Reko Diq accord can help quash ‘$9b penalty’

Barrack Gold lawyer says over $4b investment would be made in mine project

ISLAMABAD:

The lawyer for the Barrack Gold informed the Supreme Court on Tuesday that if the company’s agreement with the Pakistan government was finalised by December 15, the penalty of $9 billion on the country would be quashed and over $4 billion investment would be made in the Reko Diq project.

A three-judge larger bench heard the presidential reference about the Reko Diq deal. During the hearing, Makhdoom Ali Khan, the counsel for the Barrack Gold continued his arguments. He said that the company wanted the court's opinion to avoid legal complications like the previous agreement about the project.

Heading the bench, Chief Justice Umar Ata Bandial remarked that since the federal government was a participant in the Reko Diq project deal, therefore, the provincial government's permission for investment was not a problem. However, he asked Khan to tell the court about the transparency of the agreement.
Khan told the bench that provincial governments could enter into international commercial projects but they could not join the state level agreements.

He emphasised that Reko Diq deal of $4.297 billion was the single largest investment in Pakistan’s history.

He said that the project would create 7,000 jobs in Balochistan initially and 4,000 jobs in the long-term. he added that the Barrack Gold would build an underground pipeline from Reko Diq to the port of Balochistan, besides undertaking road and community development projects in the province.

The hearing of the reference will continue on Wednesday (today) and Makhdoom Ali Khan will continue his arguments.

President Dr Arif Alvi had asked the Supreme Court whether a new deal on the Reko Diq gold and copper mining project in Balochistan was legally safe under the Constitution of Pakistan and international arbitration.

In a voluminous reference, the president had asked the apex court whether the proposed Foreign Investment (Protection and Promotion) Bill 2022, whenever enacted, would be a valid law under the Constitution.

The presidential reference comes a month after the federal cabinet approved its filing. Dr Alvi has filed it under Article 186 of the Constitution, which is related to the Supreme Court’s advisory jurisdiction and says the president may refer a question of law to the apex court if they think it holds public importance and the court’s opinion is needed.

Canadian company Barrick Gold, which ended a long-running dispute with Pakistan in March to develop the mining project under a new agreement, earlier asked the government to get the deal stamped by parliament and the Supreme Court to make company’s investment in the project sustainable in the long term.

Canada’s Barrick Gold, which owns half of gold and copper mining project, earlier asked govt to get deal stamped by parliament and Supreme Court
Under the out-of-court deal, an $11 billion penalty slapped against Pakistan by a World Bank arbitration court and other liabilities would be waived and Barrick and its partners would invest $10 billion in the project.

The consortium Tethyan Copper Company — of which Barrick and Chile’s Antofagasta controlled 37.5 per cent each — found vast gold and copper deposits at Reko Diq in Balochistan. However, the hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper’s lease, and in 2013 the Supreme Court declared it invalid.

In 2019, the World Bank’s arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining. After a decade-long legal battle, Pakistan announced the out-of-court settlement with Barrick Gold in March. Antofagasta agreed to exit the project.