Pakistan escapes $11b penalty on Reko Diq after new accord: Tarin

Finance minister says deal will also provide the opportunity to avail the largest gold and copper reserve in the world

Minister for Finance and Revenue Shaukat Tarin on Sunday confirmed that Pakistan had reached an agreement to reconstitute the Reko Diq project, enabling the country to avoid the $11 billion penalty as well as to avail the largest gold and copper reserve in the world.

Earlier today, it was reported that an out-of-court settlement of the project in the Chagai district of the province had been finalised. Pakistan is actively engaged with Australia's Tethyan Copper Company (TCC) to reach the settlement as the country was threatened with facing a penalty of $6 billion due to its decision to deny a mining lease with the latter.

In the latest development, the governments of Pakistan and Balochistan, Antofagasta plc, and Barrick Gold Corporation agreed in principle to a framework to reconstitute the project as well as to a pathway for Antofagasta to exit the project.

Addressing a hurriedly called press conference along with Energy Minister Hammad Azhar and Chief Minister Balochistan Mir Abdul Quddus Bizenjo in Islamabad, Tarin said some $10 billion would be invested under this project which would create 8,000 new jobs for the locals.

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Also read: Pakistan, TCC reach out-of-court settlement on Reko Diq project

He added that as per the new agreement, Barric Gold would retain 50 per cent share, while government of Balochistan would get 25 per cent share, and the rest 25 per cent share would be attributed to the state-owned enterprises – Oil and Gas Development Company (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan (GHPL).

He apprised media persons that an agreement was signed in 2006 among a Canadian Company Barrick Gold, a Chilean company Antofagasta plc, and the governments of Pakistan and Balochistan to extract gold and copper from the Reko Diq reserve.

As per the old agreement, 37.5 per cent share each was given to the two foreign companies whereas 25 per cent share was given to the provincial government.

The agreement was suspended in 2011 due to a dispute over the legality of its licensing process. As a result, the International Court of Arbitration leveled $6.4 billion award on government of Pakistan while on the same time the London Court of Arbitration also imposed another $4 billion fine on Pakistan.

The minister further said that soon after taking the charge, Prime Minister Imran Khan actively pursued the case and directed to draw a suitable solution as early as possible.

Also read: Reko Diq to liberate Pakistan from 'crippling debt', says PM Imran

Subsequently, Antofagasta decided not to participate in the reconstituted project and withdrew from its claim of $3.9 billion in place of $900 million.

Tarin informed the newsmen that $900 million would be paid by the three state-owned enterprise (SOEs) and in return they would get 25 per cent share of the project.

Had the PM not taken his personal interest in the case, Pakistan would have to pay the huge amount of $11 billion as a penalty, he maintained.

Tarin also said Pakistan and Balochistan would benefit from the project for more than 100 years and the total worth is estimated to be over $100 billion.

Terming the new agreement a landmark achievement, Hammad Azhar said it was a historic day. He added that according to the Barrick Gold, Reko Diq was the only one part with such huge gold and copper reserves. There were also other reserves in the area, so a lucrative mining cluster is going to be developed in Pakistan.