Reko Diq controversial project
Posted by Faheem Belharvi
Thursday, December 20, 2012 – Reko Diq, a small town in the North-West of Chagai District, is now identified for its large copper and gold reserves in raw form. This remote area of Pakistan is sparsely populated in Baluchistan. It has one of the largest undeveloped copper and gold mining deposits, worth billions of dollars, in the world.
This natural treasure lies below the sand. The government of Baluchistan signed an agreement with Australian BHP Billiton, one of the world’s largest mining companies, to explore gold and copper at Reko Diq in Chaghi. After the survey of the area it was concluded that 200 to 500 million pounds copper can be extracted through this venture annually. The project has potential to generate a big mining industry in Pakistan. It has potential to become a multi-billion dollar project and can change the destiny of the nation. It contains large copper-gold deposits of different grades and categories. A number of reddish rocks with large crystals also exist in the area.
The feasibility report shows that total mineral resources at Reko Diq are of about 5.9 billion tons of ore. Economically mineable portion is about 2.2 billion tons. It is estimated that an average copper grade of 0.53 percent and an average gold grade of 0.30 grams per ton can be processed “to produce12.3 million tons of copper and 20.9 million ounces of gold in the form of payable metal in about 56 years of mine life.” The estimate includes probable reserves at the Tanjeel of 128.8 million tons with a copper grade of 0.7%.
The provincial government and the BHP entered into a new agreement in 2000 over the Reko Diq mining lease. This agreement was finally bought by the TCC. “Royalties were reduced from the initial four to two per cent. Terms for the provision of cost-free land for an airport and a 400 km Reko Diq-Gwadar road were accepted.” It is in the agreement that 25 % share will be paid to the Baluchistan government after it invests 25% in the project. The main license holders in this joint venture are the government of Baluchistan ( 25 % share), Antifagasta Minerals ( 37.5 % share) and Barrick Gold(37.5 % share). Nonetheless, it is a highly controversial contract.
The provincial government has now accused TCC of violating the terms and rules. The Baluchistan government now wants to run the project itself. There are several flaws in the scheme and the companies have not much bothered about the drinking water and environmental problems. The shortage of water is the biggest issue. The project depends upon sub-surface water. It is, in fact, pre-requisite for this project. The whole process has intense environmental problems. It probably does not have program of recycling of fresh water. The companies involved in Reko Diq project can create huge water problem in the area unless proper planning is made in this connection.
According to INP “ Tethyan Copper Company, a Canadian and Chilean consortium of Barrick Gold and Antofagasta Minerals formed to explore gold and copper, had invoked the jurisdiction of the ICC and ICSID against the government of Pakistan for not renewing the prospective Reko Diq minerals license in accordance with Baluchistan Mining Rules 2002.” Recently ICSID has given verdict and allowed Baluchistan government to carry out mining activity in the controversial area at Reko Diq. It has been concluded that the company had submitted insufficient feasibility report of six kilometers only.
The apex court continued to hear the case of identical petitions filed against the federal government’s decision to lease out gold and copper mines at Reko Diq in Chagai district to foreign companies. The Chief Justice remarked that court’s interest is in the validity of the agreement. Khalid Anwar, council for Tethyan Cooper Company Pakistan (TCCP), told the apex court that TCCP has a dispute both with the federal and provincial governments. He ensured the court that wealth of the nation had not been plundered by the company. He further added that it would take time to start the exploration.
He stressed the point that Tethyan Copper Company Pakistan ( TCCP ) had spent millions of dollars for feasibility report on the Reko Diq project. He further submitted that all the allegations made against the Chaghai Hills Exploration Joint Venture Agreement (CHEJVA) were irrelevant.
Moreover, Ahmer Bilal Sufi, counsel for the Balochistan government, raised the point that land had not been specifically allotted in the Reko Diq agreement. According to Chief Justice the agreement did not ratify a mining license in its spirit. It simply agreed to the filing of a request for that purpose. “The Chief Justice has demanded copies of Reko Diq mining lease agreement from Baluchistan government to ascertain legality of the contract between Chagai Hills Exploration Joint Venture Agreement (CHEJVA), BHP and Baluchistan Development Authority.” The Chief Justice has pointed out certain flaws in the contract. He noted that the agreement was signed without mentioning the date on it. He added the governor cannot issue such directives to sign any addendum. The Chief Justice remarked that all foreign companies are bound to follow the laws of the country. They have no right to dictate a sovereign nation. “The Reko Diq case, according to Chief Justice, would be considered by keeping within the limits of the system of the country and ensuring transparency in terms of law.”
Dr. Samar Mubarakmand’s viewpoint is that government of Baluchistan need not sign agreement with any foreign company. He believes that these companies have their own vested interests. Pakistani scientists and engineers can develop the Reko Diq project by dint of great effort. It is a national property and needs to be protected properly. It’s high time the proper mechanism had to be evolved to generate revenue. It should be beneficial for the nation and free from polluted hands.
The lease duration, in any contract, should not exceed two years. The long lease agreements open the door of corruption for the corrupt rulers. It is claimed that this project would be beneficial for Baluchistan in the form of substantial profits as well as for the economy of the nation. The common people of Baluchistan should be the major beneficiaries of the Reko Diq program and not the corrupt politicians and their companions.(Muhammad Daheem)
