Pakistan is sitting on a gold mine
The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world.
The Canadian and Chilean gold mining companies dropped their $5.9 billion damage claim against Pakistan after Islamabad gave them the contract for the fifth-largest gold mine in the volatile province of Balochistan.
In mid-December 2022, the Pakistani government, Barrick Gold, and Antofagasta PLC inked an agreement in London that handed the mining corporations half of the ownership rights of the Reko Diq gold mines in Pakistan’s northeastern Balochistan province, with the remaining half belonging to the federal and Balochistan provincial governments. The agreement calls for the "reconstruction of the Reko Diq project and the settlement of $11 billion in claims" after the country's Supreme Court makes a decision in their favor and the parliament passes the necessary laws.
A press release of Barrick Gold Corporation issued on Tuesday, January 31, said the government of Balochistan has received the inaugural $3 million payment under the revised Reko Diq agreement. Ali E. Rind, country manager for Reko Diq Pakistan, stated that the project is expected to employ approximately 7,500 people at its peak construction phase and approximately 4,000 permanent roles once production commences.
Barrick indicated that Reko Diq would be a conventional open pit and milling operation that would generate a high-quality copper-gold concentrate. It will be developed in two phases, beginning with a factory that can handle around 40 million tonnes of ore per year, which might treble in five years after the first phase's production commences.
Mark Bristow, president of Barrick Gold, claimed in October last year that the company desired the Pakistani government to provide legal protection for Barrick's investment in Pakistan and ratify the Reko Diq gold and copper transaction with the parliament and Supreme Court for legal fortification. He said that Barrick is still negotiating with the government about the legal structure of the deal and the laws they want to pass. This is because they want the legislature and the Supreme Court to look over the deal to make sure the investment will be successful in the long run.
He told the media that the expert teams from Barrick and Pakistan were reportedly in the process of finalizing the substantive agreements underlying the framework agreement. Once this is done and all of the legal steps have been taken, Barrick will go back and change the first feasibility study. This is expected to take two years, he said.
In response to Barrick Gold's demands, Pakistan's parliament passed the Foreign Investment (Promotion and Protection) Bill 2022 on a war footing in December 2022. This bill gives foreign investments that have been approved by the government full protection and immunity, paving the way for the Reko Diq gold project to be restarted. The bill authorized the government to provide as many incentives as it thought necessary to qualified investors. The federal government cannot remove these incentives, nor can it modify the legislation to do so.
The statute exempts qualified investors from all taxes, duties, and levies, including income taxes, sales taxes, capital value taxes, customs duties, export duties, federal excise duties, and property taxes. The rules state that the future government will not be able to impose additional taxes and fees, nor will it be able to advocate for local or community welfare funds. It stipulates that whatever is granted to a classified investment cannot be revoked in the future by any legislative or judicial authority. In addition, investors will enjoy "banking transaction confidentiality," except for anti-money laundering investigations, and tax authorities will not be able to examine investor accounts to discover the source of funds under this law. The country's highest tax authority, the Federal Board of Revenue (FBR), is unable to probe anything within these protected accounts operated under a qualifying investment.
Before coming to an agreement with the TCC last year, Pakistan asked the highest court to review the mining agreement with the TCC.
The Supreme Court of Pakistan authorized the settlement agreement between the government and two foreign corporations in December last year. The Supreme Court ruled that restarting the Reko Diq mining project was permissible and that the mining corporation had agreed to adhere to corporate social responsibility and labor regulations. The reconstitution procedure for the Reko Diq project has been conducted openly and with great diligence. The judgment states, "The agreements are being signed by authorities that are legally authorized and qualified to do so." The reconstitution procedure for the Reko Diq project has been conducted openly and with great diligence. The judgment states, "The agreements are being signed by authorities that are legally authorized and qualified to do so."
In 2013, the same court ruled that the Reko Diq agreement was invalid and against the country's laws. In its judgment, a three-judge bench of the country's highest court, led by Chief Justice Iftikhar Muhammad Chaudhry, determined that the deal made on July 23, 1993, violated the country's laws. The court added that all post-signing alterations to the agreement were unconstitutional and in violation of the agreement. In its order, the court declared that the TCC had lost all rights under the Reko Diq deal.
Prior to Pakistan’s apex court ruling against the TCC, the mining companies had filed a claim with an international arbitration panel in 2011 against Pakistan for sustaining financial losses as a result of the cancellation of the contract for the Reko Diq mining project. In July 2019, the International Center for the Settlement of Investment Disputes (ICSID), an arbitration panel run by the World Bank, fined Pakistan $5.9 billion for taking away a gold-copper exploration license held by Tethyan Copper Company (TCC), a joint venture between Barrick Gold Corporation of Canada and Antofagasta PLC of Chile.
Beginning in 2021, a court in the British Virgin Islands authorized the seizure of Pakistan's properties in the United States and France to recoup losses allegedly incurred by mining corporations. The court began proceedings to attach the Roosevelt Hotel in New York and the Scribe Hotel in Paris to recover the $5.9 billion in damages claimed by the mining company.
Reko Diq goldmine
Reko Diq is a small desert village in the Balochistan district of Chagai, 70 kilometers northwest of Naukundi and close to Pakistan's border with Iran and Afghanistan. This region is situated within the Tethyan belt, which extends from Turkey and Iran to Pakistan. Reko Diq, which in Balochi means "sandy mountain," is also the name of an extinct volcano.
The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world. The mine is in a small desert area in the northeast of Balochistan, near the border with Iran and Afghanistan.
600,000 tons of concentrate produce an estimated 200,000 tons of copper and 250,000 ounces of gold on a yearly basis. The annual profit from the mines is estimated by the TCC to be approximately $1.14 billion for copper and $2.50 billion for gold, totaling $3.64 billion annually. Independent estimates suggest the number is as high as $500 billion, which is significantly higher than the TCC's estimation of $200 billion.