What's new

Barrick, Pakistan and Balochistan Agree in Principle to Restart Reko Diq Project

hydrabadi_arab

FULL MEMBER
Jul 31, 2015
1,093
4
2,223
Country
Pakistan
Location
Pakistan
Islamabad – Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) and the governments of Pakistan and Balochistan have reached agreement on a framework that provides for the reconstitution of the Reko Diq project in the country’s Balochistan province. The project, which was suspended in 2011 due to a dispute over the legality of its licensing process, hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits.

The reconstituted project will be held 50% by Barrick and 50% by Pakistan stakeholders, comprising a 10% free-carried, non-contributing share held by the government of Balochistan, an additional 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises. A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties.

Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period. The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan. If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce.

Barrick’s president and chief executive officer Mark Bristow hailed the agreement as an important step towards the development and operation of Reko Diq and a tribute to the decisions of all parties to work towards a mutually beneficial outcome in a spirit of partnership.

“Barrick has successfully partnered with host countries worldwide and our philosophy of sharing the economic benefits our mines generate equitably with core stakeholders is also evident in the ownership structure of the new Reko Diq. This is a unique opportunity for substantial foreign investment in the Balochistan province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come. In addition to local employment and skills development, local procurement, infrastructure upgrades and improved medical and education systems, Reko Diq could also be the springboard for further exploration and other mineral discoveries along the highly prospective Tethyan Metallogenic Belt,” he said.

On closing, Barrick will start a full update of the project’s 2010 feasibility and 2011 expansion prefeasibility studies, which envisaged a conventional truck-and-shovel open pit operation with comminution and flotation processing facilities producing a high-quality copper-gold concentrate. Bristow said that if all went according to plan, Reko Diq could be in production within five to six years.

 

hydrabadi_arab

FULL MEMBER
Jul 31, 2015
1,093
4
2,223
Country
Pakistan
Location
Pakistan
What happened to Antofagasta? Here is details. Pakistan will have to pay $900m to Antofagasta by next year. Thats huge hit to Pakistan foreign reserves. But now Pakistani state owned enterprises will work alongside Barrick to develop Reko Diq.

Antofagasta : Agrees in Principle to Exit Reko Diq Project in...​


03/20/2022 | 05:58am EDT

Antofagasta plc (the "Company"), Barrick Gold Corporation ("Barrick") and the Governments of Pakistan and Balochistan have today reached agreement in principle on a framework that provides for the reconstitution of the Reko Diq project ("Project"), and a pathway for the Company to exit the Project.

The Project was suspended in 2011 due to a dispute over the legality of its licensing process. Antofagasta has decided not to participate in the reconstituted project as the Company's growth strategy is focused on the production of copper and by-products in the Americas (particularly Chile, Peru, the USA and Canada) and the Reko Diq project does not support this strategy.

The parties have agreed to work together over the course of this year to finalise and approve definitive agreements. If definitive agreements are executed and the conditions to closing are satisfied:
  • the project will be reconstituted under Tethyan Copper Company Pty Limited ("TCC"), a joint venture held equally by the Company and Barrick, and TCC's International Centre for the Settlement of Investment Disputes ("ICSID") award will be resolved;
  • a consortium comprising various Pakistani state-owned enterprises will acquire shares in TCC's subsidiary which will hold the Project for consideration of approximately US$900 million; and
  • proceeds will be distributed to Antofagasta in return for its exit from the TCC holding structure.
If the conditions to closing are satisfied during 2022, the Company would expect to receive those proceeds during 2023.

The Company notes that, although this agreement in principle is an important step towards its exit from the Reko Diq project and the resolution of the ICSID litigation announced in July 2019, there can be no certainty that definitive agreements will be finalised or approved, or that the conditions to closing will be satisfied.
 
Last edited:

hydrabadi_arab

FULL MEMBER
Jul 31, 2015
1,093
4
2,223
Country
Pakistan
Location
Pakistan
more details.

Pakistan, TCC reach out-of-court settlement on Reko Diq project​

Project shall be revived and developed by Barrick Gold in partnership with Pakistani entities



ISLAMABAD:

50 per cent of the new project’s shares will be owned by Barrick Gold, while the remaining shares shall be owned by Pakistan, divided equally between the federal government and the provincial government of Balochistan.

The federal government’s shares of 25% shall be divided equally amongst three state-owned entities (SOE), namely Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan Limited (GHPL).

Balochistan’s shares shall be held by a company wholly-owned and controlled by the Government of Balochistan.

Earlier, the lawmakers of Balochistan expressed their satisfaction with the terms of the proposed deal after senior federal government officials addressed concerns on the out-of-court settlement for the Reko Diq project.
A senior official in the AGP’s office, along with additional secretaries of petroleum and finance, provided an eight-hour briefing to the members of the Balochistan Assembly in December 2021.

Balochistan’s lawmakers were informed that the most daunting challenge was to clear the liability of the $6 billion fine awarded by the International Centre for Settlement of Investment Dispute (ICSID) on account of scrapping the lease mining agreement with TCC.

In order to clear the liability, a deal was negotiated wherein there was an opportunity that TCC’s shareholding company, Barrick Gold, might resume the project under different terms. Likewise, Balochistan’s profit share would be 25%, which was equal to the share owned by the federal government.

Balochistan’s lawmakers were further informed that the federal government would bear the burden of the province's share of the cost of the project.

Prime Minister Imran Khan had already announced that in line with his government's vision for the uplift of smaller provinces, he had decided that the federal government would bear the financial burden for Reko Diq and its development on behalf of the Balochistan government.

Sources revealed to The Express Tribune that the project’s development would result in an investment of approximately $10 billion in Balochistan, including $1 billion which would be invested in social uplift projects such as roads, schools, hospitals, and the creation of technical training institute for mining. The investment is also said to result in the creation of over 8,000 jobs.


“This project shall make Balochistan the largest recipient of foreign direct investment in Pakistan and the Reko Diq project shall be one of the largest copper and gold mining projects in the world”, sources added.
In order to ensure optimal utilisation of the nation’s mineral wealth, the government is considering setting up a smelter.

The agreement was reached after several rounds of negotiations over the last three years.
In August 2019, the premier had set up a committee to steer the negotiations, with an aim for early development of the mines. In this effort, the federal and provincial governments were assisted by international advisors including the law firm White and Case and investment bank, Lazard.

To ensure the deal’s compliance with the law, the government is to submit the matter before parliament and the Supreme Court.

The Balochistan cabinet on March 19, approved the proposed agreement and settlement regarding the Reko Diq project. The approval was given during a special cabinet meeting chaired by Balochistan Chief Minister Abdul Quddus Bizenjo.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom