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Written by Malik Ayub Sumbal
Pakistan’s largest copper-gold mining project is in shabby waters due to the ongoing Supreme Court case in which suo moto action has halted all activities of the Reko Diq mine. The courts have asked the government of Pakistan to justify the contract given to the Tethyan Copper Corporation.
The Supreme Court of Pakistan intervened, believing that the contract to Tethyan Copper Company (TCC) Pakistan—a joint venture of Antofagasta and of Barrick Gold Corporation—has been grossly undervalued and the actual project estimate should be in the billions of dollars. Their suo moto decision is in the larger interest of the country and the nation.
Due to the Reko Diq hearing, all site work has been halted for more than 6 months following the publication of a news story by a Pakistani newspaper citing serious embezzlements in the awarding of the contract to the Antofagasta and of Barrick Gold Corporation.
Reko Diq is a massive copper and gold project in Chaghi, Pakistan containing 12.3 million tons of copper and 20.9 million ounces of gold in inferred and indicated resources.
The copper-gold deposits at Reko Diq are believed to be even bigger than Sarcheshmeh in Iran and Escondida in Chile. The Reko Diq copper deposits are four times larger in copper ore tonnage than the neighboring Saindak mine.
The most credible international surveys suggest that Reko Diq is one of the biggest undeveloped copper projects in the world with over 11 billion pounds of copper and nine million ounces of gold. So far, three foreign companies have purchased stakes in the strategic copper and gold assets setting off a cycle of ‘change of foreign ownership’ of the Reko Diq copper project. Pakistan has only 25 per cent stake in the Reko Diq copper project. The rest of the 75 per cent stake had first been transferred to BHP Billiton, the Anglo-Australian mining giant and then BHP Billiton under a ‘deed of waiver and consent’ transferred it to the Australian Tethyan Copper Company (TCC). Now TCC has sold its 19.95 per cent stake to Antofagasta Minerals.
According to some objective facts and figures, Reko Diq’s annual production is estimated at 200,000 tons of copper and 250,000 ounces of gold contained in 600,000 tons of concentrate. At today’s international prices of copper at $8,600/ton (with cost of production at $1,500/ton) and gold at $1,350/ounce (with cost of production $350/ounce), the profit works out to $1.42 billion for copper and $2.5 billion for gold, $4 billion approximately annually from a revenue of $4.65 billion. This translates to $224 billion’s profit from revenues of $260 billion over the life of the mine.
According to TCC, the facts are totally different from what the media is reporting. The media has manipulated the issue of Reko Diq to create hype in the country according to their vested interests.
TCC claims that the country’s media has nothing to do with strengthening the economy of Pakistan through these mega projects, but rather have their own planning and agenda to maximize advertising revenue by sensationalizing the issues.
Sources revealed that due to the lack of technical information regarding the country’s mining sector and expertise, the issue has been extremely manipulated with wrong information disseminated among the masses.
Part of this media confusion, however, is because Tethyan Copper Company (TCC) media officials have been ordered by their lawyers and senior management not to comment on Reko Diq with any journalist or media outlet. Speculation has thus resulted.
When contacted, correspondent to the Senior Manager Communication Andy Lloyd of Barrick Gold Corporation Toronto, Canada writes: “I do apologize for your difficulties in reaching our representatives in Pakistan. I know they have been fairly pre-occupied with the court case, and we are very limited as to what we can say while the case is before the courts. We are generally declining to comment at this time.”
Manager of Corporate Communications of TCC Samia Ali Shah also refused to comment on the issue when contacted, stating the matter is in the courts and they have to announce the final verdict.
The mining experts, analysts and the senior lawyers in Pakistan are expecting a strong judgment from the Supreme Court in the Reko Diq case as it is sub judice.
Malik Ayub Sumbal is a freelance investigative journalist based in Islamabad