Reko Diq investor wants deal vetted by parliament, SC

ISLAMABAD:

Barrick Gold Corporation, the Canada-based mining group, has asked the government to get the Reko Diq gold and copper deal stamped by parliament and the Supreme Court for long-term sustainability of the company’s investment in the project.

Mark Bristow, president and chief executive officer (CEO) of Barrick Gold, said that the company was still negotiating the legal framework with the present government and wanted legislation on this deal.

“We want partnership framework conforms to legislation,” Bristow told a press conference in Islamabad. He said they wanted transparency in the execution of the project and that parliament and the Supreme Court vet this deal.

Under an agreement, Barrick Gold would operate the Reko Diq mine with 50% share, while the Balochistan government would own the 25% share, and state-owned enterprises – Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Private Limited (GHPL) – would have the remaining 25%.

Previously, Pakistan and foreign companies, including Barrick Gold, had fought a legal battle in the international court of arbitration over the Reko Diq mining issue. Later, both sides entered into an out-of-court settlement during the tenure of the previous government.

As a result, a Chile-based firm exited the deal after the payment of $900 million. However, Barrick decided to become a 50% partner of Reko Diq mining project. Bristow said that the company wanted long-term relationship with the state of Pakistan.

He termed Pakistan a very attractive “destination for investment” but stressed that legal protection was the key to big foreign investment coming to Pakistan. Referring to legal battle, Bristow said that it did not benefit any party.

“We had been fighting for long and decided to find out a solution to execute Reko Diq project as the fight was not good for any party,” he said, adding that the project could attract additional investment in the region.

Bristow revealed in the press conference that the Reko Diq project would attract a total of $10 billion investment in two phases. “There will be $7 billion minimum investment in the first phase and $3 billion in the second phase,” he explained.

Bristow ruled out initial public offering (IPO) to generate funds. “Barrick Gold has strong balance sheet, so we do not need to raise money and are able to support investment,” he said.

When asked further about the possibility of setting up a refinery in Pakistan to process raw material from the project, chief of the Canada-based mining group said that such a proposal was not feasible at the present stage.

Responding to another question pertaining to the law and order situation in Balochistan, Bristow played down any such worries, saying that Barrick Gold had worked in conflict areas and that it had its own plan to execute the Reko Diq project.

“We will invest in the communities, in social responsibility, and will offer 100% jobs to the local people,” he said, adding that the Pakistani students would be offered scholarships to study in the top universities of the world.

Training of the local people by import of technology would also be the objective, Bristow said. He assured that the company would ensure all international standards of the environment. He added that a distillation plant would also be set up.

“The company will work on a three-pronged strategy to give high quality asset to unlock more value for the Pakistani and the Baloch people. It will work on building infrastructure, water security and power in Balochistan.”

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Earlier, Bristow held a meeting with Finance Minister Miftah Ismail and shared a clear vision for the Reko Diq copper-gold project. Both sides resolved to develop it into a world-class mine that would create value for the country and its people for multiple generations.

Reko Diq is one of the world’s largest undeveloped copper-gold mine. Earlier this year, an agreement was reached in principle between the federal government, the Balochistan government and Barrick Gold to restart the project, which has been on hold since 2011.

For this purpose, the definitive agreement, underlying the framework agreement, is currently being finalised by teams from the mining group and the government of Pakistan. Once the necessary legalisation steps have been taken, the original feasibility study would be updated.

The process is expected to take two years, after which the construction in the first phase will start. The first production of copper and gold is expected in 2027-28. Both sides agreed that Balochistan would get its due share.

“Balochistan and its people should receive their fair share of the benefits,” Bristow said. “At Barrick, we know that our long-term success depends on sharing the benefits we create equitably with our host governments and communities.”

At Reko Diq, Balochistan’s shareholding will be fully funded by the project and the federal government, allowing the province to reap dividends, royalties and other benefits of its 25% ownership without having to contribute financially to the project’s construction or operation.

“It’s equally important that Balochistan and its people should see these benefits from day one. Even before construction starts, when the legalisation process has been completed we will implement a range of social development programmes,” Bristow said.

These programmes, the company chief said, would be “supported by an upfront commitment to the improvement of healthcare, education, food security and the provision of potable water in a region, where the groundwater has a high saline content”.

Finance Minister Miftah Ismail said that the development of Reko Diq represented the largest foreign direct investment (FDI) in Balochistan and one of the largest in the history of the country.

“Like Barrick, we believe that the future of mining lies in mutually-beneficial partnerships between host countries and world-class mining companies. The Reko Diq agreement exemplifies this philosophy, and also signals to the world that Pakistan is open for business.”

Subject to the updated feasibility study, Reko Diq is envisaged as a conventional open-pit and milling operation, producing a high-quality copper-gold concentrate. It will be constructed in two phases.

The project will start with a plant that will process approximately 40 million tonnes of ore per annum, which could be doubled in five years. With its unique combination of large scale, low strip and good grade, Reko Diq will be a multi-generational mine with a life of at least 40 years.

During peak construction, the project is expected to employ 7,500 people and once in production it will create 4,000 long-term jobs. Barrick’s policy of prioritising local employment and suppliers will have a positive impact on the downstream economy.