$260 billion gold mines going for a song, behind closed doors

[ajpirzada]

International example II


Market Report, "Tanzania Mining Report Q4 2009", published


2010-01-07 16:59:12 - New Materials research report from Business Monitor International is now available from Fast Market Research Major reforms to the legislation covering Tanzania's mining sector are expected in an amended Mining Act that should be tabled in parliament in April 2009, according to local newspaper The Guardian. A development that could have far-reaching implications for the country's mining sector, the momentum for reform has come from a presidential select committee on mining contracts that recommended in July 2008 that the government should own a 10% stake in all mining companies operating within the country. The Guardian reported the main findings of the Mining Contract Review Committee as follows: Mining royalties on metals should be increased to 5% from 3%; tax relief on fuel imports for gold mines should be stopped; royalties on rough diamonds and gemstones, such as tanzanite, should increase to 7% from 5%, while that for cut and polished stones should rise to 3% from zero; a fuel tax should be levied on mining companies with the money to be spent on road building; and royalties from the mining sector should be calculated on gross value, not net back value. The Guardian also reported that the government had lost around US$200mn due to tax exemptions granted to foreign companies. The 12-member presidential review committee, chaired by Judge Mark Bomani, began its assessment of Tanzania's mining sector in November 2007. It has also proposed the establishment of a Minerals Authority charged with the responsibility of supervising all mining activities in the country. This new body would replace the current Mining Advisory Committee. The National Assembly began discussing the Committee's report in October 2008, according to The Guardian. The Parliamentary Committee on Mining quickly requested that the government stop selling its shares in mining companies, stating that no mine should be wholly foreign-owned, and that government shares should be supervised by the State Mining Corporation (STAMICO).

Market Report, "Tanzania Mining Report Q4 2009", published

 

[ajpirzada]

so 25% share other than the royalty and taxes is not bad in my view

 

[deathfromabove]

Most Pakistanis missed a newspaper advertisement over the weekend that indicates that Pakistan’s elected rulers have no qualms conducting deals away from public scrutiny worth billions—even when there are public complaints about it.

AHMED QURAISHI & BILAL KHAN UMERZAI

ISLAMABAD, Pakistan—No one noticed when an international mining conglomerate placed a large advert in a Pakistani newspaper over the weekend seeking to recruit a slick operative to help in dealing with the federal Pakistani government for ‘a major project in the mining industry in Pakistan.’

The advertisement was placed by Tethyan Copper Company in Dawn newspaper yesterday, Sunday, Nov. 7. In explaining the new recruitment, the advert said, “[Tethyan], in partnership with Government of Balochistan, is developing a world-class copper-gold mine in Reko Diq, District Chagal of Balochistan.”

The ad sought to invite applicants for the position of Security & Government Affairs Officer based in Islamabad. As the title suggests, the successful candidate is expected to ensure security on the ground in Balochistan, and create and peddle influence to ensure no government department blocks company interests.

It makes sense the large advertisement did not appear in the other large newspaper of the country, The News International, which probably angered the foreign mining company five days ago when it ran an investigative story exposing a possible underhand deal to sell off the national asset in exchange for greasing the palms of a few greedy Pakistani politicians and bureaucrats.

The advertisement signifies one of two things:

-Either the federal government and the provincial government of Balochistan have renewed Tethyan’s contract;

-Or Tethyan is now part of a new deal involving fresh entrants

In either case, the new recruitment indicates that Pakistan’s elected government is going ahead with plans to sell off the country’s wealth for peanuts or that it has already done so. The problem is that this is being done without public scrutiny or debate, possibly involving commissions or bribes to ensure the companies get the most out of Pakistani assets with very little going to Pakistani government coffers.

If properly utilized, Reko Diq mines and other natural assets, including rare earths, can easily pull Pakistan out of debt and end foreign aid dependence. But this appears impossible under the country’s failed political system and rusting administrative rules requiring an overhaul.

Mining license for Reko Diq was first sold to foreign companies around 2006 under then President Musharraf and Prime Minister Shaukat Aziz. Reports suggested bribes and commissions ensured that Government of Pakistan get very little out of the deal while foreign companies pocket most of the discovered wealth.

There is not much credible public information available on the details of the license granted by the Musharraf-Aziz government. Online data bank Wikipedia.org is not a reliable source of information but this paragraph is posted on the site, referring to the 2006 deal:

“One of the world’s largest copper deposits (and its matrix-associated residual gold) have been found at Reko Diq in the Chagai District of Baluchistan. Reko Diq is a giant mining project in Chaghi. The main license (EL5) is held jointly by the Government of Baluchistan (25%), Antofagasta Minerals (37.5%) and Barrick Gold (37.5%). The deposits at Reko Diq are hoped to be even bigger than those of Sarcheshmeh in Iran and Escondida in Chile (presently, the second and the third largest proven deposits of copper in the world). BHP Billiton, the world’s largest copper mining company, began the project in cooperation with the Australian firm Tethyan, entering into a joint venture with the Balochistan government. The potential annual copper production has been estimated to be 900,000 to 2.2 million tons.”

Even if Wikipedia is sometimes unreliable, the above information checks out. Barrick Gold has confirmed it partially on its website.

All of this means that, circa 2006, the Musharraf-Aziz government sold the most lucrative natural asset of Pakistan cheap, way cheap than anything expected anywhere else in the world. The excuse was that Pakistani government didn’t have the skills to exploit this natural resource and so we might as well get something out of it than nothing.

A Pakistani citizen who did not reveal his name posted the following analysis on the Internet explaining in simple terms what the Musharraf-Aziz government had done. He titled his post, ‘Congratulations—Pakistan is being sold out – Thank you Shaukat Aziz!’

Out of 100% of the mining project:

-37.5% share has been given to Antofagasta Minerals

-37.5% share has been given to Barrick Gold

-Only a mere 25% share has been given to the provincial Government of Balochistan

But that was during the Musharraf ‘dictatorship’, as detractors refer to that era. The irony is that something very similar or possibly worse is happening under the democratic government of President Asif Zardari and Prime Minister Yousaf Raza Gilani. The Zardari-Gilani government refuses to open the bidding process for Reko Diq mine to public scrutiny.

Five days after the front-page The News story, the federal Pakistani government is yet to utter a single word. There has not even been a denial of corruption allegations or a reassurance that Pakistani interest will be protected.

But what could prove a game spoiler for the little scheme hatched by the Pakistani government and its foreign partners is the judiciary. Following The News story, a Pakistani citizen has petitioned the Supreme Court of Pakistan to scrutinize the Reko Diq arrangements.

 

[Al Bhatti]

12-Nov-2010

Pakistan Supreme Court considers petition against Reko Diq copper-gold mine development

The Pakistan Supreme Court is considering yet another challenge to the big Barrick/Antofagasta Reko Diq copper-gold development project in Balochistan

LONDON -

Reports from Pakistan say the country's Supreme Court has issued notices to both the Federal and Balochistan governments regarding a petition against the award of the huge Reko Diq copper/gold development to foreign entities (namely Barrick Gold and Antofagasta). It puts the value of the project at some $260 billion.

Reko Diq is a very large copper/gold project in a sensitive area of western Pakistan. According to Barrick, which has Reko Diq in its medium term mine development programme, it is described as a large copper-gold porphyry mineral deposit on the Tethyan belt in Balochistan, in which Barrick hold a 37.5% interest. (The holding is through Tethyan Copper Co. (TCC) - a JV with Antofagasta with TCC controlling 75% of the deposit and the Balochistan Government the balance). The total resource is put at around 42 million ounces of gold in the Measured, Indicated and Inferred categories and nearly 54 billion pounds of copper. It is in the same area as the existing Saindak copper project which is operated by the Metallurgical Construction Company of China whose lease runs out next year and which may then revert to the Balochistan government..

Barrick puts its share of average annual production from Reko Diq for the first five full years as about 100,000 ounces of gold at total cash costs of $420 - $450 per ounce and 150 - 160 million pounds of copper at total cash costs of about $1.00 - $1.10 per pound. The initial mine development feasibility study is complete and the social and environmental impact assessment is in its final stages. The feasibility study indicates pre-production capital of approximately $3.3 billion (100% basis) based on a 120,000 ton per day processing plant, which is capable of future expansions.

The project is considered as highly controversial in the region and has already gone through a stage where it was rejected by the Balochistan government, which appears to have some designs on taking over the whole project itself, and then re-instated. There is local opposition too in what is a very politically sensitive area of a very politically sensitive region of the world.

The latest petition against the development has been brought by a local group regarding the principle of leasing out gold and copper mines in Balochistan to foreign companies by the federal government. The petition also suggests that the deposit includes big reserves of uranium, which again raises the sensitivity of the development in the region, which borders on Iran to the west and Afghanistan to the north.

The court has directed all the respondents to file their replies by November 24.

Mineweb.com - The world's premier mining and mining investment website Pakistan Supreme Court considers petition against Reko Diq copper-gold mine development - POLITICAL ECONOMY | Mineweb

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I dont know much in these issues but if someone can clarify the following:

"The feasibility study indicates pre-production capital of approximately $3.3 billion (100% basis) based on a 120,000 ton per day processing plant, which is capable of future expansions."

Why not take a loan and pakistan invests directly in the project?

Where we already have so much in loans an extra 3.3 billion will not be a big thing and in the end the loans of the country in total could be paid off with this investment of USD 3.3 Billion!

 

[Al Bhatti]

Barrick Gold Corp., which began the destruction of the Western Shoshone's Mount Tenabo region during Thanksgiving, was voted the fourth Worst Company in the World. Blackwater Worldwide, responsible for murders and brutality worldwide, was voted the fifth Worst Company in the World.[/COLOR] GEO Group, Inc., formerly Wackenhut, profiteering from the misery of migrants and people of color in prisons, was voted the sixth Worst Company in the World.

Barrick Gold, responsible for the deaths of Indigenous Peoples around the world, began its onslaught on the sacred lands of the Western Shoshone at Mount Tenabo during the Thanksgiving holidays. Before leaving office, President Bush Sr. made it possible for Barrick to lease lands for gold mining in Nevada. Once out of office, Bush Sr. went to work for Barrick as a senior consultant.

In Australia, DR Congo, Ghana, Tanzania and New Guinea, Indigenous Peoples are fighting Barrick's destruction in solidarity with the Western Shoshone. They are fighting the coring out of mountains for minute particles of gold and the poisoning of water with cyanide leaching.

Carrie Dann and other Western Shoshone grandmothers said the United States is trespassing on Western Shoshone treaty land, destroying mountains, trees, food and medicine, while leaving dirty polluted water ponds for birds and animals.
"Why doesn't the mining company go dig up the Vatican or the Mormon Tabernacle instead of Western Shoshone lands, I'm sure they will find gold there," said Mary McCloud, Western Shoshone grandmother, mourning the bulldozing of the pines near the ceremonial grounds on Mount Tenabo in November.

Near the Porgera mine in New Guinea, Jethro Tulin of the Akali Tange Association, told Barrick Gold, "Your security guards have been shooting and killing our people and raping, even gang-raping, our women with impunity for years now."

Protest Barrick : Worst Companies in the World: US, Monsanto, Peabody and Barrick

 

[xenia]

SC declines to stay award of contract to Chilean firm

ISLAMABAD, Nov 24: The Supreme Court declined on Wednesday to stay the process of awarding mining contract to a Chilean consortium to explore gold and copper at the Reko Diq development project.

A three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday had taken up identical petitions filed by Barrister Zafarullah and Advocate Tariq Asad.

The stay was denied when the advocate general of Balochistan and deputy attorney general said that no such contract was in the field. The hearing was adjourned for Dec 15.

Advocate Tariq, whose petition is based on a news report, requested the court to summon record of the deal or lease agreement relating to the sale of Reko Diq mines to Tethyan Copper Company, a consortium of Chilean firms. The report alleged that mines worth over $260 billion had been sold at a throwaway price.

The petitioner requested the court to restrain the respondents from issuing a mining licence in an arbitrary and unlawful manner without a de bate on the matter in parliament. He said the government should be asked to make arrangements on its own for completing the process of digging minerals, instead of allowing a company to take the raw material out of Pakistan. There was no dearth of geologists and scientists in the country, he said.

He said the deal had been initiated during the Musharraf government, but when the magnitude of wealth became known, the rulers in Islamabad and Quetta jumped to it to renegotiate the deal allegedly behind closed doors.—Staff Reporter

SC declines to stay award of contract to Chilean firm