DUBAI: In a mysterious development, the world’s largest gold mining company, which was thrown out from Pakistan by the Supreme Court, is beginning top-level negotiations in Islamabad this week with the caretaker government to get back the multi-billion dollar Reko Diq gold and copper project in Balochistan.
Mining industry sources here in Dubai say the top executives of Tethyan Copper Company and Barrick Gold are reaching Islamabad this weekend, although the Supreme Court had declared all agreements signed by TCC with Pakistan as illegal, ab initio, and the company lost two cases in international court of arbitration last year.
Information Minister Arif Nizami, when contacted by The News, said it was not in his knowledge that any executives of TCC were arriving in Pakistan to negotiate with the government therefore he would not offer any comment on speculative assertions.
Barrick Gold Corp, the world’s largest gold miner, is also facing a serious financial crisis and reported a quarterly loss after booking a $3.8 billion impairment charge to write down the value of its Lumwana copper asset, according to a Reuters report.
The Toronto-based miner also said it has no plans to build any new mines at this time, due to the extremely challenging cost environment. The company also separately booked a $400 million charge to write down the value of its oil and natural gas business unit and the value of its investment in the Reko Diq project in Pakistan, Reuters reported.
Barrick reported a fourth-quarter net loss of $3.06 billion or $3.06 a share. That compared with a year-earlier profit of $959 million, or 96 cents a share.
The Supreme Court last year declared the Reko Diq agreement invalid. A three-judge bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, declared “not valid” the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), the initial 1993 exploration agreement between the Balochistan government and Australian mining group BHP.
“The CHEJVA dated 23.07.1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1882, etc., and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est,” the ruling stated.
The agreement was not permissible under the Balochistan Mining Rules (BMR) 2002 as well as the Rules of Business of the Government of Balochistan (GOB), particularly Rule 7, the SC said.
The case of Reko Diq, one of the world’s richest deposits of gold and copper, was first raised in these columns by The News and was taken up suo moto by the Supreme Court which finally threw out the mining giant from Pakistan.
But the previous PPP government was very keen to revive the association with TCC/Barrick and a serious attempt was made by top officials of the government in March last year when a so-called mining delegation visited Canada on the invitation of the Canada-Pakistan Chamber of Commerce.
According to a Chamber press release issued in March 2012, it was the first time such a high-powered delegation representing Pakistan had participated in any event in Toronto. “This shows the commitment of the government of Pakistan to develop Pakistan’s mineral deposits,” said Mehreen Javaid, President of the Canada-Pakistan Chamber of Commerce, in the press release.
On March 6 a meeting was arranged with Barrick Gold and the visiting ministers. Barrick Gold appreciated the efforts of the government of Pakistan to assist them, according to the Chamber press release.
Not surprisingly the top members of the delegation were Minister of Petroleum and Natural Resources, Minister of State and Chairman of the Board of Investment, Saleem Mandviwalla, who in the last days of the PPP government was promoted as Finance Minister and a lady adviser of the Sindh government. There were some lower level officials from other provinces as well for routine discussions.
What these three high-level officials discussed with Barrick executives is only a matter of guess as no details were released but now when the company is in dire straits financially, the top bosses of Barrick are visiting Islamabad for secret negotiations.
An indication that such talks will be held was given by the company when it reacted officially to the defeat it faced in the international court of arbitration. In December last year the following version was released by Dow Jones, a credible financial wire service:
“Tethyan Copper said an international arbitration tribunal has ruled on provisional measures that preserves the joint venture’s ability to ultimately secure a mining lease for the disputed Pakistani gold and copper Reko Diq project.
“Tethyan filed a request last month with The International Centre for Settlement of Investment Disputes to block the transfer or development of Reko Diq. The Tribunal issued a ruling saying that it would hold the Pakistan government to promises it made during the hearing to limit the scope of activities at Reko Diq, the company said.”
“The Pakistan government said then that the Baluchistan government had proposed to restrict any activity to just the H4 deposit at Reko Diq and not touch the massive H14 and H15 copper-gold deposits.”
“It also promised not to contract with third parties for that work nor expand its activities beyond H4. It also said mining rights wouldn’t be granted to any third parties. The decision helps “preserve the possibility of the company ultimately receiving a mining lease for the Reko Diq area by significantly limiting the steps Pakistan and the Province of Balochistan may take regarding Reko Diq,” the company said.
“The tribunal also requested that the Pakistan government provide regular updates about its activities on H4, noting that it would be prepared to consider “future applications” if the Pakistan government deviates from its promises, the company said.
“Tim Livesey, Tethyan Copper Company’s chief executive, said: “We will carefully monitor the information Pakistan provides pursuant to the Tribunal’s order, and we remain prepared to seek further relief from the Tribunal if Pakistan breaks any of the assurances it gave to the Tribunal during the upcoming merits phase of the hearings throughout 2013.”
“He added that the company still prefers a negotiated solution to the current impasse and is open to holding talks with the Pakistan and Balochistan governments to reach a “beneficial outcome for both the company and the people of Balochistan and Pakistan.”
The negotiated settlement solution mentioned in the TCC version is probably what the company is trying to achieve in a caretaker government when the country has no finance minister, no effective mining or petroleum minister and no government with a mandate to deal with such a huge issue.
Mining sources say it was an attempt by the TCC to bypass the real powers and reach a settlement when everybody else was busy in elections and political issues.
But the key decision would be made by the Supreme Court which declared all agreements with TCC void. “For any new agreement, a whole process of fresh international tenders was needed and that would be possible only if the SC orders it or a new elected government takes the decision,” an expert said.
