Reko Diq is one of the largest undeveloped copper and gold deposits
Pakistan has reached an out-of-court deal with a Canadian firm that has agreed to waive $11 billion in penalties and revive the Reko Diq mining project stalled since 2011.
After a decade-long legal battle, Pakistani officials announced the out-of-court settlement with Barrick Gold on March 20.
“The agreement has nullified the award of around $11 billion on us and secondly Barrick and its partners will invest $10 billion,” Finance Minister Shaukat Tarin said during a press conference. “It will benefit Pakistan and Balochistan for the next 100 years,” he added.
Barrick Gold will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed with Pakistan’s federal and provincial governments.
Prime Minister Imran Khan hailed the development, syaing the project “will potentially be the largest gold & copper mine in the world”.
“It will liberate us from crippling debt and usher in a new era of development & prosperity,” he said in a statement.
The agreement was reached after several rounds of negotiations over the last three years. In August 2019, PM Khan had set up a committee to steer the negotiations with an aim for the early development of the mines.
New agreement signed
Prime Minister Imran Khan 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.
A new agreement was signed today by representatives of the Federal and Balochistan Governments with a delegation of Barrick Gold, led by Barrick’s president and chief executive officer Mark Bristow.
He hailed the agreement as an important step towards the development and operation of Reko Diq. “This is a unique opportunity for substantial foreign investment in the Balochistan province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come” Bristow said.
50-50 partnership
Under 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% by Barrick Gold and the remaining 50% shareholding shall be owned by Pakistan, divided equally between the federal government and the provincial government of Balochistan.
The federal government’s 25% shareholding shall be divided equally amongst three state-owned-entities (SOEs) of the Federal Government, namely Oil & 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.
Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing 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.
$10 billion investment, 8000 jobs in Balochistan
In developing the project, nearly US$10 billion shall be invested in Balochistan, including US$1 billion to be invested in social uplift projects such as roads, schools, hospitals and the creation of technical training institute for mining.
The investment shall create over 8000 new jobs, the PM Office statement reads. “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.”
Reko Diq is one of the largest undeveloped copper and gold deposits in the world, capable of producing 200,000 tons of copper and 250,000 ounces of gold a year for more than half a century.