The timeline of the initiation of work on gold and copper mines in Reko Diq in Balochistan’s Chagi district has yet to be announced. But with the Supreme Court clearance and adoption of the relevant resolutions in Sindh and Balochistan and the ratification of the deal by the federal cabinet and Senate, all roadblocks in making the deal operational have been removed.
Both Sindh and Balochistan assemblies invoked Article 144 of the Constitution. Under Article 147, the provinces surrendered their rights to regulate the mineral resources in favour of the federal government. This allows the federal government to be fully responsible for regulating all affairs (excavation, processing, production and logistics) concerning the Canadian mining giant Barrick Gold in Pakistan. The 38-page long document entitles the federal government to provide all the incentives it deems suitable.
“The investors are legally covered to their satisfaction now, and for all I know, the work on the project will commence within months ahead”, a private source who assisted the federal government in designing the settlement deal with the foreign mining company said when approached for comments.
“It is an exciting moment for the mining sector. Besides massive capital investment, the reputed mining company will introduce cutting-edge technology and processes to enrich the collective knowhow in this crucial sector,” said another executive of a local mining firm hoping for some form of engagement in the project.
‘To address the sense of deprivation and alienation, there is an urgent need to empower provinces and not take back what they secured after decades of sacrifices and struggle’
Pakistan is stated to be now free of any liability towards all mining companies involved in this case. It hopes to rake in rich dividends from the development of mines in the remote Chagi district.
This forgotten mineral-rich district in the middle of nowhere grabbed the limelight in 1998 after Pakistan decided to go nuclear and tested its capability in the mountains there.
The details of the mining deal revealed a 50 per cent entitlement to Pakistan in shares in the Reko Diq project and proceeds of the mining giant. Half of the federal government shares and earnings accrued from the mining operations of Barrack Gold will be shared with the Balochistan Government.
The federal government’s shares of 25pc will be divided equally among three state-owned entities — Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL).
The key political parties of Balochistan, including Balochistan National Party Mengal (BNPM), National Party (NP), Jamiat Ulema Islam (JUI), Pakhtoon Khaw Milli Awami Party (PKMAP), however, were unhappy.
The members of the cabinet from Balochistan walked out of the cabinet meeting that approved Foreign Investment (Promotion and Protection) Amendment Act 2022. Some openly threatened to quit the government; others said they would resist and protest against what they call ‘betrayal by Prime Minister Shahbaz’s government’.
A Baloch leader discussing reasons for frustration after the federal cabinet and the Senate ratified the deal said their support for the Reko Diq contract was conditional.
Explaining, he said the members of the national assembly from Balochistan and the provincial assembly were briefed on the difficulties the country could land in if the deal with Barrack fell apart. To this end, Baloch leadership’s help was sought within the deadline of 15th December 2022 given by the mining investor.
“Acting in the best interest of the country, its people and the democracy, we consented to let go of our claim on riches of our lands just once in this case as the federal government pledged to team up and safeguard all our rights under the Constitution.
However, the federal government did not insert changes that were agreed upon in the presented draft. This was unfair and a breach of trust.”
A former chief minister of Balochistan and a leader of the National Party, Dr Abdul Malik Baloch, saw the deal as a retreat in the struggle for provincial autonomy. “To address the sense of deprivation and alienation, there is an urgent need to empower provinces and not take back what they secured after decades of sacrifices and struggle.
“I am against this or any deal that compromises the rights of Baloch people on their land, sea and minerals. We will not tolerate anyone meddling in our affairs and motivate our support base to resist attacks on our rights,” he said over the phone.
Nasim Beg, an asset management expert on several boards, currently abroad, shared his opinion on the deal “Pakistan is trying to make the best of a bad situation. Ideally, underdeveloped countries should not enter into contracts for extraction of mineral resources till they acquire adequate knowhow to not get duped.”
Sometime back, a former federal secretary narrated how overseas investors played weak elements in bureaucracy, media and politicians’ ranks to their end. “The decision of the global arbitration court was based on evidence and the way the contenders presented it. Pakistan was penalised for its incompetence and shoddy performance in the court.
“In my opinion, we never put up a fight, or the outcome would have been different. No point in crying over spilt milk now. The moral of the story is to be perfectly transparent in dealing and to build a capacity to deal with commercial conflicts,” he commented.
Published in Dawn, The Business and Finance Weekly, December 19th, 2022