Published: July 12, 2017
|Empty trailers for housing workers at the site of the gold and copper mine exploration project of Tethyan Copper Company (TCC) are seen in this undated photo in Reko Diq, in Balochistan, Pakistan.|
ISLAMABAD: An arbitration tribunal of the World Bank has ruled in favor of Tethyan Copper Company Pvt Ltd (TCC) in a case involving the Reko Diq gold mine project in Balochistan. As a result of the ruling, Pakistan may face a penalty of $11.5 billion for not awarding the project to TCC.
The World Bank’s International Center for Settlement of Investment Disputes (ICSID) had earlier rejected Pakistan government’s application to dismiss TCC’s claims on grounds of corruption and malpractices by the latter.
Balochistan wants Chinese helping hand for its mining industry
Both the federal and provincial governments submitted applications before the ICSID and the International Criminal Court (ICC) in The Hague during 2015-16, seeking admittance of new evidence showing TCC’s corrupt practices in Reko Diq affairs for illegal and undue gains.
The move was futile, however, as the court ruled against the government for unlawful denial of the mining lease for Reko Diq to TCC- a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold Corporation.
The arbitration claim had been submitted in 2012 by the TCC. Five years later, in 2017, it filed for compensatory damages amounting to $9.1 billion based on fair market value of its investments in the project till November 15, 2011. In addition, it also filed a claim of $2.3 billion as pre-award compound interest.
The government has to submit its reply to TCC’s damages claims by July 21.
The previous government of Pakistan Peoples Party (PPP) had tried to settle the dispute with TCC but failed. It had also warned the Balochistan government that the federal government will not pay damages in case of an adverse ruling from international tribunals.
TCC held 75% shares in the project while Balochistan had a 25% stake. The company claims it has invested over $500 million in exploration, scoping and feasibility studies on the project. Total investment was projected to be $5 billion over a period of five years.
TCC and Balochistan reached a deadlock in 2009 because of two issues. First, TCC wanted Balochistan to bear 25% financial obligation according to its share in the project. But the province refused to take any financial responsibility.
Second was the purported involvement of a Chinese company in the project. A letter written by Pakistan’s Ambassador to Chile Burhanul Islam to then Petroleum Minister Naveed Qamar in September 2009 had advised against involving Metallurgical Corporation of China in the same mining site.
Not a dime spent on environmental protection
In a feasibility report submitted to the Balochistan government, TCC projected a turnover of over $60 billion for the gold and copper project over a span of 56 years. This projection was based on a price of $2.2 per pound of copper and $925 per ounce of gold, in the year 2009.
The mine has estimated reserves of 11.65 million tons of copper and 21.18 million ounces of gold.
Published in The Express Tribune, July 12th, 2017.
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‘Lack of data on minerals in Pakistan a challenge to sector’s growth’
The Newspaper's Staff Reporter Updated July 05, 2017
ISLAMABAD: Although minerals, including gemstones, have great potential to contribute to Pakistan’s economy, the lack of real data on minerals in the country is one of the fundamental challenges to the sector’s growth, Prof Saleem H. Ali from the University of Delaware said on Tuesday.
Mr Ali, the professor of energy and environment at the University of Delaware in the United States, cautioned that only a careful and practical approach, along with an elaborated strategy, was the key to tapping into the sector.
Mr Ali was delivering a lecture on ‘How Can Minerals Contribute to Pakistan’s Development Path?’ at the Sustainable Development Policy Institute.
Projects under CPEC could support mineral developments in some sectors, US professor says
Referring to the case of Reko Diq gold and copper reserves in Balochistan, he said these mines still offer tremendous opportunities but the right planning and the proper use of technology and expertise is important to benefit from this national wealth.
“The dilemma with any mineral rich country was that such resources offer positive as well as negative impacts,” he said, adding that the rational use of such resources needs a highly thoughtful approach to harness this potential.
Mr Ali highlighted that a detailed formulation of rules and procedure was needed to define the incentives, programmes and capacities related to mineral development projects, or operational consequences could arise after the start of exploration activity.
“To reach at a workable policy and get benefits from minerals in Pakistan several legal requirements are needed, which includes upfront tax incentives, pace of extraction following price or planning for scarcity etc.” He added: “Likewise, the integrity of the environment over the long term and economic viability of the operations must remain core areas of concern.”
He also spoke about the benefits of projects under the China-Pakistan Economic Corridor, saying it would support mineral developments in some sectors, such as the cement industry, while the importance of energy minerals such as coal would also increase.
He said there is also “huge potential for Pakistan to be tapped in the gemstone industry”, adding that Pakistani gemstones are high grade items in commercial foreign jewellery markets.
SDPI’s Dr Imran Khalid earlier explained the importance of the contribution of minerals to the national economy. He said although opinions about the potential and capacity of this sector in Pakistan are diverse, the importance of the sector to the economy could not be ignored.
Published in Dawn, July 5th, 2017