ISLAMABAD:
A dispute between Balochistan government and Tethyan Copper Company (TCC) has taken an ugly turn that is likely to jeopardise $3.5 billion in foreign investment and a potential bilateral treaty between Pakistan and Canada.
TCC, a joint venture between Chile-based Antofagasta Company and Canada’s Barrick Gold Corp, seeking a mining license for Reko Diq copper and gold reserves, served a “notice of dispute” to the Balochistan government on Wednesday.
The partners filed the notice after the provincial government refused to meet the company executives and did not extend the 30-day deadline for it to respond to objections that the provincial government had risen over a mining lease.
The provincial government’s attitude disappointed the company which did not have any other option but to invoke dispute resolution clauses of the Chagai Hills Exploration Joint Venture Agreement, Canadian High Commission officials told The Express Tribune.
The provincial government had raised ten objections over mining licence application submitted by the TCC and gave it a month’s deadline to respond. The company repeatedly requested for time to better understand the objections but the government refused to either give time or extend deadline to file a comprehensive response, the diplomats said.
Under the safeguard clauses of the treaty, the two sides now have 120 days to meet and reach an agreement.
High Commission officials said if both parties could not resolve the dispute, the company will have to seek a resolution through international arbitration and seek compensation.
Reuters quoted the TCC Chief Executive Tim Livesey as saying: “It is my feeling that there is a degree of confusion ... and I hope we can resolve the dispute”.
The company has so far spent about $400 million in the exploration and feasibility study and would not leave so easily, the diplomats added.
According to the feasibility study of the project, there is approximately $127 billion worth gold and copper reserves – an estimate contested by the Pakistani experts who say that the real value is over $260 billon. Of the earnings, 52% would go to the federal and provincial governments in shape of taxes, royalty and other incomes while the provincial government would have 25% equity partnership without risk investment. (With additional reporting by Shehzad Baloch in Quetta)
Published in The Express Tribune, October 22nd, 2011.
COMMENTS (14)
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Mines Department in the present set up is defrauding every one from investor to miner to labor. It is not only the big fish like TCC in reko diq which is being mugged, but every one who works in any mining field is their victim. If the department and its minister were not enough, they have been joined by FC also, which plunder in the name of security. They do not let anyone work in the leased area in the name of security, unless one pay them.
Like Ajmal Gorgaich, I too want to be a witness of the bribery charges against the officers of Mines Department and the ministers. They will never let any body do a rightful job unless paid heavily. Present setup in the department is the most corrupt in the last three decades.
With the present provincial political setup and the mafia of mines department, Balochistan is not likely to make any progress in mining. Just see how the officers of the department are defending bribery and corruption. Unless heads are physically rolled for corruption and crimes, things are not likely to change on this side of the Pat feeder Canal
Question is how much money they actually owe, its nt like the hue and cry created by WS firms,where they cry in billions of dollar and when you go into math its pennies.So where do we stand.
This will be another hit Pak will have to take on the chin. Baloch govt cannot unilaterally change terms and conditions for binding contracts with 3rd parties, even if the govt owns the property. A signed deal is a deal. Even if the govt thinks that in hindsight it could have gotten a better deal, that's no excuse to renege on the contract. They should have negotiated better in the first place.
If this goes all the way to arbitration, the Baloch govt will have to pay expenses plus refund investments plus pay compensation for loss due to breach of contract. Money that the govt doesn't have. Not to mention set back to investment for decades and lost jobs/royalties/etc because the case will be tied up in court with appeals and counter-appeals. Then again a Pak state agency will take a judicious path when pigs fly.
Another farce by the Province of Balochistan. I'd like to see them try to extract an ounce of copper from the mine without the help of international engineering firms
Fully agree with Abid comments
Now federal Government has paly a positive role and save this project, becouse it is massive foreign investment.If TCC takes the case in INternational Court, then it will be bad luck for Pakistan as well Balochistan. The reputation of the CM Balochistan is not good, even Dr. Sammar Mubarak Mand is the man, who started conspiracies against Dr. Qadir khan. so how these two corrupt team can run this project. Every Pakistani can run this project, but no one can get benifit. running a project is some thing else ,and running a project on commercial basis is some thing else. Balochistan governemnt can make better the roads only quetta city, the how can they run this project. I request Pakistani media just play a positive role with open eyes, and never support the corrupt politicians. because they just want fill their pockets and increase bank balance.
Baluchistan can have 100% of zero if the Canadians leave
I beleive company cant prove that he has invested $ 400 million in the project so far.If they have paid $ 390 Million out of this investment as executive salary , by taking it out probably $ 10 million will be left as real investment.Rest of matter is easy to solve.