ISLAMABAD, Oct 21: Pakistan on Tuesday said it had allowed an Australian mining company to start a $130-million copper development project in Balochistan whose $1 billion second phase of investment would make Pakistan the third largest copper producer in the world in five years.

“This could be a boom for foreign investment and place Pakistan on the second or third position on the world map of copper production,” petroleum secretary M. Abdullah Yousaf told a joint news conference with Muslim Lakhani, country representative of Tethyan Copper Company (TCC) — a Pakistani offshoot of Australian BHP Billiton.

He said a $10-million initial public offering of Reko Diq Copper Project of Chaghi district in Balochistan was “heavily oversubscribed” at the Sydney senior stock exchange and closed much earlier than anticipated.

Mr Yousaf said the company had already spent $10 million on the project and would spend another $10 million to complete the detailed feasibility in 15 to 18 months. He said that since 50 per cent shares of the $10 million IPO were subscribed by the fund managers and remaining by small investors, the company would be under pressure to start $130 million H-4 (first phase of Reko Diq) project for copper exports in three years time.

He said that $130 million project would produce 40,000 tons of copper per annum, much higher than Saindak’s 15,000 per annum and earn $75 million exports for 12 years.

The response form the investors from Canada, the United Kingdom and Australia was primarily because of the Export Processing Zone status to the Reko Diq and a very attractive national mineral policy, he said.

Abdullah Yousaf said that next phase of the project would entail an investment of $1 billion and result in copper production of 250,000 tons and 400,000 ounces of gold per annum and could yield export earnings of $500 million per year for 50 years. He said the H-4 project would be completed in 3-5 years and Western Porphyry (phase-II) in 5-10 years.

Muslim Lakhani said that the money raised through the IPO was lying in the bank account of TCC and formal listing at the Sydney stock market would take place by the end of this month.

He said there were 90 known deposits of copper in Reko Diq area, bearing perhaps more than 11 billion tons of copper and nine million ounces of gold. He said the response from the investors was based on technical mining data and the road shows conducted by TCC internationally.

He said Indonesia had copper deposits of around 907 million tons, Iran 1,250 million tons and Argentina 694 million tons. Reko Diq’s H-4 project area contained 108 million tons and Western Porphyry had 729 million tons of copper. He said the IPO of TCC was the largest of the Sydney stock exchange during the last five years.

Abdullah Yousaf explained that 75 per cent earnings from the project would go to TCC and the remaining 25 per cent to the Balochistan government. The provincial government was funding nothing in the project but would get two per cent of royalty. The federal government would get 1.25 per cent of presumptive (export) tax and 0.5 per cent EPZ surcharge.

Mr Lakhani said the overwhelming response to the IPO was a major endorsement of the government’s policies towards foreign private investment and demonstrated confidence by foreign investors in funding high-risk exploration mining activities.

He said TCC would be trading under the symbol “TYC” on the senior stock exchange in Sydney. TYC is now controlled by some of the very large global institutional investors, including Mincor and BHP Billiton.