Barrick Gold (ABX.TO), has ended a long-running dispute with Pakistan and will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed on Sunday. Under the out-of-court deal, an $11 billion penalty slapped against Pakistan by a World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest $10 billion in the project, Pakistan Finance Minister Shaukat Tarin said. The Reko Diq project in southwestern Pakistan, which hosts one of the world’s largest undeveloped copper and gold deposits, was suspended in 2011 after Pakistan denied Barrick Gold and Chile’s Antofagasta (ANTO.L) a licence to develop it. Barrick said in a statement it will operate the project which will be granted a mining lease, exploration licence and surface rights.
In a separate statement, Antofagasta said it had agreed to exit the project as its growth strategy was now focused on the production of copper and by-products in the Americas.
“The new project company shall be owned 50% by Barrick Gold. The remaining 50% shareholding shall be owned by Pakistan, divided equally between Federal Government and the provincial government of Balochista,” a statement from the office of Prime Minister Imran Khan said after the signing ceremony in Islamabad.
Meanwhile, Prime Minister Imran Khan on Sunday witnessed the signing ceremony between the Government of Pakistan, 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 shall be revived and developed by Barrick gold in partnership with Pakistani entities. The new project company shall be owned 50 percent by Barrick Gold. The remaining 50 percent shareholding shall be owned by Pakistan, divided equally between federal government and the provincial government of Balochistan.
Federal government’s 25 percent shareholding shall be divided equally amongst three state-owned-entities (SOEs) of the federal government, namely Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL). Balochistan’s share shall 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 shall be borne by the federal government. In other words, the Government of Balochistan shall not incur any expenses in development of the mines and its share of expenses shall be borne by the federal government.
In developing the project, nearly USD 10 billion shall be invested in Balochistan, including USD one billion that shall be invested in social uplift projects such as roads, schools, hospitals and creation of technical training institute for mining.
The investment shall create over 8000 new jobs. This project shall make Balochistan the largest recipient of foreign direct investment in Pakistan and the Reko Diq project shall be one of the largest copper and gold mining projects in the world. To ensure optimal utilization of nation’s mineral wealth the government was also considering setting up a smelter.
To ensure the deal was compliant with all the laws, the government shall submit the matter before the parliament and the Supreme Court.
While speaking on the occasion, the prime minister stressed upon the emphasis his government placed on development of Balochistan and uplift of underdeveloped areas. He expressed hope that the investment would mark the beginning of large scale investments in Balochistan that should change the quality of lives of ordinary citizens in Balochistan. The Prime Minister appreciated the efforts of the negotiating team for a transparent and favourable agreement for the people of Balochistan.
Earlier, delegation of Barrick Gold Corporation called on the Prime Minister. Canadian High Commissioner to Pakistan Wendy Gilmour was also present.
Later, Minister for Finance and Revenue Shaukat Tarin Sunday said Governments of Pakistan and Balochistan, Antofagasta plc, and Barrick Gold Corporation have reached agreement in principle on a framework to reconstitute the Reko Diq project, and a pathway for Antofagasta to exit the project.
Addressing a hurriedly called press conference along with the Energy Minister Hammad Azhar and Chief Minister Balochistan Mir Abdul Quddus Bizenjo, the minister said after the new development, Pakistan would not only avoid the $11 billion penalty but also get an opportunity of exploring the world’s largest gold and copper reserve. He said some $10 billion would be invested under this project which would create 8000 new jobs for locals.
