01 March 2004	Monday	09 Muharram 1425

ISLAMABAD, Feb 29: Pakistan and China have agreed to join hands for the development of lead and zinc deposits at Duddar, in Lasbella district of Balochistan.

The federal cabinet in its latest session has approved the project which will be developed jointly Pakistan Mineral Development Corporation (PMDC) and Metallurgical Construction Corporation of China (MCC).

According to the initial survey, there is a possibility of lead-zinc reserves of about 14 million tons containing 8.6 per cent Zinc and 3.2 per cent Lead with a possibility of finding an additional 10 million tons at Duddar. The deposit is accessible from Winder on the Khuzdar-Karachi Highway through a 100-km road passing through nullahs.

The preliminary exploration work at Duddar, spanning almost 10 years, was conducted initially by the Geological Survey of Pakistan followed by the Pakistan Mineral Development Corporation (PMDC) and Pasminco of Australia.

The Petroleum Ministry offered this investment opportunity to the Metallurgical Construction Corporation of China (MCC) and an MOU was signed between them on March 22, 2002.

After initial studies, MCC fielded a team of experts during March 2003 to review data, reports, drill cores and infrastructure with the purpose of preparing a feasibility report, which was submitted in August 2003.

MCC estimates that they can develop the Duddar deposits economically under EPZ status with their technology and direct foreign investment of $72.63 million.

The construction or upgrading of an all-weather Winder-Duddar road for leaded trucks is however not covered in the aforesaid cost since neither the Government of China nor the Bank of China allowed the MCC to use their investment to construct infrastructure abroad.

During the last visit of President General Pervez Musharraf to Beijing on Nov 3, 2003, PMDC signed an agreement with MCC to develop the Duddar deposits through their Pakistani subsidiary, MCC Resources Development Company Ltd (MRDL).

MRDL has said that the Government of China has approved the development of Duddar deposit and a formal communication to the effect would soon be received through diplomatic channels. MCC and MRDL will provide at their own cost and risk the entire finance required for the development of Duddar deposits except the link road.

The Project would be owned and operated by MRDL under very transparent and arm's length transactions policy, and shall pay presumptive income tax to government at 1.25 per cent of sales revenue, EPZ development surcharge at 0.5 per cent of sales revenue and royalty to the Government of Balochistan at 2 per cent of sales revenue.

The total sales revenue from the current known mineral resources during 14 production years are estimated to be $450 million which would accordingly bring tax revenue of $5.6 million to government of Pakistan, development surcharge of $2.25 million to EPZ, and royalty of $9.0 million to the Government of Balochistan.

After the payment of loans, the profit on the project shall be shared between MRDL and PMDC in the ratio of 80:20, which shall be changed to 75:25, in case the profit in any year exceeds the feasibility estimates of 20 per cent or more.

Since the mineral resources belong to the provinces, PMDC has also agreed to share equally with the Government of Balochistan the profit it receives from the project, shall be in addition to royalty. PMDC or GOP are neither exposed to any financial risks nor required to share any losses accruing from the project operations. -APP