Saindak project: Govt to extend Chinese firm’s gold, copper mining contract

Balochistan to get 5% additional shares in the project.

ISLAMABAD:

The government has decided to extend a multi-million-dollar deal for gold and copper mining in Saindak for another five years after its expiry in October 2012 as Chinese partner Metallurgical Corp of China (MCC) has agreed to give five per cent additional shares to Balochistan.

Sources told The Express Tribune that Pakistan and China had finalised new terms and conditions for a fresh agreement on the Saindak project which would be signed during the upcoming visit of Prime Minister Syed Yousaf Raza Gilani to China.

Earlier, there were plans that all shares of Saindak Metal Limited would be transferred to the Balochistan government under the Aghaz-e-Haqooq-e-Balochistan package after expiry of the mining contract with MCC in October next year. Sources said the provincial government was also reluctant to extend deal with MCC.

“But now the Balochistan government has agreed to extend the deal with MCC, which will give an additional five per cent shares to the province,” a source said.

At present, Balochistan holds 35 per cent shares in the project, the federal government has 15 per cent shares and MCC holds 50 per cent shares. After October 2012, 15 per cent shares of the federal government will go to the Balochistan government.

“After signing of the revised agreement, Balochistan’s stake will increase to 55 per cent while MCC will own 45 per cent shares,” a source added.

At present, the federal and Balochistan governments are locked in a row over the transfer of shares under the Aghaz-e-Haqooq-e-Balochistan package as the Centre has demanded repayment of a loan of Rs29 billion from Saindak Metal.

Saindak Metal Managing Director Raziq Sanjrani had asked the federal government to either transfer the company to Balochistan free of cost or keep 10 per cent shares against investment. The company has so far repaid Rs6 billion to the federal government.

However, the Balochistan government argued that the federal government had not given any loan to the company, rather it was an investment and the Centre could not declare the investment as loan.

Petroleum ministry’s spokesman Zafar Iqbal Qadir, while confirming the extension in the mining agreement, said a committee was working on settling financial matters between Saindak Metal and the federal government.

During trial production in 1995, the Saindak project produced 1,500 tons of blister copper but the project could not kick off due to shortage of trained manpower and working capital. The government had been incurring expenditure of Rs300 million annually on staff salaries and maintenance of machinery and other facilities.

The cabinet in a meeting held in February 2000 constituted a lease committee that recommended leasing of the project to MCC. Thereafter, a lease contract was signed with MCC on November 30, 2001 for 10 years.

Published in The Express Tribune, May 17^th, 2011.