Reko Diq Project: Centre, Balochistan have to invest $8bn to reap benefits, SC told

ISLAMABAD: The Supreme Court on Monday questioned what benefits could Pakistan get from the new project of Reko Diq as a foreign expert told the court that the federal and Balochistan governments will have to invest $8 billion to reap benefits.

A five-member larger bench of the apex court headed by Chief Justice Umer Ata Bandail and comprising Justice Ijazul Ahsen, Justice Muneeb Akhtar, Justice Yahya Afridi and Justice Jamal Khan Mandokel heard the Presidential Reference regarding the new Reko Diq Project.

President of Pakistan Dr Arif Alvi on the advice of the Prime Minister had filed a Reference in the apex court under Article 186 of the constitution. Last month the federal cabinet chaired by Prime Minister Mian Shahbaz Sharif approved the filing of a presidential reference in the apex court for seeking its opinion on questions of law and public importance

The questions as to whether the earlier judgment of the Supreme Court, reported as Maulvi Abdul Haq Baloch versus Federation of Pakistan PLD 2013 SC 641, the Constitution, laws or public policy, prevent the Government of Pakistan and the Government of Balochistan from entering into the Reko Diq Agreement or affect their validity. And if enacted, would the proposed Foreign Investment (Protection and Promotion) Bill, 2022 be valid and constitutional? On Monday during the course of a hearing Chief Justice of Pakistan Justice Umer Ata Bandial questioned what benefits could Pakistan get from the Reko Diq agreement saying earlier, questions were also raised that Pakistan would get no share from the exploration of minerals and gold in the Reko Diq project.

During the hearing, foreign experts gave a briefing to the court regarding the new project through a video link from London. The foreign experts told the court if the federal and provincial government of Balochistan want to get benefits from the Reko Diq project, a $8 billion investment has to be made. The chief justice asked the experts about the length of time of the present investment and the time for getting profit from the project. The foreign expert replied that the project will be run in two phases adding that the first phase of the project is for five years while the profit will be started in the second phase. Justice Yahya Afridi, another member of the bench observed that the court was told that the new project of Reko Diq is the best one in the current situation. Whether Pakistan tried to approach the competitor of Barrick Gold for entering into an agreement”, the judge asked the foreign expert.

While Justice Ijazul Ahsen asked the foreign expert whether Pakistan with a damages suit of $10 billion can enter into an agreement with another company for Reko Diq.

The foreign expert, however, submitted that Barrick Gold has the expertise of exploring mining adding that Pakistan cannot make the best agreement of investment in the public sector other than Barrick Gold. He said the present life span of reserves in Reko Diq is 47 years adding that the new project will ensure the production of 400 tons of copper per year.

Additional Attorney General Aamir Rehman told the court that the Government of Balochistan will get a total profit of $32 billion from the Reko Diq Project agreement in 40 years. “It means that the Government of Balochistan will get a profit of some $8 billion per year from the Reko Diq project,” Chief Justice Umer Ata Bandial observed. The chief justice observed that in the presidential reference, the court is looking into legal aspects, not monetary benefits and asked the law officer as to what assurances the Barrick Gold Company was seeking from the apex court.

The chief justice further asked the additional attorney general in which country the raw minerals of Reko Diq will be refined. The AAG replied that it will be refined through those companies, having the best offer. Meanwhile, the court adjourned the hearing for today (Tuesday) On the last hearing, Additional Attorney General had told the court that in 1993, the Government of Balochistan made an agreement with the foreign investors in Chaghai Hills Exploration Joint Venture for the exploration and mining of gold and copper reserves in Reko Diq while the Tethyan Copper Company made an investment of $240 million. However, the agreement was challenged in the Balochistan High Court in 2006 which was dismissed but in 2013, the Supreme Court declared the agreement as void.

He had further submitted that after the apex court judgment the Tethyan Copper Company approached the international arbitration tribunal of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) which issued an award of $9 billion in damages to Tethyan Copper Company (TCC) in relation to the arbitration claims filed against the government of Pakistan for denial of mining lease for the Reko Diq project.

Aamir Rehman had submitted that the new Reko Diq project will be owned 50 per cent by Barrick Gold and 25 per cent by the federal government. The law officer had further told the court that the province of Balochistan will have a share of 25 per cent adding that the federal government’s share of 25 per cent will be divided equally among three state-owned entities—the Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL). The Additional Attorney General has also submitted that the project will generate a revenue of $104 billion adding the province will get 62 per cent profit from the project but the international investors seek solid assurances from the government for such a huge investment.