ISLAMABAD-Pakistan and Barrick Gold Corporation are likely to sign an agreement on Reko Diq Copper-Gold Project today (Friday), paving the way for $10 billion investment in the project.
Secretary Petroleum Division Muhammad Mahmood is currently visiting London to finalise the agreement with Barrick Gold Corporation, official source told The Nation. Under the agreement Barrick Gold Corporation will do an investment of $10 billion in Reko Diq project in two phases. In the first phase, there will be investment of $7 billion while in the second phase an investment of $3 billion will be made in the project. It is worth noting that an agreement for the Reko Diq Copper project was signed in 2006. Chile’s Antofagasta and Canada’s Barrick Gold were part of the consortium Tethyan Copper Company(TCC) with both had 37.5pc share, while the Government of Balochistan share was 25pc. However, the project was closed down in 2011 following the local government in Balochistan’s refusal to renew TCC’s lease. Finally the Supreme Court of Pakistan had declared the deal invalid in 2013.The World Bank’s arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining in 2019.
However, in March, the federal government and government of Balochistan reached an agreement with both the Antofagasta PLC and Barrick Gold Corporation. Both the sides agreed on a framework to reconstitute the Reko Diq project that allowed Chilean Antofagasta to make an exit from the contract in exchange for $900 million by Pakistani shareholders. Under the new agreement, Barrick Gold Corporation would operate the Reko Diq mine with 50% share, while the federal government and Balochistan government each would own 25pc share. Three state-owned enterprises Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Private Limited (GHPL) – would hold 25pc share on the behalf of the federal government.
It is also worth noting that to pave the way for signing of the agreement the Economic Coordination Committee (ECC) of the Cabinet had last Sunday approved two important agenda items related to Reko Diq project. Ministry of Energy (Petroleum Division) submitted a summary on accrued interest with respect to the amount held in an escrow account in connection with the Reko Diq Project dispute settlement. It was presented that government of Pakistan (GoP) and provincial government of Baluchistan (GoB) entered into an out-of-court dispute settlement with M/s Tethyan Copper Company Pvt Limited- a consortium of Barrick Gold Corporation of Canada and M/s Antofagasta PLC of Chile, in respect of Reko Diq Copper-Gold Project in Chaghai district of Baluchistan.
As per settlement terms, government of Pakistan has to clear liabilities to Antofagasta PLC. In the light of the terms of agreed settlement, the ECC allowed Finance Division to direct GHPL (for its own as well as GoB’s share), OGDCL and PPL to deposit the aggregate amount of interest to the sum of US$ 22,718,173/- in the escrow account from March 31, 2022 to December 15, 2022. The ECC further allowed Finance Division to arrange the interest payable for GoB’s share amounting to US$ 8,519,314 /- from the loan of Rs. 65 billion already raised by the GHPL with the GoP guarantee. Further, the ECC allowed the concerned Divisions of GoP and the SOEs to act in such a manner to ensure that the deposited amount along with interest deposited by the SOEs in the escrow account to form part of the consideration for share purchase of Reko Diq Mining Company Limited. The ECC also considered and approved a proposal of Finance Division through a summary on funding plan of Government of Pakistan for share of Government of Baluchistan in Reko Diq Project. As per proposal, overall funding commitment of US$ 717 million over the period of 6 years by GoP in respect of GoB SPV Project Capital Commitment to be provided by the Govt of Pakistan.