The mystery behind Reko Diq scramble unfolds

DUBAI/ISLAMABAD: As the Balochistan political crisis explodes into world headlines with talk of independence and self-determination for the Baloch, a group of highly influential and internationally connected strongmen in Pakistan is quietly, but desperately, scrambling to get control of the world’s largest gold mines in Reko Diq, with mind boggling audacity.
The scramble started after the Supreme Court forced the biggest mining company in the world to run away after investing millions of dollars but that allowed the local wizards, ‘the billion and bullion hunters’ as one official called them, to strike gold, either through the use of political influence, force or outright fraud.
“Pakistan’s largest natural resource is turning out to be its bigger disaster, as a dirty race has begun to grab these gold mines before any settlement is reached with the Baloch nationalists,” a well entrenched executive of a mining company which has worked for over a decade in the area told The News in Islamabad.
Startling facts have come to light in a detailed investigation conducted by The News in which numerous documents, feasibility reports, forms filed with the Security and Exchanges Commission of Pakistan (SECP), the mining department in Quetta were collected and extensive recorded interviews were conducted with the people concerned.
As The News first revealed on February 2, the existence of 11 new licences issued in Reko Diq area to a group of five hastily formed baby companies, and the Supreme Court took note of the development, it was like a cat let loose in a congregation of mice.
Only two persons were found behind these five companies. Three firms, Koh-e-Daleel Mineral (Pvt) Limited, Kohi Naro Minerals (Pvt) Limited and Pakistan Chaghi Mining (Pvt) Limited are owned and operated by one resident Sardarzada Saadat of Quetta, who is described in the SECP documents as a director, general manager, shareholder and partner. His father Sardar Mohiuddin

Khan, a resident of Golimar Chowk in Quetta, is also a shareholder and a director.
The other two companies, Adza Resources Pvt Limited and Pure Minerals Resources Pvt Limited, are both owned by a seasoned marble and onyx exporter of Balochistan by the name of Mukarram Zehri.
The 11 new licences in Reko Diq have been shared by these two persons, who have associated Chinese and Swiss individuals as shareholders in the venture to give the companies the facade of joint ventures. But when the first report appeared in The News, these two groups reacted in a startling manner, gripped by panic.
The main company of Sardarzada Saadat quickly set up a website, a thoroughly unprofessional and almost a childish job, and made fantastic claims on it. Its vision was described as: “Our business is to create value for our shareholders by Exploring, Extracting and Utilizing world-class minerals and mineral resources in an effective and efficient manner at a profit”. www.kdminerals.com.pk
Then the website made an astonishing claim: “Machinery and other technology was brought from China to extract Abrak, Antimony, Calcite, Chromite, Copper, Dio-rite, Gold, Granite, Gypsum, Iron Ore, Lead, Manganese, Marble, Onyx, Pumice, Quartz, Silver, Sulfur and Zinc, these minerals are in high (A-Class) quality and also in different colors present in different mountains located at District Chaghi, Balochistan Pakistan.”
How, without a license to mine anything, a company has already brought machinery and technology worth hundreds of millions of dollars to mine 20 minerals without anyone noticing even the movement of a truck, is beyond anyone’s comprehension.
Those on the Reko Diq site, including rivals of Koh-e-Daleel, say not a single truck has been brought to the area and these claims are a total fraud.
But the website also claims: “The Company runs a small team of experienced geologists which gives it a strong technical and scientific advantage in identifying suitable projects and implementing successful exploration strategies.” What it means can be guessed.
Chinese partners in the company are unknown persons with no background of mining or even business. None of them is listed on any mining-related website. There are at least four Chinese names starting with Wang. Who are they no one knows but a senior executive of Tethyan Copper Company (TCC) which has been carrying out exploration in the area told The News, on the condition that he not be named, that these Chinese are people who have been meeting important Pakistanis who have been visiting China on business trips and signing MOUs several times, a direct reference to top PPP leaders.
When Sardar Mohiuddin Khan, the Director of Koh-e-Daleel was contacted in Chaghi by Ahmad Noorani on the phone, and asked about the possibility of his company working with some PPP leaders and their Chinese partners, the old Sardar said: “We are all Pakistanis, including PPP leaders and we are all working for Pakistan and its development.” He did not elaborate.
As another example of an outright fraud, Koh-e-Daleel stole a geological study carried out by TCC in the Reko Diq area and presented it to the Government of Balochistan with its application of a mining license as its own “feasibility report” for EL-90. The study was published in December 2008 in Economic Geology, a Bulletin of the Society of Economic Geologists.
The News has obtained copies of both the Koh Daleel feasibility and the TCC Geology report and pages after pages have been copied from the study done by competent geologists.
TCC declined to comment when asked whether they had provided the report to Koh Daleel with spokesperson Samia Ali Shah saying she will get a response from the headquarters. But other TCC people said they had spent a huge amount of money on the report and it was impossible that they had given it to Koh-e-Daleel, a new and unprofessional company owned by a local Sardar.
The story of the other investor in Reko Diq, Mukarram Zehri is even more interesting. He first submitted documents in the SECP in which he owned only 100 out of 10,000 shares and was named as the Pakistan Director of the company. The documents are available with The News. The rest of the 9,900 shares belonged to three Swiss entities, two unknown and one named Rene Faritschia, said to be a banker.
When The News broke the story of the 11 leases on Feb 2, there was panic in the Zehri camp as the Swiss connection was becoming difficult to explain and was raising many eyebrows about other important people having more serious Swiss connections.
Mukarram Zehri, when contacted by Ahmad Noorani, admitted that he had Swiss shareholders but then quickly revealed that he had dumped them all and had brought in new partners. How could a person holding 100 shares remove holders of 9,900 shares is a mystery in its own right.
He said he had already submitted the lists of new shareholders to the SECP but did not reveal who his new partners were. Zehri then revealed that one Fatir Siddiqui of London, an investment banker, had introduced him to the Swiss banker Rene Faritschia but later he (Zehri) found that Fatir Siddiqui was a fraud and had been convicted by a Canadian court in 2005.
Who was behind all these characters and names and why were they all in such a rush is not yet clear but there is a major story behind this mad rush to grab Reko Diq licenses left open by TCC which has gone against Government of Balochistan in an international Court of Arbitration after cancellation of its license.
All these five companies erected overnight who have done no exploration in the Reko Diq area have already applied for “Mining Licences”, the authority to extract the precious metals.
But sources told The News that the security and military authorities had already intervened in the matter and the Deputy Commissioner of Chaghi, Tufail Mohammad Baloch, had been questioned by top army people about the presence of Chinese and involvement of foreigners in Reko Diq as now a No Objection Certificate is required for every foreigner involved in this business.
One source said all work on the new 11 licences had been stopped and the Mining Committee of Balochistan had rejected the applications to grant the mining licenses to these companies in its meetings on Feb 22 and 23.
Ahmed Bakhsh Lehri, Chief Secretary Balochistan, while talking to The News on Feb 1 had first denied that any licence of exploration or processing had been issued to any company but had then said no mining license will be issued unless full scrutiny of the companies involved was carried out. The detailed investigation of The News continues and many more facts will be revealed in the next part of this story in a few days.