Reko Diq Myth & Silence of Many??

This is a scandal 500 times bigger than Pakistan Steel. What were the top foreign executives doing in Islamabad? Why foreign companies are being given a generous 75% share? The Supreme Court of Pakistan must intervene before the deal is sealed, although the so-called Balochistan chief minister says Pakistan’s interest will be protected.

Background:

Reko Diq is a small town in Chagai District, Baluchistan having the world’s largest Gold and Copper reserves (!!!). Reports emerging from various sources indicate that the US $ 65 Billion natural deposit might have been sold for US $ 21 Billion to Tethyan Copper of Australia which has taken the contract to develop this mine while Barrick Gold Corporation of Canada and Antofagasta of Chile have a joint-ownership of the copper-gold deposit at Reko Diq.

The Reko Diq deposit is being explored by Tethyan Copper Company Pty Ltd (75%) and the (BDA) Balochistan Development Authority (25%). Tethyan Copper Company is held jointly (50:50) by Barrick Gold Corporation and Antofagasta Minerals. Currently the deposit is at scoping / pre feasibility stage. It is a world class copper / gold porphyry style deposit, typical of the tethyan belt. It has been sold to the Zionist controlled regimes by the Pakistani Government under the dictator at a price of $21 billion. Rough estimates suggest that the gold and copper at the surface accounts for $65 billion worth of deposits.

From Dawn: Reko Diq is a giant copper and gold project in Chaghi, 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 which is in the neighbourhood of Saindak copper project, is four times larger in copper ore tonnage than Saindak. 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 Reko Diq copper project. Pakistan has only 25 per cent stake in the Reko Diq copper project. The rest of the 75 per cent stakes 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 TCC and now TCC has sold its 19.95 per cent stake to Antofagasta Minerals.

Baluchistan is Pakistan’s largest province having 43.5 per cent landmass of the country with only 4 per cent of the country’s overall population. Balochistan remains the most neglected province and 88 per cent of its population lives in subhuman conditions. In terms of literacy, higher education, technological development, healthcare, infrastructure development and industrialization, the province is far behind rest of the country. Nevertheless, Balochistan is endowed with some of the world's richest reserves of natural energy (gas, oil, coal); minerals (gold, copper), having strategic mountainous borders adjoining Iran and Afghanistan on the west and a coast stretching from the Persian Gulf to the Arabian Sea in the south. In 2003, with the allocation of billions of rupees for development and uplift of Balochistan by the federal government, winds of social and political change started blowing. Dozens of mega development projects in Balochistan including Gwadar Port, Coastal Highway, Mirani Dam, Kachhi Canal and Sandak Copper Gold project were initiated. The development of rail, road and sea communication originating from Gwadar in all directions is expected to generate tremendous economic activities in the areas. It will facilitate the movement of goods from China and Central Asian Republics to the countries of the Persian Gulf, Middle East, East Africa, the Indian Ocean and beyond through Gwadar. The projects are aimed at ending the sense of deprivation among the people of Balochistan.

Ever since the Balochistan crisis started, a “foreign hand” is being responsible for the troubles in Balochistan. The tug of war to reach the natural resources of CARs is generally called as “Great Power Game” with Iran, USA, India and Russia as active players promoting their respective national interests. India wants to capture oil and gas reserves from Central Asia and Iran, through Afghanistan and Pakistan. Therefore, it is reasonable to assume that India would attempt to create hurdles and would ensure that the Gwadar deepwater port does not become hub port. Washington's interests in Balochistan have become very pronounced over the period of time. The sole objective of the US was to possess the enormous natural resources of Central Asian Republics as well controlling the transit trade routes. The Baloch see the United States as a potential troublemaker. Some Pakistanis suspect that Washington would like to use Balochistan as a rear base for an attack on Iran and would also like to get China out of the region. To begin US wants to encircle China by not allowing pipeline from Iran through Western China via Pakistan. The United States, in competition with China and Iran, would like to control the oil supply lines from the Middle East and Central Asia and would also like to use its Greater Middle East initiative to dismantle the major Muslim states and redefine borders in the region.

The Roll of Baloch Nationalists and So called Sarmachars:

As far as today we have not seen any target killing, kidnaping of the people of TCC & Raisani network regarding Reqo Dic Exploration team likewise we have seen such violence against people who are working for the development of Baluchistan & Pakistan such as chicness working in Saindeck Project and Gwadar Project. We haven’t seen the BLA-BRP’s pamphlets against TCC and it’s local operatives in Baluchistan, why because they have been paid well to keep their mouth shut and only project their violence where some development efforts are being made for Balochs or Pakistan.

Tethyan Copper Co (TCC):

Tethyan Copper Co (TCC), a joint venture owned by Canada's Barrick Gold and Chilean copper miner Antofagasta along with the Balochistan provincial government, is about to conclude a feasibility study into the site and is expected to apply for a mining license within weeks. Tethyan Copper Company (TCC) and Mincor Resources are engaged in the exploration of copper, gold and other base metals in district Chaghi, Balochistan with an investment of about US$ 152 million. Under the agreement, 75 per cent shares were given to TCC of Australia and 25 per cent to the Balochistan Development Authority (BDA). An annual production of 200 to 500 million pounds of copper is estimated. Reports emerging from various sources indicate that the US $ 65 Billion natural deposit will be sold for US $ 21 Billion to TCC. The TCC states that work on the feasibility study has commenced and the project is expected to be completed in early 2012. It is a world class copper/gold porphyry style deposit. The world copper and gold prices have been doubled from the first estimates for our reserves. Why should we give out 75% of our reserves to get 25% back after investing 25% in the project? The provincial government is seeking to get about 80 per cent of the project share.

Reko Diq, which has been touted as one of the most important mineral discoveries in the last two decades, would produce around 200 000 t/y of copper and 250 000 oz/y of gold, acting CEO of Tethyan Copper Company (TCC) Gerhard von Borries said. TCC owns 75% of the project, with the Balochi government owning the rest. TCC is jointly owned by Canada's Barrick Gold and Chile's Antofagasta Minerals. Von Borries said in reply to emailed questions that the feasibility study into the project was now completed.

“We are currently carrying out a thorough technical revision of it and also of the financial model and assumptions before delivering it to the government of Balochistan,” he said.

The Balochistan government in December announced the cancellation of the Reko Diq agreement with TCC on the grounds that the company violated their agreement and unnecessarily.This was apparently after the government told Barrick and Antofagasta it wanted them to build an on-site copper smelter, which they refused to do. Von Borries puts it like this: “Neither partner is in the business of building or operating smelters. Our concentrates are sold to different smelters throughout the world.

“Our own view is that given the global surplus capacity in smelting/refining, it is not attractive to pursue this kind of investment. We have advised the government that building a smelter as part of our project is not economic, but we expect to cooperate with the government in advancing their plans, if any, to build or operate a smelter.”

Von Borries, who is also Antofagasta capital projects senior vice president, said the Balochi government had not informed TCC of its intentions to go it alone. “We have not had any conversations in this regard.”

What could be an important development in the provincial government granting an extraction licence before the exploration licence lapses in February next year, is if the government agreed to build a copper smelter by itself.TCC said it might have already.

“We have been told by government officials that the government of Balochistan plans to set up a processing facility to process a minor fraction of our production,” said Von Borries. He did not say what percentage of production this would entail. Barrick spokesperson Vince Borg said talks with the Balochi government were ongoing. “TCC is committed to a constructive dialogue and discussions are ongoing. We are confident that we will make progress.”

Antofagasta chairperson Jean-Paul Luksic said at the company's annual general meeting last week: “We remain engaged with the relevant authorities for an expeditious finalisation of a framework investment agreement."

Reko Diq was forecast to cost $3,3-billion, which would be one of the biggest foreign investments in Pakistan to date. Barrick, the world's biggest gold miner, and Antofagasta bought TCC from BHP Billiton in 2002.Since then, copper prices have more than tripled to $ 6 592/t, making the low-grade, but massive resource more attractive.Gold has also gained substantially. The price of the yellow metal has almost tripled from levels around $300/oz in 2000 to the current $1 245/oz.Antofagasta planned to increase total copper production to over 700 000 t/year by 2011, up from last year's 442 500 t.

Delayed the project. In January however, the federal government, indicating a willingness to reinstate an agreement with TCC, conditioned a renegotiation of the mining deal on the formation of a joint venture with a smelting firm, as it preferred to sell processed, rather than raw copper, on the international market.

TCC contends that the authorities' proposal to set up a smelting and refining operation is based on a doubtful perception of benefits, as smelting captures less than 10% of the copper chain value. Some analysts claim that Islamabad has agreed to reinstate the agreement with TCC under pressure from the United States. Washington strongly opposed the provincial government's decision to scrap the Reko Diq deal, which threatened to deprive the country's least developed province of more than $3 billion in investments.

"The problem to a very large extent is not having the basics of understanding in place," Reuters quoted TCC chief executive Peter Jezek as saying. "There is a combination of a lack of information and fear of the unknown. Mining and concentrating actually captures over 90% of the copper chain value, smelting less than 10%. We have pointed out that the economics of smelting and refining are very poor."

TCC, which holds a 75% interest in Reko Diq, has until now been silent on the issue since the Balochistan government, which owns a 25% stake in the project, announced its decision and handed over the project's affairs to the provincial department of mines and mineral development. The department plans to establish a smelting plant in the Reko Diq area for processing 15,000 tonnes of ore.

In January, Islamabad warned that it would bring in new copper firms to perform both mining and smelting works unless the current players make a joint venture with a smelting firm. The federal government has estimated that exports from Reko Diq could be worth $500 billion and regrets the sale of the 75% stake at what it now considers a throwaway price under the government of former president Pervez Musharraf.

"I think we have sold our future," then federal finance minister Shaukat Tarin said, Business Recorder reported on January 20. "Any government, anywhere in the world, can renegotiate such contracts on the basis of national interests, and we will do the same. If we are able to export processed metal, we can fetch up to $500 billion instead of $40 billion under the existing agreement."

The Reko Diq mine is expected to yield 10 billion kilograms of copper and 368 million grams of gold over the 50-60 year lifespan of the project. The people of Balochistan feel dispossessed by this unjust Reko Diq project as the agreement with TCC has not only undermined the rights of the Baloch people, bur also depriving the Balochis worth billions of dollars. Realizing this, the government of Balochistan has cancelled the agreement with TCC Australian company for exploration of copper and gold in the Reko Dik area of Chaghai district. Now, the Balochistan government had handed over affairs of the project to the department of mines and mineral development and acquired the services of eminent nuclear scientist Dr Samar Mubarakmand who would head its board of governors. The proponents of scuttling the project state that the mines will create thousands of high paying jobs and give a massive boost to the local economy. However, this demands revenues generation activity (international funding) to acquire infrastructure associated with the mining industry. Secondly, it also necessitates the provision of local expertise to explore and develop deposits for export. Nevertheless, the termination of the contract with world's leading gold and copper mining firm could mar Pakistan’s image as an investment destination, and the multinational corporations would not invest in a country where deals were cancelled after finalization of the contract. The provincial government wanted TCC to establish refining and processing facilities in Balochistan to ensure export of finished copper and gold for better economic returns, but the TCC was not ready to accept this demand and wanted to export copper concentrate. The federal government has sought a detailed report from Balochistan after some foreign governments raised questions about the provincial government's decision to terminate a multi-billion-dollar agreement with TTC to develop a copper and gold mine at Reko Dik.

The Ugly Raisan & Provincial Government Roll:

“Quietly, and below the media radar, some 20 top corporate bosses and lobbyists of two of the world’s largest gold mining groups have been meeting President Asif Zardari, Prime Minister Gilani, Governor State Bank and others in Islamabad throughout last week, pressing them to quickly hand over one of the world’s biggest gold and copper treasures found in Balochistan at Reko Diq, worth over $260 billion, to their companies, and for peanuts.”

Balochistan's chief minister, Nawab Aslam Raisani, said in December the agreement had been terminated in the interest of the people of the province. Local demands and needs were not taken into account when the initial agreements were signed, he said.

The provincial government has acquired the services of Samar Mubarakmand, a Pakistani nuclear scientist, to head the board of governors overseeing the project, other members being the secretaries of finance, industries and mines and mineral development, the president of the Balochistan Mine Owners' Association, and the project's managing director.

Critics say the provincial department of mines and mineral development has done nothing significant to develop the mining industry in the mineral-rich province. With exploitation of precious minerals and energy resources, including oil, gas, iron, coal, copper and gold, the province could have sufficient funds to finance its development projects and run its affairs without relying on the central government. They now question what the role of the provincial department will be if the project is to be overseen by a nuclear scientist in Islamabad.

The original contract for Reko Diq exploration was signed in 1993 with BHP Minerals, which established a joint venture with the local government, leading to a deed of waiver and consent signed in 2000. TCC, then a subsidiary of Australian Mincor Resources, had an alliance with BHP. Antofagasta and Barrick Gold took over 100% of TCC in 2006, and during the past three years, the project has made more progress than in the previous 13.

Even so, it is still not clear why TCC announced last year that it would invest more than $3 billion in the project when it had only an exploration license for Reko Diq. The former provincial authorities were silent when TCC sold its interests to Antofagasta and Barrick Gold in 2006. Similarly, the present provincial government did not react when the international miners last year announced their investment plan.

The provincial government can still protect the province's interests by negotiating a mining deal with TCC rather than scrapping the relationship outright. The Balochistan Economic Forum recently suggested that a provincial assembly committee along with a sub-committee consisting of local stakeholders and including the investors should be formed to remove all irritants with mutual consent.

For detail Article by SHAHEEN SEHBAI in Washington And AHMED NOORANI in Islamabad | Wednesday | 3 November 2010 | The News International

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