Pakistan signs deal to avoid $11bn penalty in Reko Diq case

Published March 21, 2022
Prime Minister Imran Khan witnesses the agreement signing with Canada's Barrick Gold Corporation at Islamabad on Sunday. — PID
Prime Minister Imran Khan witnesses the agreement signing with Canada's Barrick Gold Corporation at Islamabad on Sunday. — PID

ISLAMABAD: The government on Sunday claimed to have saved the country from $11 billion penalty in Reko Diq case and reconstituted a project aimed at excavating huge gold and copper reserves from the site in Balochistan.

The federal and Balochistan governments and two international firms — Antofagasta PLC and Barrick Gold Corporation — have reached an agreement in principle on a framework to reconstitute the Reko Diq project, and a pathway for Antofagasta to exit the project.

Prime Minister Imran Khan witnessed the signing ceremony. Speaking on the occasion, he expressed the hope that the investment would mark the beginning of large-scale investments in Balochistan that would change the quality of life of ordinary citizens in the province.

Later, in a series of tweets, PM Khan congratulated the nation, specially the people of Balochistan, on the agreement for development of Reko Diq mine.

“I congratulate the nation & ppl of Balochistan on successful agreement with Barrick Gold for development of Reko Diq mine after 10 years of legal battles & negotiations. Penalty of approx [approximately] $11bn is off set, $10bn will be invested in Balochistan creating 8,000 new jobs,” the prime minister tweeted. “RD [Reko Diq] will potentially be the largest gold & copper mine in the world. It will liberate us from crippling debt & usher in a new era of development & prosperity,” he wrote.

Meanwhile, the Balochistan cabinet in a special session approved the agreement, terming it a game changer for the province.

Later, addressing a press conference along with Energy Minister Hammad Azhar and Balochistan Chief Minister Mir Abdul Qudoos Bizenjo, Minister for Finance Shaukat Tarin said that after the signing of the agreement Pakistan would not only avoid the $11bn penalty but also get an opportunity to explore the world’s largest gold and copper reserve.

He said some $10bn would be invested under the Reko Diq project which would create 8,000 new jobs for the locals. The minister said that as per the new agreement, Barrick Gold Corporation would get 50 per cent and the Balochistan government 25pc share, while the rest 25pc would be shared among the state-owned enterprises — Oil and Gas Development Company (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan (GHPL).

Mr Tarin recalled that the federal and Balochistan governments had in 2006 signed an agreement with Canadian company Barrick Gold and Chilean firm Antofagasta to extract gold and copper from Reko Diq mine. According to the deal, 37.5pc share each was given to the two foreign companies and 25pc to the Balochistan government.

He said that agreement was suspended in 2011 due to a dispute over the legality of its licensing process. As a result, the Interna­tional Court of Arbitration levelled $6.4bn award on the government of Pakistan while at the same time the London Court of Arbitration was also imposing another $4bn fine on Pakistan.

He said that soon after taking over the charge, PM Khan aggressively pursued the case. As a result, an agreement was signed on Sunday under which Antofagasta decided not to participate in the reconstituted project and withdrew from its claim of $3.9bn in place of $900 million, which would be paid by the three state-owned enterprises in return for a 25pc share.

The minister said Pakistan, particularly Balochistan, would be benefited for over 100 years from this project and the total worth is estimated to be over $100bn.

Terming the deal a landmark achievement, Energy Minister Hammad Azhar said it was a historic day as it had not only avoided $11bn worth of penalty but also created a new opportunity for the country. He said the “landmark success” had also saved the country from blacklisted by the FATF by implementing 32 of the 35 conditions.

Meanwhile, President of Barrick Gold Mark Bristow had a meeting with Balochistan Chief Minister Qudoos Bizenjo after the signing of the agreement.

Saleem Shahid from Quetta also contributed to this report

Published in Dawn, March 21st, 2022

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Noshki killings
Updated 14 Apr, 2024

Noshki killings

It must be asked why Baloch separatists continue to target civilians as well as security men despite large deployment.
Upholding the law
14 Apr, 2024

Upholding the law

THE recent discord in Bahawalnagar offers a chance to reflect on the sanctity of the law and its enforcement across...
Tragic travels
14 Apr, 2024

Tragic travels

FOR those embarking on road and boat journeys, the probability of fatal accidents has seen a steady rise. The recent...
Security lapses
Updated 13 Apr, 2024

Security lapses

Ensuring the safety of foreign citizens is paramount, not just for diplomatic relations but for our economic future.
An eventful season
13 Apr, 2024

An eventful season

THE Senate chairman and deputy chairman were elected unopposed, and 41 new senators were sworn in on Tuesday,...
Living rough
13 Apr, 2024

Living rough

WE either don’t see them or don’t want to see them — not even when they are actively trying to get our...