ISLAMABAD: The International Centre for Settlement of Investment Disputes (ICSID), one of the five organisations of the World Bank Group, has announced a huge award of $5.976 billion against Pakistan in the Reko Diq case.
The international tribunal which provides facilities for conciliation and arbitration of international investment disputes, rendered its judgement on Friday — a 700-page ruling against Pakistan in the Reko Diq case.
The ICSID awarded a $4.08bn penalty and $1.87bn in interest. The full details of the case are yet to be released by the tribunal.
Special assistant to the prime minister on information Dr Firdous Ashiq Awan when contacted said the law ministry and the attorney general were looking into the matter in light of international laws. She expressed the hope that the government would come up with a formal reaction on Sunday (today). “This is what I can say right now,” she said.
The management of the Tethyan Copper Company (TCC) had claimed $11.43bn in damages. The company had filed claims for international arbitration before the ICSID in 2012 after the Balochistan government rejected a leasing request from the company.
PM’s aide Firdous says law ministry and attorney general are looking into the matter in the light of international laws
The case between the Pakistani government and the international company continued for at least seven years.
The TCC lodged the case against Pakistan on January 12, 2012, and the ICSID constituted the tribunal on July 12, 2012.
Klaus Sachs of Germany headed the tribunal while Stanimir A. Alexandrov of Bulgaria represented the claimants and Leonard Hoffmann of United Kingdom represented Pakistan.
Reko Diq mine is famous because of its vast gold and copper reserves and is believed to have the world’s fifth largest gold deposit. Reko Diq, which means sandy peak in the Balochi language, is a small town in Chagai district in Balochistan. It is located in a desert area, 70km north-west of Naukundi, close to the border with Iran and Afghanistan. The area is located in the Tethyan belt that stretches all the way from Turkey and Iran into Pakistan.
The deposit at Reko Diq is a large low grade copper porphyry, with total mineral resources of 5.9bn tonnes of ore with an average copper grade of 0.41 per cent and gold grade of 0.22 g/tonne. From this, the economically mineable portion of the deposit has been calculated at 2.2bn tonnes, with an average copper grade of 0.53pc and gold grade of 0.30 g/ton, with an annual production estimated at 200,000 tons of copper and 250,000 ounces of gold contained in 600,000 tons of concentrate.
According to the extensive technical and financial studies undertaken 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.
The TCC completed an extensive and detailed bankable feasibility study establishing the basis for mine development at Reko Diq during August 2010 and submitted a mining lease application in February 2011, along with an environmental and social impact assessment report. Progress on the project came to a standstill in November 2011, when the government of Balochistan summarily rejected the application by the TCC’s local operating subsidiary for a mining lease in respect of Reko Diq.
The TCC was of the view that under the Chagai Hills Joint Venture Agreement (CHEJWA) between the company and the Balochistan government, as well as under the Balochistan Mineral Rules 2002, the TCC Pakistan was legally entitled to the mining lease subject only to ‘routine’ government requirements.
To protect its legal rights, in November 2011 the TCC commenced international arbitration proceedings at two forums: one against the Pakistan government with the International Centre for Settlement of Investment Disputes, asserting breaches of the Bilateral Investment Treaty between Australia (where the TCC is incorporated) and Pakistan, and another against the Balochistan government with the International Chamber of Commerce, asserting breaches of the CHEJVA.
Reuters adds: The TCC said it had invested more than $220 million by the time Pakistan’s government, in 2011, unexpectedly refused to grant them the mining lease needed to keep operating.
The ICSID ruled against Pakistan in 2017, but until now had yet to determine the damages owed to the TCC.
Tethyan board chair William Hayes said in a statement the company was still “willing to strike a deal with Pakistan,” but added that “it would continue protecting its commercial and legal interests until the dispute was over.”
Published in Dawn, July 14th, 2019