The government of Pakistan successfully negotiated an out of court settlement of the Reko Diq project on a framework that provides for the reconstitution of the project in Balochistan.
The project, which was suspended in 2011 due to a dispute over the legality of its licensing process, hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits.
“I congratulate the nation and people of Balochistan on successful agreement with Barrick Gold for development of RekoDiq mine after 10 years of legal battles and negotiations. Penalty of approximately $11 billion is off set, $10 billion will be invested in Balochistan creating 8,000 new jobs,” says Prime Minister in a tweet.
He added: “RD will potentially be the largest gold & copper mine in the world. It will liberate us from crippling debt & usher in a new era of development & prosperity.”
The reconstituted project will be held 50 percent by Barrick and 50 percent by Pakistan stakeholders, comprising a 10 percent free-carried, non-contributing share held by the government of Balochistan, an additional 15 percent held by a special purpose company owned by the government of Balochistan and 25 percent owned by other federal state-owned enterprises.
A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties.
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 finalise and approve definitive agreements, including the stabilisation 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. If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce.
Barrick’s president and chief executive officer Mark Bristow hailed the agreement as an important step towards the development and operation of Reko Diq and a tribute to the decisions of all parties to work towards a mutually beneficial outcome in a spirit of partnership.
“Barrick has successfully partnered with host countries worldwide and our philosophy of sharing the economic benefits our mines generate equitably with core stakeholders is also evident in the ownership structure of the new 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. In addition to local employment and skills development, local procurement, infrastructure upgrades and improved medical and education systems, Reko Diq could also be the springboard for further exploration and other mineral discoveries along the highly prospective Tethyan Metallogenic Belt,” he said.
On closing, Barrick will start a full update of the project’s 2010 feasibility and 2011 expansion prefeasibility studies, which envisaged a conventional truck-and-shovel open pit operation with comminution and flotation processing facilities producing a high-quality copper-gold concentrate. Bristow said that if all went according to plan, Reko Diq could be in production within five to six years.
Pakistan’s government was actively engaged with Australia’s Tethyan Copper Company (TCC) to reach a settlement as the country was threatened with facing a penalty due to its decision to deny a mining lease to TCC.
The Attorney General for Pakistan (AGP) office, especially International Disputes Unit Head Additional Attorney-General (AAG) Ahmed Irfan Aslam, mainly negotiated the Reko Diq deal. AAG Ahmed Irfan had earlier successfully negotiated the deal in the Karkey case, in which Pakistan faced a billion-dollar fine.
Located in the Chaghi District of Balochistan in Pakistan, Reko Diq is a large copper and gold deposit containing 12.3 million tons of copper and 20.9 million ounces of gold in inferred and indicated resources. A further 14 mineralised porphyry bodies are known to exist, with the potential to place Reko Diq as one of the world’s largest undeveloped copper projects.