Reko Diq case: Centre refuses to pay Rs450m fee for legal experts

Wife of former British prime minister Tony Blair one of Pakistan’s representatives.

Our Correspondent August 02, 2012


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.

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