Reko Diq case: Centre refuses to pay Rs450m fee for legal experts
The federal government has distanced itself from the multi-billion-dollar Reko Diq gold and copper mining saga by refusing to pay Balochistan the Rs450 million it needs to pay legal experts to fight the international arbitration case filed by Tethyan Copper Company.
Pakistan is currently in litigation with TCC at the International Centre for Settlement of Disputes in Washington and is hoping for an out-of-court settlement, said a top federal government official.
The panel of legal experts representing Pakistan include Cherie Blair, wife of former British Prime Minister Tony Blair, Barrister Mehnaz Malik, Advocate General Amanullah Kanrani and Ahmer Bilal Soofi.
TCC filed for international arbitration in November 2011 after Balochistan blocked the company from mining copper and gold by rejecting its application. TCC had submitted the feasibility report to the provincial government in August 2010 and applied for a mining licence in February 2011.
Tethyan Copper Company had hired SNC-Lavalin, one of the top three feasibility study companies in the world, to prepare a feasibility study which cost around $220 million and took around three to four years to be completed.
The petroleum ministry had sought legal opinion from the law ministry which was of the opinion that the provincial government of Balochistan should pay the fees for legal experts, official said.
The central government has also refused to pay damages if TCC wins the case in international court, official said adding that it has asked Balochistan to consider renegotiating the deal to reach an amicable settlement with the company.
According to sources, the law ministry has also suggested that the Balochistan government should pay damages if the international court rules in favour of TCC.
Several foreign companies have refused to make investment in Pakistan after TCC went to international court.
TCC, which is represented by Antofagasta of Chile and Barrick Gold of Canada, holds 75% share in the project while Balochistan has a 25% stake.
TCC claims it has invested over $500 million in exploration, scoping and feasibility studies on the project. Total investment is projected to be $5 billion over a period of five years.
This is not the first altercation between the mineral-rich province and TCC. In the first one, Balochistan refused TCC’s proposal to become a partner by financing 25% of the project. Secondly, TCC was concerned about purported involvement of a Chinese company in the same project.
In a letter written to then petroleum minister Naveed Qamar in September 2009, Pakistan’s Ambassador to Chile Burhanul Islam wrote that it was not a good idea to entertain Chinese company MCC in the same mining site, which had been offered to TCC with all commitment, responsibility, investment and legal claims. He suggested that the Chinese, if aspiring for a project, could be offered a separate mining site.
In a feasibility report submitted to the Balochistan government, TCC projected a turnover of over $60 billion for the gold and copper project over a span of 56 years. This projection was based on the price of $2.2 per pound of copper and $925 per ounce of gold in 2009. The mine has estimated reserves of 11.65 million tons of copper and 21.18 million ounces of gold.
Published in The Express Tribune, August 3rd, 2012.
COMMENTS (12)
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The TCC saga is fraught with (stupidity) and arrogance on both sides while keeping the people in the dark. The GOB should be thankful that a Consortium this size would agree to invest $5billion and create 12thousand jobs. After consulting with the Top people on both sides it is my considered opinion that an OMBUDSMAN type of figure needs to be appointed and this issue should come in front of the Public to make the decision.
I fully endorse to what Mr Mustikhan has brought forth.
The best recourse for both the parties i.e. TCC & Government of Balochistan would be to go for an out of court settlement which would be in the best interest of both.
TCC is vying for a change in the Provincial setup after the elections but this could be wishful thinking and things may get even worse. For the time being let us say that TCC wins the Arbitration, how can it operate without the help and support of the Government under the present law and order scenario. Mining Lease is not the only issue, the corridor from Reko Dek to Gwardar Port for the Concentrate Pipe Line and service road has to be leased from the Provincial Government. Would the decision of the Arbitration be obligatory upon the Government of Balochistan to grant this lease for the Corridor? Would the Government of Balochistan be obligated to offer land for the thickening facilities at Gwadar? Will the Government of Balochistan/Pakistan be obligated to provide security to the Concentrate Pipe Line throughout its length of hundreds of Kilometer?
I have my reservations at the stance of both GOB and TCC as the mistrust prevailed between them from day one that led to the delay in the implementation of the Project. TCC has submitted a twenty two volume feasibility report to GOB. Does GOB have the manpower and capacity to evaluate these documents and do they have information to authenticate the assumptions on which the feasibility study has been based?
There are yet too many questions left unanswered to ascertain the eventual fate of the Reko Dek Project at this stage.
You tried to cheat TCC and they stood their ground and took you to court -- now your trying to cheat your attorneys/legal experts -- and you wonder why your having a tough time getting international investors?
Pakistan must be in a critical situation now. How can Pakistan compensate the damages which are in huge money if reluctant to pay even a less money for the fee of legal experts? going for an out-of-court settlement is the best and easy way of resolving this dispute..
Pakistan must be in a critical situation now. How can Pakistan compensate the damages which are in huge money if reluctant to pay even a less money for the fee of legal experts? going for an out-of-court settlement is the best and easy way of resolving this dispute.
TCC good luck! Our government should be taught a lesson for not honouring a legal contract. The Balauchistan Mining Rules provide for specific fee for reconnaissance, exploration and mining licences. Plus royalty percentages are clearly specified. TCC was very kind to give 25% share in the project. The owner has to pay their share in the business expenses. We don't have the money, experts and equipment to run REKO DIQ and that the plain truth.
Since the day my country came into existence, my people have been exploited and made fool's of...that is why we are such willing believers in finding a pot of gold at the end of Reko Diq rainbow....just like we're chasing the tons of gold at the end of the Thar Coal rainbow
Kick TCC out. It should be exclusively mined by Pakistan.
Someone better pay. Did the government officers not think about this.Did they not negotiate the fees.Did they not get approvals before engaging these legal experts?.This whole government is dysfunctional