ISLAMABAD: In response to Canada’s proposal for an out-of-court settlement of a case surrounding the multibillion-dollar Reko Diq copper and gold mining project, the Balochistan government has expressed its willingness for a reasonable settlement of the years-long dispute.
Tethyan Copper Company Limited (TCC), a joint venture between Chile’s Antofagasta Plc and Canada’s Barrick Gold Corporation, had claimed a penalty of $11.5 billion in the wake of then provincial government’s refusal to award the mining project, but Pakistan dismissed the company’s demand in the international court of arbitration.
It was argued that the compensation claimed by TCC was highly speculative, disproportionate and hundreds of times larger than any amount invested by the claimant.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) had earlier rejected Pakistan government’s application, seeking dismissal of the TCC’s claims on the grounds of corruption and malpractices by the latter.
According to a source, the Canadian assistant deputy minister for Asia had suggested the out-of-court settlement. The federal government conveyed the proposal to the government of Balochistan, which said it would support a reasonable out-of-court settlement.
The previous government of Pakistan Peoples Party (PPP) had tried to settle the dispute with TCC, but to no avail. It also told the Balochistan government that the federal government would not pay any damages in case of an adverse ruling in the international tribunal.
TCC held 75% shareholding in the project located in Chagai district whereas Balochistan had a 25% stake. The company claimed it had 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% of financial obligation according to its share in the project. However, 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 advised against involving Metallurgical Corporation of China in the Reko Diq mining site.
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. The 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.
Balochistan Express, Quetta