Reko Diq: TCC files notice of dispute against Balochistan government

The Balochistan government is reluctant to grant the mining lease to TTC.

Shezad Baloch October 21, 2011

QUETTA: The Tethyan Copper Company (TCC) filed a notice of dispute (NoD) to seek more time to address the Balochistan Government's concern over granting the mining license on Friday.

According to TCC, the mining firm that concluded exploration at the Reko Diq Copper and Gold project, had filed the NoD on October 19 which allows for a 120 day window during which the TCC and the Government of Balochistan would seek a resolution to their dispute.

TCC and the provincial government are locked in a business dispute as the latter is reluctant to grant the mining lease to TCC, reserving the right to exploit the biggest gold and copper project in the public sector.

The TCC claimed that the company had a right to get the license as it had completed the exploration work after spending hundreds of millions of dollars while the Balochistan government was seeking to operate the mine on its own discarding all other options.

Earlier this year in February, TCC had filed an application for a mining lease (ML) over a mining area within the exploration license EL5 in Chagai district, western Balochistan. The basis of the application was a feasibility study of an initial mine at the Reko Diq project.

If the NoD fails to resolve the dispute between the two parties, it is expected that the TCC may take it to an international arbitration court against the provincial government to defend its right.

The feasibility study was completed and submitted to the Government of Balochistan in August 2010 under an existing agreement between TCC and the government (the Chagai Hills Exploration Joint Venture Agreement or CHEJVA).

At the time of the completion of the study in 2010, and under the provisions of the CHEJVA, Balochistan was entitled to a 25% equity partner in the project, enabling them to profit additionally from the mine development and operations over and above the normal royalty and taxation payments.

However on November 24 2010, the Government of Balochistan had decided not to become a participating party in the project.

Upon receipt of the lease application from TCC, the government regulatory body responded in September with a number of observations, made in the context of an intended refusal.

TCC was given 30 days to respond to the observations.

TCC sought to meet with the government to better understand their observations and concerns and requested an extension of an additional 60 days in order to engage with the government, however no extension was granted.

Under the CHEJVA, TCC filed a NoD on October 19.

TCC is hopeful that the provincial government will engage to meet and discuss the ML application adding that they would like to see the project move forward with the government as a participating partner, so as to benefit Balochistan and Pakistan, stated in statement issued here on Friday.

It further said that the project has the potential to become a model for the development of a modern mining industry in Balochistan, contributing to Pakistan’s economy through a large initial foreign direct investment (the study indicates $3.3 billion initial capital expenditure) and through ongoing revenue generation and local reinvestment during the 56 year mining operation.

The owners of TCC, Antofagasta PLC and Barrick Gold Corporation, are world class mining companies, listed on the main London, New York and Toronto bourses.



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