Copper-gold project: Balochistan refuses to grant mining licence for Reko Diq

Provincial govt terms feasibility study incomplete; TCC spent $220m and four years to compile the report.

QUETTA/KARACHI: The Balochistan Mining Committee has refused to grant a mining licence to Tethyan Copper Company (TCC) for the Reko Diq project.

Advocate General of Balochistan Amanullah Kanrani told The Express Tribune on Wednesday that he will submit the provincial government’s report in this regard to the Supreme Court today (Thursday).

The report says that the feasibility study provided by Tethyan Copper Company – a joint venture between Chilean copper producer Antofagasta and Canada’s Barrick Gold – was incomplete.

The company hired SNC-Lavalin, one of the top three companies of the world conducting feasibility studies, for the study which cost around $220 million and took around three to four years to be completed, according to an official. The company collected over 5,000 samples from an area spread over 13,000 kilometres for its feasibility study.

The Balochistan Mining Committee, headed by the director general of Mines and Mineral Department Balochistan, was formed specifically to examine the feasibility report of TCC on the Reko Diq project.

The court had earlier sought an explanation of the agreements between the Balochistan government and TCC. The Supreme Court earlier this year handed over the gold mining license issue of Reko Diq to the government of Balochistan.

“Tethyan strongly believes that the Reko Diq project can contribute significantly to the development of a modern mining industry in Balochistan and will consider its options for a further course of action,” Antofagasta said in a statement on Wednesday.

Reko Diq project located in Chagai district of Balochistan, an hour’s drive from both Afghanistan and Iran borders, has an estimated fourth largest copper reserves in the world.

TCC had submitted the feasibility report to the provincial government in August 2010 and applied for a mining licence in February 2011.

The company had earlier filed a notice of dispute seeking more time to address the Balochistan government’s concern over granting the mining licence. “TCC can appeal in the court against the decision,” said a Balochistan government official. The mine having a life of 56 years is expected to produce 200,000 tons of copper and 250,000 ounces of gold annually.

When TCC submitted the report, the Balochistan government being part of the project was expected to invest 25 per cent in the development phase and in return get profit from its portion of investment along with royalty and taxes. In the complete project, the federal and provincial governments were supposed to get 52% of the profits while TCC was supposed to get 48%, according to the company.

However, the provincial government in November 2010 decided not to participate in the project.

Tethyan Copper Company’s spokesperson was not available for comment.

Published in The Express Tribune, November 17^th,  2011.