over its lifespan based on long-term copper and gold prices of $2.2/pound and $925/ounce, respectively. Higher spot prices would increase that sum significantly. Based on recent copper and gold prices, the mine would be worth almost $120 billion, with Baluchistan getting a quarter of that after operating costs. It is this difference in long-term and spot prices that has led to angry allegations in the media and from Baluchis that outsiders are exploiting their natural wealth. "The picture that emerges is one of a grand deception, loot and plunder that never happened before on such a scale," the News daily said. "And the facts, untruths, half-truths, attempts to sabotage, frauds and back-door bribes, are all documented." The Baluch official was more succinct: "They corrupted our people, they corrupted our nation and for 18 years they looted our money." The Tethyan Copper Company was originally established 18 years ago in 1993 under a different partnership. SANDY MOUNTAIN Reko Diq, which means "Sandy Mountain" in Baluch, is part of the Tethyan Magmatic Arc, a crumple in the earth created by collisions of the African, Arabian, Indian and Eurasian tectonic plates. It contains massive deposits of copper and gold ore of varying grades in a belt stretching from Romania through Turkey, Iran, Pakistan and Afghanistan all the way to Papua New Guinea. The site in Pakistan today is a boulder-littered moonscape of rust-colored dunes, extinct volcano domes and a whipping wind that sends a fine-grit dust over the scattered settlements in the area. There are few towns, fewer roads, no electricity or running water, and almost nothing grows there. The only way in or out is by chartered plane on a private airstrip. TCC's exploration site is like an abandoned moon colony: converted shipping containers and white trailers meant to house workers line up neatly under the baking sun, but stand empty. TCC has laid off about 240 of its 270 workers, but if the mine goes forward, it plans to employ 11,000 people within two years. That seems unlikely now. Alongside the lonely trailers, cavernous warehouses with corrugated steel roofs hold thousands of trays containing rods of compressed earth -- core samples that testify to the riches underfoot. In all, the planned $3.3 billion investment would have included a 1,000-metre-deep open-pit mine, a processing facility, a project village for employees and a 682-km underground pipeline to Gwadar port on the Arabian sea to carry slurry concentrate to a dedicated marine terminal. The village would include schools and cricket pitches, a mosque, health clinics, a library, a public square, restaurants and markets, and even a 189 MW power plant. INVESTMENT RISK Despite its remoteness, TCC's Livesey said the project would add "percentage points" to Pakistan's gross domestic product, which grew at just 2.4 percent in fiscal 2010-11. Indeed, the mining sector has been hit especially hard, posting only 0.4 percent growth last year and contributing just 2.4 percent of GDP, down from a peak of 2.7 percent in 2004-5. "Most mining projects in Pakistan, they suffer from lack of research or lack of management," said Dr Farid Malik, a geologist and former chairman of the Pakistan Science Foundation, explaining the need for foreign investment. Political turmoil and other uncertainties hanging over the $175 billion economy risk deepening the steady attrition of foreign direct investment, which plunged 40 percent to $594 million in the first seven months of the 2011/12 fiscal year. TCC's feasibility study alone was already the largest single foreign direct investment in Pakistan's history. The rejection of a mining license after an exploration permit had been granted is highly unusual, industry sources say, and has heightened perceptions of foreign investment risk in Pakistan. "There is potential ... for multiple mine developments over the next few decades," Livesey said. "By refusing a mining license without good grounds, it's sending quite a negative signal to the exploration/mining community." TCC has filed cases with the International Court of Arbitration in London and the World Bank's International Centre for the Settlement of Investment Disputes. If the courts find in its favour, Pakistan could face billions of dollars in damages. DIGGING UP THE PAST The origins of the dispute go back to 1993, when Australian mining company BHP Billiton and the government of Baluchistan signed a joint venture agreement that set up the Tethyan Copper Company, with BHP getting a 75 percent share of any mineral wealth found. In 2006, Barrick Gold and Antofagasta acquired TCC, taking an equal share each. The Baluch government kept its original quarter share. The new owners soon found signs of the immense deposits. Once word of the billions below ground appeared in the media, an avalanche of lawsuits followed. Last May, the Supreme Court directed the local government to "expeditiously decide TCC's application for the grant of mining lease transparently and fairly." In November, Baluchistan made its decision. It rejected the license -- but not before granting 11 exploration permits for sites surrounding TCC's Reko Diq area to five hastily established Pakistani and Chinese companies with no previous experience in mining. All five companies were created and attained their licenses in the four months following the Supreme Court's May order. "Why should (Baluchistan government) give away 75 or 50 percent of a multi-billion-dollar resource when it can keep everything?" lawyer and arbitration expert Feisal Naqvi sarcastically asked on his blog, Monsoon Frog. The Baluchistan government says it rejected TCC's permit because the company didn't complete the feasibility study on time and the study did not cover the entire area for which the exploration license had been granted. "These were the grounds that we made for the licensing authority to reject the application for the mining lease," said Ahmer Bilal Soofi, who represents the Baluch government. But TCC and mining experts say it is normal to submit feasibility studies for a smaller area than originally explored. In a bid to head off arbitration, the provincial government and a number of nationalist political parties have filed suit in the Supreme Court to have the original deal declared illegal. Soofi says the 1993 agreement was tainted by corruption. The official who signed the original deal, Athar Jaffar, was later convicted of having assets beyond his means and was sentenced to seven years in prison, he says. Though Jaffar's conviction was not related to the deal signed with BHP, "you can infer corrupt practices," he said. Jaffar could not be located for this report, nor could Soofi's statements be verified. THE CHINA SYNDROME Further complicating the story are the Baluchis themselves. Traditionally proud and martial, they are fiercely suspicious that outsiders - including the rest of Pakistan - are out to steal their mineral and energy resources. They have valid reasons to worry. For years Baluchistan has languished near the bottom in literacy, electric power, infant mortality and other social indicators; its natural gas and mineral riches went to the wealthy, populated parts of Pakistan. "They've been exploited so many times in the past," said Malik. "Now they see so much light at the end of the tunnel ... and they think they're not getting their fair share." The Baluchis have staged five uprisings since the province was incorporated into Pakistan in 1948, each time demanding more control over their natural resources. Because of this, some analysts speculate that the powerful Pakistani army sees Reko Diq as a strategic resource and hopes to keep the mineral wealth out of the hands of the Baluchistan government, in case separatist political parties win provincial elections. The army, acknowledging Pakistan's inexperience in large-scale commercial mining, might also want to bring China into the picture. China is the world's largest consumer of copper, has experience in large-scale mining, and has a record of building infrastructure in exchange for resources in developing countries. "Everywhere I look, there are indications of Chinese interest in developing this area, more than Barrick Gold could," said Shamila Chaudhary of Eurasia Group. The Chinese government-owned Metallurgical Construction Corp (MCC) already runs the nearby Saindak Copper-Gold Project, and submitted a counter-proposal to develop the Reko Diq mine during a visit to Pakistan by Chinese Prime Minister Wen Jibbao in December 2010. Pakistan media say MCC's proposal was similar to TCC's, but was sweetened with a larger share of the royalties going to the government. This was after TCC had submitted its feasibility report. MCC has not commented on those reports. TCC is still hoping for a negotiated settlement outside arbitration, but Chaudhary thinks its parent companies are looking to cut their losses. "From what I hear on the Barrick Gold side ... they're looking to come to closure on this issue," she said. (Additional reporting by Qasim Nauman in ISLAMABAD and Faisal Aziz in KARACHI; Editing by John Chalmers and Bill Tarrant) ================== Mining lease case: SC to announce Reko Diq verdict on Jan 7 By Peer Muhammad Published: December 21, 2012 Main petitioner Tariq Asad contended the Reko Diq mining lease was tainted by corruption and urged the bench to direct concerned authorities to take action against TCC. ISLAMABAD: After hearing all sides in the Reko Diq case, the Supreme Court (SC) reserved its judgment on Friday, saying it will issue a short order on January 7, 2013. The three-judge apex court bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, after concluding hearings of the case, observed it will announce a verdict ‘in accordance with the law and the Constitution of Pakistan’. Several identical petitions had been filed in the SC against the lease of gold and copper mines in Reko Diq to the Tethyan Copper Company (TCC) – a consortium of Canada-based Barrick Gold and Chile-base Antofagasta Minerals. TCC had invoked the jurisdiction of the International Chambers for Commerce and International Centre for Settlement of Investment Disputed against the government of Pakistan for not renewing the prospective Reko Diq minerals licence in accordance with Balochistan Mining Rules 2002. During Friday’s hearing, main petitioner Tariq Asad contended the Reko Diq mining lease was tainted by corruption and urged the bench to direct concerned authorities to take action against TCC. Meanwhile, amicus curiae (a person who, despite not being a party to a case, offers unsolicited information which has a bearing on that particular case) Raza Kazim suggested that the court form a commission under a retired apex court judge to resolve the matter. The bench reserved its ruling after Khalid Anwar, TCC’s counsel, concluded his arguments. The counsel for copper mining company BHP, Abdul Hafeez Pirzada and the counsel for the Balochistan government, Ahmer Bilal Sufi, had already concluded their arguments earlier. ============= SC terms Reko Diq mining lease ‘illegal’ By Web Desk Published: January 7, 2013 The court announces short verdict, admits applications against Tethyan Copper Company. PHOTO: FILE ISLAMABAD: The Supreme Court of Pakistan termed the lease of gold and copper mines in Reko Diq to Tethyan Copper Company (TCC) “illegal”, reported Express News on Monday. The court had reserved the 16-page judgement in the case on December 21, and announced the short verdict today. The court also accepted applications to hear against TCC. Several identical petitions had been filed in the SC against the lease of gold and copper mines in Reko Diq to TCC – a consortium of Canada-based Barrick Gold and Chile-base Antofagasta Minerals. TCC had invoked the jurisdiction of the International Chambers for Commerce and International Centre for Settlement of Investment Disputed against the government of Pakistan for not renewing the prospective Reko Diq minerals licence in accordance with Balochistan Mining Rules 2002. Reko Diq is a multi-billion dollar project in the area of district Chaghi of Balochistan where millions of tonnes of copper and gold were identified in different reports prepared by world renowned companies. ================ Sport Business Magazines Culture Blogs Balochistan rejects reports about $11.5bn penalty in Reko Diq case Saleem ShahidUpdated July 18, 2017 2 1 QUETTA: The Balochistan government has rejected reports that Pakistan might face a penalty of $11.5 billion after an international tribunal of the World Bank ruled in favour of Tethyan Copper Company (TCC) in the Reko Diq gold mine case. A spokesman for the Balochistan government on Monday said the International Centre for Settlement of Investment Disputes (ICSID) had not awarded the verdict and therefore all reports appearing in the media and social media were wrong and misleading. He said the losses claimed by the TCC, a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold Corporation, were exaggerated and against the ground realities. The TCC has argued that Pakistan abused its discretion in denying, without any legal basis, the company’s mining application in 2011 after it had spent a substantial amount of money on mining exploration and feasibility studies for around 10 years. Subsequently, the TCC initiated arbitration proceedings before the ICSID against the Pakistan government under a bilateral investment treaty with Australia. The spokesman said that on behalf of the federal government, Balochistan was contesting the claim at appropriate forum with the help of legal experts. A team comprising the attorney general for Pakistan and international legal experts was preparing a rebuttal to the TCC claims which would be filed in the next hearing, he said. “The court had already suspended the quantum proceedings on the request of Pakistan.” He said the provincial government had objected to a member of the tribunal set up under the ICSID and the court had accepted its plea for hearing. He advised the people in general and the media in particular to avoid speculative stories on the issue. Published in Dawn, July 18th, 2017 =============== Decision in Reko Diq case not final ruling, says AG Nasir IqbalUpdated March 24, 2017 ISLAMABAD: Attorney General Ashtar Ausaf on Thursday claimed that the International Centre for Settlement of Investment Disputes (ICSID) — a World Bank-funded tribunal — had accepted Pakistan’s evidence against the international firm over the terminated Reko Diq mining contract. However, he contended that ICSID had declined Pakistan’s request to dismiss financial claims by the Tethyan Copper Company (TCC) over the termination of a multimillion dollar mining lease in Balochistan, adding that the case would therefore proceed. “The order by the tribunal of March 20 states that the tribunal has admitted Pakistan’s evidence on the record,” Mr Ausaf explained in an announcement issued by the AG’s office, admitting that the tribunal had not dismissed the TCC’s claims. Ashtar Ausaf says WB-funded tribunal has turned down govt request to dismiss TCC’s $400m claim Pakistan had adopted the plea that the agreement/mining licence at Reko Diq was procured through corrupt means and, therefore, the claimant (TCC) cannot ask for damages. The tribunal took up the dispute between Pakistan and the TCC after the latter’s application was rejected by the Mining Authority of Balochistan. The Supreme Court, in January 2013, had declared void the Chagai Hills Exploration Joint Venture Agreement, signed between the Balochistan government and Australian mining company BHP in 1993. After the decision, the BHP sold its stakes in the venture to TCC. TCC had invoked the jurisdiction of ICSID against the prospective Reko Diq Minerals Licence, claiming a loss of investment amounting to $400 million. the TCC is a Canadian and Chilean consortium of Barrick Gold Corporation and Antofagasta PLC, formed to explore gold and copper at Reko Diq — a small desert town in Chagai, Balochistan, that sits over the Tethyan copper belt and is known for having the fifth largest deposits of gold and copper in the world. The AG explained that the recent ICSID tribunal order was not a final order or award in the matter of TCC versus Pakistan. “It is part of a series of orders issued at the end of each distinct phase of the hearing,” the AG explained, adding that the tribunal’s order had been issued at the end of a phase where Pakistan presented evidence of alleged corruption by TCC and its representatives. In Sept 2015, Pakistan had filed an application requesting the tribunal to dismiss the claims by TCC on grounds of corruption. Pakistan presented detailed evidence of corrupt practices by TCC in relation to its investment in the Riko Diq project, the AG stated. This order brings to an end the “corruption” phase and it will now proceed with the “quantum” phase. Explaining further, the AG stated that in this phase, the claimant (TCC) will now present its case for the value of compensation it seeks for terminating the licence. Pakistan will rigorously contest any amount claimed by the claimant, AG said, adding that the final liability, if any, would be determined at the end of quantum phase. The ICSID system, he explained, also provided for “annulment” of an award and other remedies and options were available to Pakistan within and outside of international arbitration, which it continues to consider fully. Pakistan reserves the right to challenge the validity and enforceability of any order passed by ICSID tribunal, he said. Published in Dawn, March 24th, 2017 =========================================
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