ISLAMABAD: Prime Minister Imran Khan has issued orders for the formation of a commission to investigate and fix responsibility for the massive $6 billion penalty imposed on Pakistan by the International Centre for Settlement of Investment Disputes (ICSID) in the Reko Diq case.
The premier's directives were communicated in a statement issued by the Attorney General for Pakistan (AGP) Office on Sunday. The statement is the first official response to the $5.976 billion penalty imposed on Pakistan by the ICSID.
The ICSID penalty comes weeks after PM Imran secured a $6 billion bailout from the International Monetary Fund, amid devaluations of the rupee and soaring inflation.
"The prime minister has directed formation of a commission to investigate into the reasons as to how Pakistan ended up in this predicament; who were responsible for making the country suffer such a loss and what are the lessons learnt, so that mistakes made are not repeated in the future," read the AGP statement.
A thorough internal review of this long-standing arbitration shall also be conducted in due course, it added.
"The government notes with disappointment the award by ICSID in the matter of Tethyan Copper Company (TCC) vs Islamic Republic of Pakistan. The tribunal has rendered an award of $4.08 billion in favour of TCC against their claim of $8.5 billion," read the statement.
"This [AGP] Office and other stakeholders, particularly the Balochistan government, are studying the award and reflecting upon its financial and legal implications."
Reko Diq case: Ex-CJP's verdict costs Pakistan $6b
The statement said the Pakistani government shall consult with the provincial government involved to devise a strategy for the future.
"For now, the Government of Pakistan reserves its right to pursue any and all legal remedies available to it under the ICSID regime, international law and all other relevant laws to safeguard its interests," the statement read.
"The government takes note of the press release dated July 12, 2019 made by Antofogasta Plc, one of the parent companies of TCC, and of the statement by William Hayes, the chairman of the Board of Directors of TCC, in which he expressed a willingness to work towards a negotiated settlement. The government welcomes this approach to work towards a mutually beneficial solution that works for both sides," it further said.
Reiterating Islamabad's commitment to its international obligations, the statement said, "Pakistan welcomes all foreign investors and assures them that their lawful rights, interests and assets shall always be protected.
"The mineral resources in Reko Diq are the collective resource of the people of Balochistan and Pakistan. Pakistan is keen for development of this resource to ensure that the development needs of some of the poorest people on the planet are addressed.
"International tribunals are also urged to consider the implications of their decisions and the impact on development and poverty alleviation."
The TCC -- of which Canadian gold firm Barrick and Chile's Antofagasta Minerals control 37.5 per cent each -- is the largest foreign direct investment mining project in the country.
More than a decade ago, the group found vast gold and copper deposits at Reko Diq in Balochistan, and had planned a hugely lucrative open-pit mine. But the project came to a standstill in 2011 after the local government refused to renew the consortium's lease, and in 2013 Pakistan's top court declared it invalid.
On Friday, the World Bank's international arbitration tribunal committee awarded $6 billion in damages to TCC, according to a statement from the company, because of the government's decision to shut down the mine.
The country's legal experts were "studying the award and reflecting upon its financial and legal implications," the statement continued.
Antofagasta Chief Executive Officer Ivan Arriagada said, "We are pleased to reach this milestone after more than seven years of arbitration."
TCC's William Hayes said, "We remain willing to discuss the potential for a negotiated settlement with Pakistan and will continue to protect our commercial interests and legal rights until the conclusion of this dispute."
Barrick and Antofagasta say the proposed plant could produce 600,000 tonnes of copper and 250,000 ounces of gold a year. But the mine is in Chagai district, one of the most deprived parts of Pakistan and rife with sectarian and separatist violence.
The provincial government is also a sleeping partner in the Reko Diq project with a 25 per cent stake.
Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts say, which waste up to 80 per cent of potential because of poor extraction techniques.
Experts have called for more transparent policies to allow mining to flourish.
- With additional input from APP