Chinese firm agrees to work without subsidy on Saindak project

Company sought cut in royalty, project rent due to low metal prices

ISLAMABAD: Metallurgical Corporation of China (MCC) has withdrawn its demand for subsidy in the form of reduced royalty payment and waiving project rent for the Saindak Copper and Gold Project over the next five years.

Earlier, MCC - a state-owned Chinese company - told Pakistan government that metal prices stood at a lower level and in that scenario development of the North Ore Body (NOB) of the Saindak project would not be economical, say sources.



To offset the impact of lower prices, the company sought subsidy through reduction in royalty payment and waiving project rent in order to continue operations for the next five years beyond October 2017.

However, after comprehensive deliberations, MCC has now agreed to continue to work on the project for five years at the existing royalty rate and other terms and conditions in line with a lease agreement.

Mineral deposits found in the project area have been divided into three ore bodies - east, north and south. Minerals found in the south ore mine have almost been utilised and other ore mines need to be explored for future operations.

Continuing work on the project beyond 2017 is of paramount importance for socio-economic uplift of the people of this far-flung area in Chagai district of Balochistan.

The project is providing livelihood to thousands of local people besides making substantial revenue contribution to provincial and federal exchequers and community development.



The government of Balochistan has agreed to a five-year extension in the lease agreement between Saindak Metals Limited and MCC, which will begin from November 2017. The provincial government has also given its consent to continuing the existing arrangements for project operations.

On its part, the Finance Division has endorsed the extension of the lease period, saying that no financial obligation would be placed on the government of Pakistan during the current as well as the extended lease contract.

The Saindak Copper and Gold Project produces blister copper from the ore found in the mines. Earlier, it was a federal government project managed by Saindak Metals Limited, which was 100% owned by the government of Pakistan.

Following a cabinet decision taken on May 9, 2001, the project operation was leased out to MCC for 10 years beginning October 2, 2002.

The federal government, under its Aghaz-e-Haqooq-e-Balochistan package, transferred project ownership to the government of Balochistan after the completion of lease term. The lease period was later extended up to October 2017 with the consent of the provincial government through an agreement.

Published in The Express Tribune, September 21^st, 2017.

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