ISLAMABAD: The Supreme Court of Pakistan will tomorrow decide the fate of the most talked about and controversial gold and copper mining project in the history of Pakistan that has the potential to change the fate of its people and bring them on track towards prosperity and a better future for their generations to come.
The Reko Diq project located in district Chaghi of Balochistan is being developed by Tethyan Copper Company Pakistan Pvt. Limited (TCC) which is jointly owned by Barrick Gold Corporation (Canada), the world’s largest gold producer, and Antofagasta (Chile) the 5th largest copper producer. The combined Market Capitalization of these two companies is about US$ 67 bn and between them they are operating 30 mines spread over five continents.
Since 2006, when these mining giants acquired TCC, the profile of Reko Diq mine changed dramatically. In just four years, it hired more than 200 permanent employees and more than $220 millions investment has been made on extensive exploration campaign, technical studies, environmental and social impact studies (ESIA).
All this culminated in a world class bankable Feasibility Study of Reko Diq project. Minerals being a provincial subject under the constitution of Pakistan, the report was submitted to the government of Balochistan by TCC.
Considering that investment in exploration for base mineral is high risk and on average only about one in every hundred metallic mineral prospects explored goes into to production, it is indeed a big achievement that Reko Diq project has reached a stage where its viability for production has been established. Feasibility report of Reko Diq project has been formalized by one of the world’s top three technical and engineering firms.
According to the Feasibility report, Reko Diq is what is typically known as a large scale, low grade ore deposit. The average annual production is estimated to be 200,000 tons of copper and 250,000 ounces of gold for 56 years of mine life.
A project with a profile such as that of Reko Diq, low grade ore deposits- needs to be operated at the highest possible levels of efficiency to be profitable and to actually realize the fruits of mineral wealth buried underneath Balochistan
Tethyan Copper Company (TCC), has so far invested over US$220 mn in the exploration phase of Reko Diq project and plans to invest over US$3.3 in the development of the mine. TCC will also give more than half of the pre-tax earnings to the governments of Pakistan and Balochistan.
Experts giving counterarguments to this campaign in the media say that in the current environment, it is not easy to attract genuine investors in Pakistan and when two internationally reputable companies like Barrick Gold and Antofagasta are willing to invest in Balochistan, it is an opportunity that Pakistan should not let go. With the investment of over $220 million in last four years, these investors have established their credibility as serious investors and have demonstrated their commitment by complying with all the rules and regulations and respecting the long-standing agreement which was signed by their predecessors.
As Pakistan has no history of modern large scale mining, there are misconceptions about the value and quantity of the mineral resource at Reko Diq. Quantifying resources and its valuation is a complex and technical process and it’s easy for non-professionals to get carried away by simplifying it. Valuation of a mineable resource factors-in several variables which includes technical issues like metallurgical recoveries to non-technical variables like cost of doing business in a country. However, for analysts who understand the business, it is quite clear that the reporting mechanisms of the co-owners of TCC relating to declaration of resources; production figures etc. are of international standards and all figures are audited by leading auditing firms and any misreporting by them can land them into trouble with their shareholders and securities exchange commissions of London, New York and Toronto where they are listed.
The whole nation sees Reko Diq as a ray of hope in these troubled times and awaits the decision of this unique legal case being heard by the Supreme Court of Pakistan for the past few months. Pakistan is already widely perceived as an extremist if not terrorist country. The economic future of the country will be at stake if we are branded as a defaulting country that reverts on its commercial commitments.