Out Line of International Business Final Project

Submitted To:

Mr. Ansir Ali Rajput

Submitted By:

Group leader: Zeeshan Akhtar (MBA123026) Members: Junaid Khalid (MBA123021)

M.Noman jamil (MBA123019)

Topic:

Reko Diq
Date:22-3-2013

Introduction:
Reko Diq is a small town in Chagai District, Balochistan, Pakistan, in a desert area, 70 kilometres north-west of Naukundi, close to Pakistan's border with Iran and Afghanistan. The area is located in Tethyan belt that stretches all the way from Turkey and Iran into Pakistan. Reko Diq is a remote location in the North-West of Chagai district. Chagai is a sparsely populated western desert province of Balochistan. It is mostly low relief and thinly populated desert. The weather of Chagai ranges from very hot summers of 40-50C to very cool winters of up to -10C with less than 40 mm precipitation (winter rain and minor snow). It also exhibits periods of high wind and dust/sand storms which have a demobilizing impact on the local activities and trade. Access to the Chagai district is via the Zahidan - Quetta highway also known as the London Road. The Reko Diq area is part of the Tethyan Magmatic Arc, extending through central and southeast Europe ( Hungary, Romania, Bulgaria, Greece) Turkey, Iran and Pakistan through the Himalayan region into Myanmar, Malaysia, Indonesia and Papua New Guinea. It contains wealth of large copper-gold ore deposits of varying grades. The eastern and central sections of the belt are well recognized hosting world class mineralization such as Grasberg, Batu Hijau in Indonesia, Ok Tedi in Papua New Guinea and Sar Cheshmeh in Iran. Whereas in the eastern Europe it host world class porphyry/epithermal cluster of Bor, Majdanpek in Serbia and more recent developments include Skouries and Olympias Greece, and Copler in Turkey. Reko Diq area is one of many eroded remnant volcanic centers in the Chagai volcanic chain of mountains which runs in an east west line across Balochistan between the Quetta to Taftan railway and the border with Afghanistan. TCC has identified a large low grade copper-gold resource at Reko Diq. According to the 1998 census the population of Chagai District was 202,562, along with approximately 53,000 Afghan refugees. The population of Chagai District was estimated to be over 250,000 in 2005. Over 50% of the people of the area are Muslims. According to Dr. Samar Mubarakmand (Member Science & Technology, Planning Commission of Pakistan) Geological Survey of Pakistan had discovered the Reko Diq reserves way back in 1978. Reko Diq, which means sandy peak in Baluchi language, is also the name of an ancient volcano.

Reko Diq, is famous because of its vast Gold and Copper Reserves and its believe to be the world 5th largest gold mine.

Importance & Finances:

The Reko Diq Mining Project is a US$ 3.3 billion investment project that promises to build and operate a world class copper-gold open-pit mine in the northwest area of Balochistan. The project has an estimated mine life of 56 years. The annual production of the TCC Reko Diq project is estimated at 200,000 tons of copper and 250,000 ounces of gold from 600,000 tons of concentrate. In order to achieve this production rate approximately 110,000 tons of ore shall be processed daily. High-efficiency mining techniques and cutting-edge technology shall be used to achieve economic feasibility for the TCC Reko Diq project. According to the extensive technical and financial studies undertaken, in order to secure optimal economies of scale efficiencies, and lower mining and processing costs, a large scale, state of the art mining and processing unit is required at Reko Diq. TCC brings with it the technological edge and proven expertise of its parent companies, Barrick Gold and Antofagasta Minerals, for making Reko Diq project the first ever large scale copper and gold mine in Pakistan.

Setup of Mining Operations:

The next steps to advance the project will be taken by TCC as soon the mining lease is granted, followed by project financing and construction of ancillary infrastructure to make the mine operational. The TCC Reko Diq Project shall consist of 4 main operations components: An open-pit mine. A processing facility. A concentrate pipeline to transport the product from the mine site to the port of Gwadar and a dedicated marine terminal facility at the port for storage and transfer to shipping vessels for supply to smelters throughout the world. A project village for TCC employees.

Mining Technique Used:

The mining operation at Reko Diq is modelled on an open pit mine utilizing a conventional truck and shovel technique. This means that giant mechanical shovels shall be used to dig out the copper ore which shall then be loaded onto 360 ton trucks that will then haul tons of copper ore on a daily basis from the mine to the processing facility. At the processing facility the rocks (ore) shall be crushed in giant crushers. This crushed ore shall then be transferred to a finegrinding stage where it will be converted into a powdered form. This powder, containing small quantities of copper and gold shall pass through a separation process called flotation, resulting in a 30% concentrated slurry of copper and traces of gold. This concentrate is the final product of the Reko Diq Mining Project which shall then be transported to the Gwadar port in Balochistan via a 682 km long underground slurry pipeline. This will be the longest pipeline in the world transporting copper concentrate. The scope of operations at the Gwadar port shall be limited to receiving, de-watering, storing and ship-loading concentrate for onwards selling to smelting units globally. In order to keep the process running round the clock the average mining rate will be about 293,000 tons per day of ore and waste and, at this rate, the open-pit mining will continue for 46 years, thereafter the ore processing will continue for another 10 years utilising the ore stockpiles created over the years during the mining operation. In the processing plant about 110,000 tons of ore per day will be processed through flotation process. The plant will produce approximately 600,000 tons of copper concentrate a year, which will contain 28-31% copper and 722 g/ton gold. That translates to about 200,000 tons copper and 250,000 ounces of gold per year.

Mining Technique Deployed:

The Reko Diq mine will employ state-of-the-art mining equipment, support systems and maintenance practices. To operate this project latest technological innovation will be introduced, putting the Reko Diq project at the cutting edge of technology. This will include 360 tons haul truck equipped with computer controlled engine management systems, and the Reko Diq process plant will be one of the only few hard-rock mines in the world to apply High Pressure Grinding Rolls (HPGR) between crushing and milling. Use of latest technology is critical to create efficiencies in the processes to make Reko Diq a long term economically viable project.

Training and Technology Transfer:

Significant skill and technology transfer shall take place during the life of the mine in Balochistan. TCC is committed to skill development and training of local employees to ensure that indigenous capabilities develop along with the technology transfer. TCC has on-site training

programs for its employees and off-site training opportunities are provided within training institutes in Pakistan and also abroad.

TCC has an integrated training program comprising a basic skills development module and a specialist vocational training module. The Basic Skills Development Module shall focus on development of basic safety, team and leadership skills-set in order to support a safe, collaborative and positive work environment. This module shall accommodate maximum candidates and act as a feeder program for the specialized vocational training module. The selected trainees from the Basic Skills Module shall be inducted into the Vocational Training Module. Specialist training across trades required within the mine development and mining operations phases shall be imparted to the selected trainees. Specialized training shall include electrical, mechanical, construction, heavy equipment operations and an array of other technical skills essential to the project.

The Basic Skills Development will commence prior to the start of construction and continue throughout the life of mining operations. This shall be followed by the Vocational Training Module in preparation for the construction phase and finally, the operational-readiness training programs will prepare selected employees for running the mine after commissioning. The maintenance and repairs contracts shall expose the local service providers to world class technology and state-of-the-art-equipment. This will help flourish and advance the locally and nationally available technical capacity, improve academic and vocational training curriculum and eventually improve employability and mining industry standards.

Ancillary Infrastructure Development:

Pipeline The concentrate produced at the processing plant will be further fluidized into a 53-57% slurry and transported to the Gwadar port via a pipeline. The main features of the pipeline are: 1. Underground pipeline 682 km from Reko Diq connecting to Gwadar port. 2. Three booster stations will be established along the route. 3. Leak detection equipment will be installed and the pipeline will be encased in concrete at river crossing.

Power Plant From mining to the processing of the ore requires considerable amount of electricity. Since there is no power supply in the area, the project will have its own power supply. A 189 MW power plant is planned to be built at the site to provide uninterrupted supply of electricity for the project, ancillaries and the residential colony. Heavy furnace oil based combined cycle reciprocating engines will be to be installed to provide 99.5% availability Port A number of facilities will be built at Gwadar port in order to handle the concentrate for its final shipment for export. These include: De-watering facilities and pressure filters; wherein concentrate is removed from the slurry. Warehouse consisting of a covered shed which will store the dried concentrate. Conveyor belt arrangement to transport the concentrate from storage yard to the shipping berth. Ship-loader to load the ship with the concentrate cargo. Project Village Due to long life of Reko Diq Project, TCC will build a permanent village to provide lodging at the camp site for Reko Diq workers. Design of the proposed village takes into consideration the local social and cultural milieu. This village will accommodate up to 10,000 persons during construction phase and up to 3,000 for operations phase. Local materials and labour will be used for the construction of this village at a sheltered location, 10 km from mine site to reduce wind, dust and noise. The facilities include: Education and sports facilities Mosque Clinic and library Public square Semi private courtyards for after hours socializing Dining halls and retail outlets

Bus shelters

Firm says ready to address Balochistans concern

Chief of the Tethyan Copper Company Pakistan (Pvt) Limited has said his company is aware of the reservations expressed by the Balochistan government over the multi-billion-dollar Reko Diq gold and copper project and is ready to address them. We submitted a feasibility report about the project in August this year and are still waiting for a response from the government, TCC Chief Executive Officer Gerhard Von Boris said at a press conference here on Friday. He said the provincial government would have a permanent member in the board of directors of the company and access to financial details. Mr Boris said that TCC had invested $450 million and drilled 300,000 metres over the past four years in Reko Diq, Chagai district, for preparing the feasibility study. More than 50 per cent of free cash flow will go to the federal and Balochistan governments in the form of royalty, taxes and proportionally distributed profits, he added. He said that prices of gold and copper were highly volatile and for evaluation of such a project average long-term prices were determined by independent analysis. Mr Boris said that 90 per cent jobs had been earmarked for local people; 11,500 jobs would be provided during construction work. Besides, 2,500 locals would be given permanent jobs. He said that a separate village with all facilities would be set up for employees.

CM denies signing deal with Chilean consortium

Balochistan Chief Minister Nawab Aslam Raisani has said the provincial government has not signed any agreement with a Chilean consortium of companies for mining in Reko Diq area of Chagai district. When no agreement has been signed then how can one say that Reko Diq reserves have been sold at throwaway prices, Nawab Raisani asked, referring to allegations made in some media reports. Talking to journalists, the chief minister said he and his cabinet colleagues could not even think of selling the provinces natural resources in a reckless manner.

He said the people of Balochistan were the real owners of its natural resources. My government will not compromise on the rights of the people of Balochistan and will take all possible steps to protect their interests. Nawab Raisani clarified that an agreement had been signed by the previous government with a Chilean company for the survey of the area and exploring the resources and no new accord has been signed by the present provincial or federal government. The company had been given the rights of exploration and not copper and gold mining.

Another Reko Diq in North Waziristan

Nuclear scientist Dr Samar Mubarakmand has said copper and gold reservoirs are also located in North Waziristan. He revealed this while delivering his keynote address at the ninth convocation of the Government College University (GCU) here on Friday. Dr Mubarakmand, who has recently been elected unopposed as president of the Old Ravians Union, said Pakistan was one of the richest countries in the world in terms of mineral reserves and there was a need for proper exploration of these reserves. If we take steps in the right way, Pakistan will become a developed rich state in next two decades, he said. According to the recent evaluation, he said, the copper and gold reservoirs in Balochistan were worth US $273 billion while a similar kind of reserves had also been discovered in North Waziristan. Dr Mubarakmand said coal reserves were also available in powder form under water and Pakistan could produce 50,000 megawatt electricity and 100 million barrel diesel just through the gasification of these reserves. He said the talented students had already carried out a successful project to make diesel from the coal gas at the laboratory level. He said Pakistani students were competent enough to explore and utilise mineral reservoirs of the country. There was a need of thousands of mathematicians, chemical analysts, engineers and other experts for exploration of mineral reserves at commercial scale, he said. However, he regretted that Pakistan had a very small number of educational institutions of higher education that were producing quality manpower.

The scientist said out of 140 experts, who carried out nuclear explosions in 1998, as many as 60 were Old Ravians and their team leaders who pressed the button for explosions was also a Ravian. He advised the students that the country could not wait more for quality leaders. Now, the youth should lead and work for the progress of its country, he said. Criticizing the nationalization policy of 1970s, he said that it stalled the countrys progress. Speaking on the occasion, GCU Vice-Chancellor Prof Dr Khalid Aftab said the absence of quality education was the real cause of the overall social decline in the country. He said the poor quality education gave birth to general stagnation that over the time might produce unmanageable problems as was evident in the present society. He said only a few educational institutions were imparting quality education to students, adding that higher education in Pakistan had a class bias against students of the low-income strata. Later, Dr Mubarakmand presented medals and degrees to position-holders. The university awarded medals to its 22 best students for their outstanding performance in academic work and co-curricular activities, while doctorate degrees were conferred upon 31 scholars in various subjects. As many as 167 students were awarded M.Phil degrees.

Balochistan able to run Reko Diq project: CM

Welcoming the decision of the Executive Committee of the National Economic Council (Ecnec) to hand over the Reko Diq copper-cum-gold project to Balochistan, Chief Minister Nawab Aslam Raisani said here on Friday that the province had adequate resources, manpower and technical expertise to run it. He told reporters the provincial government would set up a refinery and install equipment to run the project. The chief minister said he would meet Dr Samar Mubarakmand, the chairman of the Reko Diq Project Steering Committee in Islamabad on Dec 14 and a technocrat will be soon appointed as project director. There is no dearth of technical people in the province for running the project. He said technical training institutes were working in Quetta, Gwadar and other areas and more were being set up in Mastung, Khuzdar and Dera Murad Jamali. The chief minister said his government had allocated

Rs1 billion for the refinery and the federal government would pay Rs120 billion Gas Development Surcharge, which would help it finance the project. He said a Chilean company had been awarded a licence for exploration and mining and refinery were not part of the agreement. Replying to a question, he said that the company would be paid for the exploration work. Nawab Raisani said a committee headed by Chief Secretary Ahmed Bakhsh Lehri would deal with the transfer of five federal departments to the province.

Consortium revises offer to secure Reko Diq lease

With the Balochistan government seeking a financially better deal, the Tethyan Copper Company (TCC) Pakistan, a consortium of Chilean and Canadian companies, has made a revised offer to secure a mining lease and production sharing agreement with the provincial government for commercial production at Reko Diq, one of the worlds biggest copper-cum-gold reserves in Chagai district. This has come amid a high-profile controversy over the value of the deposit and concerns that a high-value national resource was being handed over to foreign firms for negligible returns to the province. Having proven mineral resource of 5.9 billion tons established through a bankable feasibility study, the Reko Diq also attracted Chinese, Russian and American companies to secure the high-value natural resource. Sources said a Chinese firm, which is engaged in the production of copper and gold at a much smaller reserve, expressed a desire to compete for the project as late as during the recent visit of the Chinese prime minister to Pakistan. The federal government, however, decided not to oblige. The chairman of Board of Investment, Salim Mandviwala, said the Reko Diq will stay with TCC. The Chinese will get new concessions which are available to all. Sources told Dawn that the revised offer had come after a meeting between Balochistan Chief Minister Nawab Aslam Raisani and chief executive of the TCC, Gerhard Von Borries, in which the provincial leader sought improved offer that corresponded better to aspirations of the government and people of Balochistan. According to a revised proposal, the TCC has offered to raise $600 million loans to fund the provincial governments 25 per cent share of the capital contribution for equity participation at no interest to start mine development. About $100-125 million interest cost of the loan would therefore be picked up by the TCC owned equally by Barrick Gold of Canada and Antofagasta of Chile. Under the Chaghi Hills Exploration Joint Venture Agreement (CHEJVA) signed in 1993 and revised in 2006, the Balochistan government was to raise this amount at Libor plus two per cent interest rate.

The project needs about $3.3 billion to be raised from the international market to make it a commercial success. About $230 million have been spent on project exploration over an area of 585 square kilometers, proving the project was commercially viable. The government did not invest during the exploration phase. The TCC has also offered to give up the Balochistan governments share of the management fee of the project that roughly provides another saving of about $25 million to the province. In another relaxation in loan repayment, the consortium said the Balochistan government would be entitled to start receiving dividends once net profits commenced and would have to allocate half of its dividends towards the repayment to TCC of the principal amount of the loan, extending the loan repayment period beyond eight years envisaged under the original agreement.

Mubarakmand opposes foreign role in Reko Diq

The Supreme Court was informed on Wednesday that the country could earn $2 billion per year by developing the Reko Diq copper and gold project on its own much higher than a paltry return of $160 million offered to the Balochistan government by a consortium of Chilean and Canadian companies. Pakistan is possessed with the expertise and technology to explore and refine the precious metals an investment which will help the government earn $2 billion per annum, nuclear scientist Dr Samar Mubarkmand, chairman of the board of governors of Reko Diq Copper Development project, said in a presentation to a three-judge bench seized with petitions challenging a contract awarded to Tethyan Copper Company (TCC) for exploring gold and copper. The bench, comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday, is hearing identical petitions filed by Barrister Zafarullah and Advocate Tariq Asad. Barrister Zafarullah also moved a contempt petition against the TCC for carrying out advertisements in the print media, although the matter is before the court. Dr Mubarakmand wondered if Pakistan could develop nuclear technology by reducing defence budget, why could it not develop mining technology. It would also help boost foreign exchange reserves and establish the downstream industry, the scientist said while talking to reporters. This technology is similar to uranium mining. The digging process will also help excavate a number of precious minerals, including zirconium and cobalt, he said, adding that about 400

square kilometres of land had been leased out to the foreign firm, but it had dug only six to seven sq-km over the past three years only two to three per cent of the total area. Dr Mubarakmand said that mines in Reko Diq had 0.025 per cent reserves of precious metals. The country, he said, had the capability to process these metals. He said the foreign firm would fetch an estimated profit of $104 billion from the digging site. Right now the firms owners wanted to ship the extracted raw mineral outside the country for refining. The scientist informed the court that the total copper requirement of the country was one ton a year, but whatever copper was excavated from the Saindak copper and gold project had been exported. Not a single kilogram went to the local industry, he lamented. He rejected allegations that Balochistan was not sharing the projects feasibility report with the federal government. Irshad Ali, Director General of Minerals in the petroleum ministry, defended the project and said the allegations levelled by the petitioners were unfounded. No violation of rules or policy has been breached by the government at any stage, he told the court. He recalled that the Balochistan government had in 1993 entered into an agreement with Broken Hill, a foreign company, for exploration of mineral reserves, of which 25 per cent of shares as profit was to go to the province while the federal government reserved the right to levy cess. On Sept 3, 2007, the then prime minister had constituted a five-member committee comprising federal secretaries to attract foreign companies, but it failed to reach any decision as the firms interested in the project were not ready to give more than two per cent share as royalty while the governments demand was five per cent. Dr Zubair Khan, an adviser to the TCC, claimed that a large quantity of precious deposits had been lying idle for years, but these were discovered only after exploration by the company. The TCC invested at a time when other investors were running away because of security concerns, he said, adding that future of the country, especially Balochistan, would brighten only if those bringing investment were appreciated, encouraged and protected. The shareholding given to the Balochistan government from the project will be unprecedented. The TCC has already invested $200 million and negotiations for a $1.3 billion loan have been

finalised with banks. The total size of the project is $3.3 billion, of which only $1.5 billion is required to develop necessary infrastructure, the TCC adviser said. Justice Ramday said that banks would lend the money only after securing interest. Dr Zubair said that everybody would take a big share if the cake was big. He said that it was a wrong impression that the company would take away ready-made solid gold bricks from the mining site, adding that only a paltry amount of gold which could produce a small gold ring had been extracted from five trucks loaded with raw ores. Would we be able to see the face of copper and gold dug out from the site as ores would be taken outside the country in liquid form, Justice Ramday asked. When the chief justice asked whether the foreign firm would also set up downstream industries in Pakistan, the adviser replied in the negative. We are a mining and exploration company, Dr Zubair said, but added that the company would transfer technology by training the people of Balochistan. Dr Zubair claimed that the Balochistan government had restrained the company from sharing the feasibility report conducted by a Canadian firm when the chief justice asked whether the TCC had shown the report to the federal as well as provincial governments and the apex court. Government not serious about Reko Diq case: CJ Chief Justice Iftikhar Chaudhry expressed anger on Monday at the failure of the Balochistan government and the federation on failing to submit a reply in the Reko Diq case. The Supreme Court adjourned the hearing until January 25 and ordered the petitioners to submit their responses by January 19. The Chief Justice said that the Reko Diq case was very important and all eyes worldwide were on it. He said that the government was not taking the case seriously. On the request of Watan Party leader Barrister Zafarullah, the court has also issued a notice to foreign company Tethyan Copper Company.

Inconsistent policy blamed for lack of investment

First it was just the Balochistan government that was pushing for termination of the contract one of its predecessors had signed with Tethyan Copper and Gold Company (TCC) for Reko Diq. This was followed by a court case and then politicians jumped into the fray.

A group of senators has announced its support for the idea that the mining of gold and copper at Reko Diq be done by Pakistanis instead of TTC. Such incidents lend credence to the words of people such as this senior diplomat who commented: The greater hurdle [to foreign investment in Pakistan] is the inconsistent policies of the government. He said this as he explained that he would like to encourage better business relations between his country and Pakistan, but could not because of the flip flops in the state`s policies. His are not merely the words of an outsider. In private conversations, senior government officials and those working for the private sector in the auto industry, energy, mining, manufacturing and oil and gas sectors have expressed the same views. Inconsistent policies are the greater evil. Abbas Bilgrami, the managing director of the country`s first Liquefied Petroleum Gas (LPG) terminal, said that due to the sudden change in government policies, he was even planning an exit from the scene. Policy makers invited us to enter the energy market of the country in 2001; the policy was conducive and we had international investors too, he said. But the LPG pricing formula was changed in Dec 2006 by OGRA and another change in the policy in Jan 2009 resulted in a loss of up to $200 per ton LPG for the importers as it gave leverage to local produced LPG which is cheaper. The state of the art LPG terminal at Port Qasim was established by his company at a cost of $30 million in 2004; its current value is around $120 million, but the facility remains under-utilised despite a severe LPG shortage in the country, because importing LPG is not feasible under the current pricing regime.

In a report the Overseas Investors Chambers of Commerce and Industry has highlighted seven factors related to declining investments in the country five of them are directly or indirectly related with policies and regulations, Thee factors are `Business Environment,` policy and regulation, federal budget, while the law and order and availability of utilities are at fifth and sixth places and the performance of the ministry and regulatory bodies is also part of the list. Responding to the LPG terminal case, minister for investments, Salim Mandviwala, explained that Most decisions in the past were taken through the SROs and these can be withdrawn easily.

He claimed that the present government was bringing regulatory changes and would also present a Specialised Economic Zones Act to the Council of Common Interests. And then the minister also added that his government did not change policies as had happened in the past. Yet, under the incumbent government the refining sector has lodged a complaint to the petroleum ministry that the collective loss faced by most of the petroleum refineries in the country exceeds Rs2 billion in the past few months. Gradually the government has been changing the petrol pricing formula since 2008 and we faced a loss of more than Rs2 billion after the one per cent incidentals on petrol have been withdrawn, said Aftab Husain, Deputy Managing Director, PRL. While the ECC decision to deregulate petrol , which was linked with withdrawal of one per cent incidental, has not been implemented. According to official figures, the refining sector faced a 134 per cent drop in foreign investment in the six months of the current fiscal year over the same period in 2009. This is why, analysts point out, no major international player has entered the local fuel and electricity scene despite the high demand for fuel and electricity. In fact, some go so far as to say that such figures will get worse in the wake of the state`s flip flops on investments like Reko Diq.

Balochistan chief secy summoned in Reko Diq case

The Supreme Court on Wednesday summoned Balochistans former and current chief secretaries along with record of the licenses issued to a foreign company, allowing it to explore gold and copper deposits in the province. The former and incumbent officials were summoned during a hearing of petitions challenging the award of a contract to the Tethyan Copper Company (TCC) a Canadian consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chagai district of Balochistan. The apex court bench hearing the petitions comprised Chief Justice Iftikhar Mohammad Chaudhry, Justice Mohammad Sair Ali, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday. The court issued notices to 26 Senators, including former minister Azam Khan Swati, after approving a petition seeking to make them party in the said case.

The court said the case was too important and that provincial representatives be present during the proceedings. The court also ordered Advocate General Balochistan to bring a record of the license awarded to TCC.

Judicial intervention not negative for foreign investment: Justice Ramday

During a hearing of the Reko Diq case in the Supreme Court on Tuesday, Justice Khalilur Rehman Ramday said the courts intervention will not have a negative impact on foreign investment in the country. The apex court heard a number of petitions challenging the award of the contract to the Tethyan Copper Company(TCC) a Canadian consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chagai district of Balochistan. Foreign companies should understand that the judiciary in Pakistan is independent and therefore they can consider themselves safer in this situation, Justice Ramday remarked. He further said that the Reko Diq contract was signed when a caretaker government was in place, adding that it appeared that the contract was finalised in a day.

SC issues stay order in Reko Diq case

The Supreme Court on Thursday issued a stay order against the leasing of the Reko Diq reserves located in Balochistan until a verdict was reached on the case, television reports said. The apex court has been hearing petitions challenging the award of a contract to the Tethyan Copper Company (TCC) a Canadian consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chagai district of Balochistan. The court bench hearing the petitions comprised Chief Justice Iftikhar Mohammad Chaudhry, Justice Mohammad Sair Ali, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday. During hearing, Barrister Zafarullah stated that awarding public property to a foreign company was tantamount to plotting against the country. The court subsequently restrained the Balochistan government from issuing licenses to any company until a final verdict was reached on the case.

TCC counsel tells SC BHP was ready to sell licence for $100

A counsel representing the Tethyan Copper Company (TCC) startled the Supreme Court on Thursday when he said the BHP, the company which had first come to explore copper and gold deposits at Reko Diq in Balochistan, offered to sell its prospecting licence to a new buyer for a paltry sum of $100 after having wasted 10 years and spent millions of dollars and achieving nothing. The BHP lost interest after getting zero results from EL-5 (Reko Diq) despite spending millions of dollars and went out in the market to hunt for a prospective buyer by offering for $100 the prospecting licence it got from the Balochistan government, Advocate Khalid Anwar said before a three-judge bench. But Chief Justice Iftikhar Mohammad Chaudhry observed that nobody would accept this because God forbid fools are not sitting here, because certain interests were always there behind such deals. You cannot even buy a shirt from `Marks and Spencer` for $100, not even a common shirt, what to talk of an exploration licence, the chief justice said. He was heading the bench hearing a set of petitions filed to block the award of a possible copper and gold exploration contract to TCC a Canadian and Chilean consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chaghai district of Balochistan that sits over what is known as the Tethyan copper with the fifth largest deposits of gold and copper in the world. Khalid Anwar said the BHP was selling the prospecting licence for $100 to another firm in its own interest but with a condition that the interested party would work at the site for six months and if it discovered certain precious deposits, the BHP would then enter into an alliance with it by sharing profits from the venture. The court again asked Balochistan Advocate General Amanullah Kinrani to have a detailed discussion with the Balochistan chief minister and the chief secretary because the provincial government had already awarded so many concessions to the foreign firm. Whatever the BHP said, the Balochistan government accepted, the chief justice said, adding that it was for the provincial government to take a final decision in this regard. The court is only concerned with the legal aspect of the matter, like examining the validity of the rules and the joint venture agreement (JVA) between BHP and the Balochistan Development

Board (BDA). Otherwise the court would decide the controversy on merit, the chief justice said, adding that the court was not competent to look into the matter which was not its domain. In June 1993 the BDA and BHP, and a number of experts, had entered into the joint venture agreement which was approved by the then chief minister of Balochistan. During the proceedings when Khalid Anwar said that no allegation of corruption had ever been levelled against the BHP although such allegations were levelled against the present provincial as well as the federal governments, the Balochistan advocate general said that Atta Mohammad, who had signed the agreement with the BHP on behalf of the BDA, was a known corrupt person and was dismissed from the job on corruption charges. This prompted another BHP counsel Abdul Hafeez Pirzada to suggest to the advocate general to become a petitioner instead of being a respondent pleading the government`s point of view. Khalid Anwar, citing rules, tried to establish that being the holder of the exploration licence, his client`s company reserved the legal right to ask for mining lease rights and that the TCC had already applied for that on February 19. The Supreme Court has already stayed the Balochistan government from issuing a lease to any exploration company till its final decision, although companies could apply for it. Khalid Anwar said that attempts were made by the petitioners to get judges` sympathy by giving the impression that loot, plunder and corruption were committed by foreign companies. He also said that although he had enormous respect for nuclear scientist Dr Samar Mubarkmand, but whatever he said before this court about a project was not his position but that of the Planning Commission from which the commission subsequently backed out. Dr Samar Mubarkmand had told the apex court on Jan 12 that the country could earn $2 billion a year by developing the Reko Diq copper and gold project in Balochistan on its own several times more than a paltry return of $160 million offered to the provincial government by the TCC.

SC asks parties to resolve Reko Diq issue in 24 hours

The Supreme Court gave on Tuesday 24 hours to parties in the Reko Diq gold and copper case to resolve the issue of mining lease. A three-judge bench comprising Chief Justice Iftikhar

Mohammad Chaudhry, Justice Mohammad Sair Ali and Justice Ghulam Rabbani is hearing a petition challenging the award of a mining lease to Tethyan Copper Company (TCC) a Canadian-Chilean consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chaghai district of Balochistan. If the respondents agree to handle the matter with mutual cooperation, the court can nullify the Balochistan High Court verdict, the chief justice observed. The federal and provincial governments and TCC are main respondents in the case. The chief justice said since the matter pertaining to the renewal of exploration and mining licences was an administrative matter, it would have to be decided by the Balochistan government. Advocate Tariq Asad, the main petitioner, said he wanted to file a separate plea challenge the mining rules. The court said the mining rules had already been challenged by Maulvi Abdul Haq and asked him to approach the high court. The chief justice said that TCCs licence for exploration and mining of gold and copper at Reko Diq had already expired, adding that the authority of issuing licences rested with the Balochistan government. Advocate Asad said the Balochistan cabinet had already decided that the exploration and mining licence would not be issued to TCC. The court asked Ahmer Bilal Soofi, counsel for the Balochistan government, to get instructions from the provincial government and inform it at the next hearing on Wednesday. The counsel said his client was waiting for a court verdict. Justice Sair Ali said the court could not decide the matter in place of the government. At the last hearing, Khalid Anwar, counsel for TCC, had informed the court that the BHC verdict was also in favour of his client and if it was nullified it would affect the interests of his client who had invested billions of rupees on the project. He said the lease should be awarded to TCC because it was already working on the project. The chief justice had observed that Reko Diq mines were resources of the people of Balochistan and their elected representatives had the right to take a decision about their exploration, mining and lease. The petitioner has claimed that the contracts of gold and copper mines in Reko Diq have been awarded to foreign companies at throwaway prices. He requested the court to direct the federation not to sell mineral deposits of gold and copper. He questioned the sale of gold

mines worth $260 billion (the total yield could be $500 billion or even a trillion dollars because of a rise in prices of gold and copper) to the foreign companies at a very low price. The petitioner said the Reko Diq mines also contained huge reserves of uranium.

Balochistan govt will decide Reko Diq mining license issue: SC

The Supreme Court on Wednesday handed over the gold mining license issue of Reko Diq to the government of Balochistan, DawnNews reported. The decision was made after the consent of the parties concerned. A three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Mohammad Sair Ali and Justice Ghulam Rabbani is hearing a petition challenging the award of a mining lease to Tethyan Copper Company (TCC) a Canadian-Chilean consortium of Barrick Gold and Antofagasta Minerals for exploring gold and copper in Reko Diq, a small desert town in Chaghai district of Balochistan. All parties accepted the decision of the three-member bench to empower the government of Balochistan to decide on the issue of licensing for mining in Reko Diq. The court also directed that the Balochistan governments decision should be submitted in the Supreme Courts registrar office. Moreover, the court has decided to adjourn all applications pertaining to the case so that in case of any disagreements from a future decision of the Balochistan government, the parties can contact the apex court again.

Pakistan says no to Antofagasta-Barrick Gold mine

Pakistans Balochistan province has rejected a mining lease application from Chilean copper producer Antofagasta and Canadas Barrick Gold, raising questions over the future of their Reko Diq copper-gold project. The two miners joint venture, Tethyan Copper, said last month it had filed a notice of dispute with the province over Reko Diq, after Balochistan government officials refused to meet the companys executives or extend a deadline for a response to objections raised over the lease. The mining lease application, for an area including the Reko Diq deposit, was submitted in February. Tethyan strongly believes that the Reko Diq project can contribute significantly to the

development of a modern mining industry in Balochistan and will consider its options for further courses of action, Antofagasta said in a statement on Wednesday. Reko Diq only the second significant project in the mineral-rich region and potentially a source of much needed inward investment for Pakistan holds an estimated 5.9 billion tonnes of mineral resources, with an average copper grade of 0.41 per cent and an average gold grade of 0.22 grams a tonne. The joint venture partners spent $200 million in 2006 buying the exploration licence from rival BHP Billiton. Construction has been projected to cost some $3.3 billion, but that is expected to climb given rising costs faced by the mining industry, particularly in remote locations like Balochistan.

Antofagasta, Barrick JV says Pakistan breached rules

Tethyan Copper, a joint venture between Chiles Antofagasta and Barrick Gold , said a summary decision by a Pakistan region to reject a mining lease application for its Reko Diq project breached local rules and Pakistani law. Pakistans Balochistan province rejected the application earlier this week, raising questions over the future of the Reko Diq copper-gold project. Tethyan warned in a statement on Friday that a refusal without discussion compromised its preferred route of resolution by negotiation. The Licensing Authoritys summary refusal to grant the Mining Licence to which TCC (Tethyan) is entitled breaches not only the Balochistan Mineral Rules (2002), but also TCCs rights under the Chagai Hills Exploration Joint Venture Agreement (CHEJVA) and Pakistani law, Tethyan said. Tethyan Copper last month filed a notice of dispute with the province after local officials refused to meet the companys executives or extend a deadline for a response to objections raised over the lease

Tethyan begins arbitration over Reko Diq dispute

Tethyan Copper, which owns the massive Reko Diq copper-gold project in the Balochistan province of Pakistan, said it has begun international arbitration proceedings in order to protect its rights after the province rejected its mining lease application. Tethyan, a joint-venture between

Chiles Antofagasta and Canadas Barrick Gold, said it has begun arbitration proceedings, but it remains open to an amicable, negotiated resolution to the dispute. Earlier this month, Balochistan rejected the mining lease application (MLA) that had been submitted by Tethyan in February. This came just weeks after Tethyan filed a notice of dispute, after provincial officials refused to meet with its executives, or extend a deadline for a response to objections raised over the lease. We are disappointed we have not yet been given the opportunity to resolve this by negotiation. We firmly believe that our feasibility study and MLA submission are in accordance with the Balochistan Mineral Rules 2002, said Tethyan Chief Executive Tim Livesey in a brief statement on Tuesday. Tethyan did not provide any details on the arbitration proceedings. Barrick and Antofagasta have already invested over $220 million in the Reko Diq project and the two companies jointly own a 75 per cent stake in the project, with the government of Balochistan owning the remainder. The project, seen costing more than $3 billion, is expected to generate a huge amount of foreign direct investment into the country.

SC asks govt to seek delay in Reko Diq arbitration

The Supreme Court directed the federal and Balochistan governments on Tuesday to request the International Chambers of Commerce (ICC) and the International Centre for Settlement of Investment Disputes (ICSID) to delay nomination of arbitrators over the Reko Diq mining lease dispute. Both the governments are required to request through letters the two international organisations to extend the nomination of arbitrators so that the Supreme Court, seized with the matter since 2007, could reach a final decision. The court will resume the hearing after two weeks. A three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Khilji Arif Hussain and Justice Tariq Parvez had taken up a plea by Dr Abdul Haq Baloch, one of the petitioners in the main Reko Diq case, seeking initiation of criminal proceedings against the Balochistan government for violating the May 25, 2011, order of the apex court. The petitioner had also sought a restraining order against the provincial government from appearing at the international arbitration forums.

The ICC in Paris (France) is seized with the dispute between the Tethyan Copper Company Pakistan (TCCP) and the Balochistan government over the latters rejection of mining lease to the former for exploration at Reko Diq. The TCCP has also filed a request for arbitration at the ICSID in Washington D.C. (United States) against the federal government. The TCCP is a Canadian and Chilean consortium of Barrick Gold and Antofagasta Minerals formed to explore gold and copper at Reko Diq, a small desert town in Chagai district of Balochistan that sits over what is known as Tethyan copper belt with the worlds fifth largest deposit of gold and copper. On Tuesday, Advocate Ahmer Bilal Sofi, counsel for the Balochistan government, informed the court that the provincial government had received a letter from the ICC for immediate appointment of the arbitrator. In fact it was he who suggested to the apex court to direct the parties to make a request to the ICC not to go for further proceedings till disposal of the case by the court in Pakistan. Under the 1958 New York Convention, he explained, the parties before invoking the arbitration should have sought the apex courts permission to refer the matter to the international arbitration tribunal. Advocate Raza Kazim, representing the petitioner, objected to the simultaneous arbitration by Tethyan Copper Company Australia (TCCA) at the international forums and said he could establish that the TCCP was a subsidiary of TCCA. But Advocate Khalid Anwar, counsel for the TCCP, said the TCCA was an independent corporate body having no concern with the instant proceedings. But the advocate general of Balochistan disputed this claim and while referring to an April 3, 2002, agreement between the BHP Minerals International Exploration Inc and the TCCA said the TCCP and TCCA were actually component of one company and now the TCCA had approached the ICC and the ICSID for arbitration. When the court asked Khalid Anwar whether the party could appear before the international judicial forum for arbitration when the case was pending with the apex court, he said that under the international laws, whenever an issue came up for arbitration at the ICC or the ICISD, the judicial forums in disputing states could not intervene in the matter.

Gold war highlights investment risks

Pakistans Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the countrys mining sector, but its beginning to look more like fools gold to the companies involved. Set in one of the most godforsaken places on earth, in a Balochistan desert at the foot of an extinct volcano, Reko Diq was expected to yield revenues of at least $60 billion over the 56-year life of the mine. Tethyan Copper Company (TCC), a joint venture between Chiles Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit in the ochre sand desert, where temperatures reach 130 degrees Fahrenheit in the summer. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year. TCC says it never did get an explanation. Its been difficult to define what their actual issues were, Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. We wen t back to them for clarification, as many of their issues are not covered in the Balochistan Mining Regulations. A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was cheating Balochistan by under-valuing the worth of the copper and gold. They are the monopoly, the official said angrily. They are the monopolists of the gold! They dont want to disclose the worth of the gold in Baluchistan. The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Balochistan government, meanwhile, has recently handed out exploration permits in the area around Reko Diq to new Pakistani and Chinese companies with no mining experience. Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list. WHATS THE DEAL? Reko Diq was supposed to be a model of public-private partnership and a means to lifting an impoverished area where Baloch insurrectionists have long operated. The Balochistan government received a 25 per cent stake in the venture for no money down. Adding in taxes and

royalties, the total share of revenues to the provincial and federal governments would come to just over half. From my experience, 25 per cent to the government is extremely generous and its not normal, said Vivienne Lloyd, a senior consultant at the US-based Copper Research Group. According to documents filed with the Supreme Court, TCC projected the mine would produce at least $60 billion worth of ore over its lifespan based on long-term copper and gold prices of $2.2/pound and $925/ounce, respectively. Higher spot prices would increase that sum significantly. Based on recent copper and gold prices, the mine would be worth almost $120 billion, with Balochistan getting a quarter of that after operating costs. It is this difference in long-term and spot prices that has led to angry allegations in the media and from Balochis that outsiders are exploiting their natural wealth. The picture that emerges is one of a grand deception, loot and plunder that never happened before on such a scale, the News daily said. And the facts, untruths, half-truths, attempts to sabotage, frauds and back-door bribes, are all documented. The Baloch official was more succinct: They corrupted our people, they corrupted our nation and for 18 years they looted our money. The Tethyan Copper Company was originally established 18 years ago in 1993 under a different partnership. SANDY MOUNTAIN Reko Diq, which means Sandy Mountain in Baloch, is part of the Tethyan Magmatic Arc, a crumple in the earth created by collisions of the African, Arabian, Indian and Eurasian tectonic plates. It contains massive deposits of copper and gold ore of varying grades in a belt stretching from Romania through Turkey, Iran, Pakistan and Afghanistan all the way to Papua New Guinea. The site in Pakistan today is a boulder-littered moonscape of rust-colored dunes, extinct volcano domes and a whipping wind that sends a fine-grit dust over the scattered settlements in the area. There are few towns, fewer roads, no electricity or running water, and almost nothing grows there. The only way in or out is by chartered plane on a private airstrip. TCCs exploration site is

like an abandoned moon colony: converted shipping containers and white trailers meant to house workers line up neatly under the baking sun, but stand empty. TCC has laid off about 240 of its 270 workers, but if the mine goes forward, it plans to employ 11,000 people within two years. That seems unlikely now. Alongside the lonely trailers, cavernous warehouses with corrugated steel roofs hold thousands of trays containing rods of compressed earth -=- core samples that testify to the riches underfoot. In all, the planned $3.3 billion investment would have included a 1,000-metre-deep open-pit mine, a processing facility, a project village for employees and a 682-km underground pipeline to Gwadar port on the Arabian sea to carry slurry concentrate to a dedicated marine terminal. The village would include schools and cricket pitches, a mosque, health clinics, a library, a public square, restaurants and markets, and even a 189 MW power plant. INVESTMENT RISK Despite its remoteness, TCCs Livesey said the project would add percentage points to Pakistans gross domestic product, which grew at just 2.4 percent in fiscal 2010-11. Indeed, the mining sector has been hit especially hard, posting only 0.4 percent growth last year and contributing just 2.4 per cent of GDP, down from a peak of 2.7 per cent in 2004-5. Most mining projects in Pakistan, they suffer from lack of research or lack of management, said Dr Farid Malik, a geologist and former chairman of the Pakistan Science Foundation, explaining the need for foreign investment. Political turmoil and other uncertainties hanging over the $175 billion economy risk deepening the steady attrition of foreign direct investment, which plunged 40 percent to $594 million in the first seven months of the 2011/12 fiscal year. TCCs feasibility study alone was already the largest single foreign direct in vestment in Pakistans history. The rejection of a mining license after an exploration permit had been granted is highly unusual, industry sources say, and has heightened perceptions of foreign investment risk in Pakistan. There is potential for multiple mine developments over the next few decades, Livesey said. By refusing a mining license without good grounds, its sending quite a negative signal to the exploration/mining community. TCC has filed cases with the International Court of Arbitration

in London and the World Banks International Centre for the Settlement of Investment Disputes. If the courts find in its favor, Pakistan could face billions of dollars in damages.

DIGGING UP THE PAST The origins of the dispute go back to 1993, when Australian mining company BHP Billiton and the government of Balochistan signed a joint venture agreement that set up the Tethyan Copper Company, with BHP getting a 75 per cent share of any mineral wealth found. In 2006, Barrick Gold and Antofagasta acquired TCC, taking an equal share each. The Baloch government kept its original quarter share. The new owners soon found signs of the immense deposits. Once word of the billions below ground appeared in the media, an avalanche of lawsuits followed. Last May, the Supreme Court directed the local government to expeditiously decide TCCs application for the grant of mining lease transparently and fairly. In November, Balochistan made its decision. It rejected the license but not before granting 11 exploration permits for sites surrounding TCCs Reko Diq area to five hastily established Pakistani and Chinese companies with no previous experience in mining. All five companies were created and attained their licenses in the four months following the Supreme Courts May order. Why should (Balochistan government) give away 75 or 50 per cent of a multi-billion-dollar resource when it can keep everything? lawyer and arbitration expert Feisal Naqvi sarcastically asked on his blog, Monsoon Frog. The Balochistan government says it rejected TCCs permit because the company didnt complete the feasibility study on time and the study did not cover the entire area for which the exploration license had been granted. These were the grounds that we made for the licensing authority to reject the application for the mining lease, said Ahmer Bilal Soofi, who represents the Baloch government. But TCC and mining experts say it is normal to submit feasibility studies for a smaller area than originally explored. In a bid to head off arbitration, the provincial government and a number of

nationalist political parties have filed suit in the Supreme Court to have the original deal declared illegal. Soofi says the 1993 agreement was tainted by corruption. The official who signed the original deal, Athar Jaffar, was later convicted of having assets beyond his means and was sentenced to seven years in prison, he says. Though Jaffars conviction was not related to the deal signed with BHP, you can infer corrupt practices, he said. Jaffar could not be located for this report, nor could Soofis statements be verified. THE CHINA SYNDROME Further complicating the story are the Balochis themselves. Traditionally proud and martial, they are fiercely suspicious that outsiders including the rest of Pakistan are out to steal their mineral and energy resources. They have valid reasons to worry. For years Balochistan has languished near the bottom in literacy, electric power, infant mortality and other social indicators; its natural gas and mineral riches went to the wealthy, populated parts of Pakistan. Theyve been exploited so many times in the past, said Malik. Now they see so much light at the end of the tunnel and they think theyre not getting their fair share. The Balochis have staged five uprisings since the province was incorporated into Pakistan in 1948, each time demanding more control over their natural resources. Because of this, some analysts speculate that the powerful Pakistani army sees Reko Diq as a strategic resource and hopes to keep the mineral wealth out of the hands of the Baluchistan government, in case separatist political parties win provincial elections. The army, acknowledging Pakistans inexperience in large-scale commercial mining, might also want to bring China into the picture. China is the worlds largest consumer of copper, has experience in large-scale mining, and has a record of building infrastructure in exchange for resources in developing countries. Everywhere I look, there are indications of Chinese interest in developing this area, more than Barrick Gold could, said Shamila Chaudhary of Eurasia Group. The Chinese government-owned Metallurgical Construction Corp (MCC) already runs the nearby Saindak Copper-Gold Project, and submitted a counter-proposal to develop the Reko Diq mine during a visit to Pakistan by Chinese Prime Minister Wen Jibbao in December 2010.

Pakistan media say MCCs proposal was similar to TCCs, but was sweetened with a larger share of the royalties going to the government. This was after TCC had submitted its feasibility report. MCC has not commented on those reports. TCC is still hoping for a negotiated settlement outside arbitration, but Chaudhary thinks its parent companies are looking to cut their losses.

SC puts TCCA on notice in Reko Diq mining lease case

The Supreme Court on Wednesday issued notice on Tethyan Copper Company Limited, Western Australia (TCCA), in a case pertaining to award of mining lease of gold and copper reserves in Reko Diq, Chagi area of Balochistan province. A three-Judge bench of Chief Justice Iftikhar Mohammad Chaudhry, Justice Khilji Arif Hussain and Justice Tariq Parvez issued notice after conducting proceedings on a civil petition and others. The bench in its order said that notice should be issued to the TCCA at the cost of petitioner during course of the day by sending it through fax, E-mail as well as courier service. The Ministry of Foreign Affairs is also directed to assist the office in effecting service upon the company through the relevant Diplomat of Pakistan in Perth (Australia), it added. The bench further observed that on the last date of hearing, it was pointed out that TCCA, which was one of the parties of the Alliance Agreement between the BHP Minerals International Exploration Inc. and TCCA, had been one of the component of TCCP, as the latter had invoked the jurisdiction of the International Chamber of Commerce with the request of arbitration concerning the issue of prospective Reko Diq Minerals Licence. The bench also directed Secretary (Minerals), Government of Balochistan to dispose of an appeal moved by TCCP by ante-dating the hearing for 3rd March, 2012 and to decide the same on such date. The bench observed that the decision of the appeal at the earliest was important for the reason that the International Chamber of Commerce had allowed 15 days time to the Government of Balochistan to nominate an Arbitrator, while honouring/respecting the observation made by this Court in the order dated 07.02.2012. Advocate General Balochistan Amanullah Kanrani, appeared and stated that they had submitted a report over status of mining lease. He also rejected media reports that they had granted lease to

some other company and said that TCCP offer had been rejected. He informed that TCCP had moved an appeal against the order of the DG Mines, Govt of Balochistan, dated 15.11.2011, which was pending before the Secretary (Minerals). The bench observed that it was of the opinion that any order passed in the instant petition was likely to cause prejudice to the case of either side; therefore, in the interest of justice, the appeal should be decided by the concerned authority.

Balochistan accuses TCC of causing $1 billion loss

The Balochistan government has suffered a loss of about $1 billion because of alleged failure of the Tethyan Cooper Company to honour an agreement it had signed for exploration of copper and gold in Reko Diq area. Tethyan Copper Company Australia (TCCA) has violated the agreement, a source in the office of Advocate General Balochistan alleged. He dispelled a perception that the company was trying to create through newspapers that it had suffered a financial loss of about $10 billion because of non-issuance of mining licence to the company. The provincial government can file a case against the company for compensation because it has deprived the province of one billion dollars, the source said. He denied that the Balochistan mines and mineral department had refused to give mining licence to TCC Australia and said the company had so far not applied for it. The Balochistan government has denied giving licence to TCC Pakistan, the source said, adding that the TCCP had not signed any agreement with the provincial government about exploration in the Reko Diq cooper-cum-gold project in Chagai. The first agreement about exploration work was signed by a US company, BHP, with the Balochistan Development Authority (BDA) in 1993. The company was allotted 13,000 squarekilometre area in Reko Diq to start exploration work. The fee of the land was fixed at only one rupee per sq-km which was not paid to the provincial government as the company had managed to get the amount waived off, causing a loss of millions of rupees to Balochistan.

The rules were also violated in the allocation of land. According to mining rules, no company can be allocated more than 100 sq-km of land for exploration. BHP did not start exploration work and after initial assessment of quantity of cooper and gold handed it over to another company, Mincor, on the pretext of relaxation by getting more than $294 million. BHP did not take the Balochistan government into confidence about its deal with another company, depriving the province of financial benefit that it (BHP) had earned by assigning the job to another company, sources said, adding that Mincor had later handed over the project to two other companies Barrack Gold of Canada and Antofagasta, a Chilean-based company, which registered another company with the name of TCC in Australia. TCCA signed another agreement and chose only 900 sq-km area for exploration instead of 13,000 sq-km in Reko Diq. The sources said these companies had in 2000 set up TCC in Pakistan in violation of existing laws not registering it with the Security and Exchange Commission of Pakistan depriving the national exchequer of billions of rupees in tax. According to the sources, the company again surrendered the allotted area and said it would work on 424 sq-km area. According to the agreement, it was bound to submit its feasibility report by Feb 19, 2011, as its exploration licence had bee renewed for six years. The feasibility report submitted by the company, the sources said, showed that it had worked only on five sq-km area instead of 424 sq-km, which proved that it had no capacity to continue exploration work on such a large area. The Balochistan government has not signed any agreement with the TCCP which is at present running the Reko Diq project, the sources said, adding that the Supreme Court which had taken up the case issued a number of notices to TCC Australia, but no-one from the company had appeared before it. The mining committee of the mines and minerals department of Balochistan had on March 5, 2011, rejected an appeal of the company seeking the mining licence on the grounds that it was incapable of working in such a large area. The company has not filed any review against the committees decision, the sources said, adding that it had also not approached any court which showed that the company had accepted the committees decision. The sources said the Balochistan government had already decided to run the project on its own and allocated Rs8 billion for it in the budget.

BHP with Reko Diq mining lease was not registered, SC told
Advocate General Balochistan Amanullah Kinrani on Wednesday apprised the Supreme Court that the BHP, the worlds leading copper mining company, which had been given a mining lease for discovery of gold and copper reserves in Reko Diq during 1990s was not registered under Pakistani laws. He was appearing before a three-member bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Gulzar Ahmed and Justice Sh. Azmat Saeed, that resumed hearing of a petition moved by late Mualana Abdul Haq. In response to benchs remarks, Kinrani maintained that the BHP had not been incorporated in Pakistan as foreign minerals mining company. The chief justice observed that the Balochistan government should have known the fact as all foreign companies were required approval from the Board of Investment. He told Khalid Anwar, counsel for Tethyan Copper Company (TCCP), that nothing like mining agreement existed prior to 1996 with the BHP, but a request for relaxation of rules was submitted. He said the relaxation was sought when there was no agreement. Show us any exploration agreement from any part of Pakistan with similar precedent. We will examine the instant matter on touchstone of the Pakistani laws. Khalid Anwar said when Chagi Hills Exploration Joint Venture Agreement (CHEJVA) was reached, there was no such requirement. The CJ remarked, Do not give such a free hand, we are a sovereign country. Khalid Anwar contended that the BHP was not entitled for such an agreement as it did not make any discovery in the area. He said the TCCP had made a discovery in 2006 so why it was blamed for the acts of BHP. Reading out Companies Act, he said under its provisions, Pakistani exploration companies did not require registration but it was a requirement for the foreign companies while his client TCCP was a subsidiary of the TCCA and a Pakistani company. The counsel further apprised the bench that the negotiations for reaching an agreement for Reko Diq mining venture started way back in 1993 and after three years of elaborate discussions involving all the stakeholders, a consensus draft was agreed upon which had all the transparency. He said the BHP made a generous offer of 25 per cent to the provincial government which was unprecedented in the exploration history at that time. Refuting claims about corruption or any

underhand deals, he said relaxation of rules did not amount to amending of Balochistan Mineral Rules of 1997. Abdul Hafeez Pirzada, counsel for BHP, apprised the bench that they were contacting with their clients but the time difference was a matter and would assist the court with relevant record. The advocate general Balochistan apprised the bench that barrister Aitzaz Ahsan was also engaged by the provincial government to represent it in the instant case and sought an order in this regard. The chief justice told him that the court always welcomed everyone and had not stopped Aitzaz from appearing.

SC questions TTC claims of vested interests in Reko Diq

The Supreme Court on Monday grilled a counsel for Tethyan Copper Company (TCC) for his claims of vested interests in award of mining lease for exploration of precious minerals resources in Reko Diq area of Balochistan. Heading a three-judge bench over the issue of mining leases for gold and copper reserves in Reko Diq, Chief Justice Iftikhar Muhammad Chaudhry asked Khalid Anwar, counsel for TCC, as how the Balochistan High Court (BHC) could say that the company had vested rights. He observed that there could be no vested rights for any particular company, only those rights which were subjected to laws. What matters for court is the laws, he added. He told the counsel that judgement of the licensing authority was not impugned before us. Anwar contended that the BHC verdict was in his favour which had two vital components. He said that the verdict did not hold anywhere that the mineral wealth of the province was wasted and pleaded that the court could not settle the questions of facts. The counsel further said that the Balochistan chief minister could not have taken a decision over the issue by terming it as policy issue. The CJ reminded him that the Chagi Hills Exploration Joint Venture Agreement (CHEJVA) was an agreement between the parties which was not statutory. He said the incumbent chief minister was not on the scene during 2006. The licensing authority did not mention anything in its order that it was provincial cabinets decision, he added.

Replying to a query of Justice Shaukat Azmat Saeed, the counsel said that they had dispute with both federal and provincial governments. He contended that all the allegations made about CHEJVA and relaxation of rules was directed against the BHP, its predecessor company, and not against the TCC. He said the TCC was not in existence when relaxation of rules took place on January, 24, 1994. The company was entitled for all the legal rights of innovation agreement of May 1, 2006 after the BHP entirely left the scene and had not further legal rights or obligations and the Balochistan government had independently conferred the legal duty and obligations to the TCC. The chief justice supplemented him by saying that he wanted to establish that the TCC had an independent stance and had nothing to do with all this. The counsel said, if it was his stance then why he was undertaking a long exercise of reading out volumes of papers for the last two weeks. The counsel apprised the bench that total sales value of the venture was $56 billion and the operating cost was $25 billion. He said the initial investment stood around $3.3 billion whereas $2.7 billion were also required for maintenance of the mines, adding that $8 billion would go to the government of Pakistan in taxes. Justice Saeed observed that the mineral wealth of a country belonged to that very country. An official of provincial government stood up and claimed that the company had calculated shares amount itself without informing the officials concerned.

Work on Reko Diq to begin on Jan 7

Balochistan Chief Minister Nawab Aslam Raisani would inaugurate work on Reko Diq coppercum-gold project in Chaghai district on Jan 7 for which Rs8 billion have been set aside in the budget. A three-member tribunal of International Centre for Settlement of Investment Disputes (ICSID), comprising Dr Klaus Sachs, Lord Hoffman and Mr Stanimir A Alexandrov, has allowed Government of Balochistan and Dr Samar Mubarakmand to carry out mining and smelting project in the area, rejecting the plea of Tethyan Copper Company (TCC) regarding urgency and irreparable loss.

The board of governors of Balochistan Copper-Cum-Gold Project here on Monday decided to initiate work at the project at a meeting, presided over by Nawab Raisani. The meeting decided to establish a mining institute in Dal Bandin to provide training to local youth in mining and make them able to work in the Reko Diq project. Hundreds of trained youths of Balochistan would be provided jobs in the project, the meeting further decided. The chief minister announced to give scholarships to outstanding students for training in the mining institute. The experts team, headed by Dr Samer Mubarakmand was also directed to complete necessary work on the project as soon as possible. It was also decided that recruitment would be made on merit and local people would be given priority. Nawab Raisani directed the departments of planning and development, finance and mineral not to allow any hurdle in the project and take all steps be taken for making the project viable and result-oriented. The meeting was attended by Dr Samer Mubarakmand, Additional Chief Secretary Aslam Shakir, Finance Secretary Mushtaq Ahmed Raisani, DG Mines Irshad Ahmed Khokhar, Member, Planning Commission Shabbier Ahmed, project director Javed Raza, Advocate General Amanullah Kanrani and lawyer Ahmed Bilal Soofi.

TCC denied any relief

In the parallel arbitration lodged by the Tethyan Copper Company with the International Chamber of Commerce International Court of Arbitration (ICC ICA), the tribunal has denied TCC any relief under its interim measures application and supported the arguments of the government of Balochistan, said an official press release on Wednesday. It said that the case before the ICC ICA was lodged in late 2011 and over the course of the year the government of Balochistan had vehemently contested the same. In an obvious attempt to put pressure on the government not only did the TCC make two requests for arbitration one before the ICC ICA against Balochistan and another before the International Centre for the Settlement of Investment Disputes against Pakistan but had also made two similar requests for interim relief. Instead of capitulating to the pressure, the government of Balochistan and the federal government contested the arbitrations and the interim relief applications and have now won the

interim relief application in the ICC ICA. It further said that through the interim measures application TCC wanted Balochistan to stop its plans for working on the H4 deposit in Reko Diq in the interest of Balochistan and Pakistan, claiming that Balochistan would damage the area and that TCC would suffer irreparable harm. The legal team of Balochistan was successful in proving to the tribunal that TCC would not suffer any irreparable harm if Balochistan were allowed to continue with its plans. In fact, it has now been established that Balochistan is working on the site for the benefit of the Baloch people and Pakistan in general. It is also established that Balochistan would suffer more loss than TCC if it were ordered to stop its plans.

SC issues detailed verdict on Reko Diq case

The Supreme Court of Pakistan issued on Friday the detailed verdict over the Reko Diq case, DawnNews reported. A three-member bench of the apex court, which had heard the case, issued a short order in January this year declaring the Reko Diq agreement as void. The detailed verdict of 149 pages was drafted by Chief Justice Iftikhar Muhammad Chaudhry according to which the agreement reached on July 23, 1993 was in violation of the countrys laws. It said that the agreement was in negation to the Mineral Development Act, Mining Concession Rules and the Contract Act. The verdict added that the agreement reached on March 4, 2000 was also illegal.

Proposed Benefits of Reko Diq

Employment Human Resource Development Community Investment Plan Technology Transfer Creating a world class large scale mining projct Full Commitment to local Transparency