Expensive blunder

Three decades ago, Moeen Qureshi, a Pakistani-American economist and former caretaker prime minister, envisioned unlocking Pakistan’s vast mineral wealth. He championed a vision of attracting international mining giants, advocating for contracts that adhered to global best practices. This vision led to the engagement of prominent players, including Canada’s Barrick Gold, a global leader in gold mining, and Chile’s Antofagasta, a major force in copper production. Barrick Gold and Antofagasta invested a substantial $220 million in the exploration phase of the Reko Diq project.

On February 18, 2008, seventeen years ago, general elections were held to elect members of the 13th National Assembly. The elections saw the resurgence of the PPP which formed the government in the centre. On March 22, 2009, Iftikhar Muhammad Chaudhry became the 20th chief justice of Pakistan, ushering in a period of judicial activism.

In 2011, fourteen years ago, Tethyan Copper Company (TCC), a joint venture between Barrick Gold and Antofagasta, applied for a mining lease. A PPP government and the Supreme Court under Iftikhar Muhammad Chaudhry rejected the TCC’s application. However, the PPP government, in a move that sent shockwaves through the international business community, and a Supreme Court led by the formidable Chief Justice Chaudhry, dealt a devastating blow to the project, rejecting the TCC’s application.

In July 2019, the International Centre for Settlement of Investment Disputes (ICSID) delivered a staggering blow to Pakistan, slapping the nation with $5.8 billion in damages in favour of the TCC. But the cost didn’t stop there; between 2013 and 2019, Pakistan bled an estimated $3.5 billion annually in lost production, culminating in a jaw-dropping $21 billion in unrealised revenue. The true cost of judicial activism? A crushing $30 billion in penalties, damages, and lost opportunities – a financial catastrophe of epic proportions.

For the first time in the annals of global governance, a Pakistani government, in tandem with the Supreme Court of Pakistan, managed to transform a hundred-billion-dollar national asset into a staggering $5.8 billion liability – an unparalleled blunder.

In December 2022, a two-star serving army general spearheaded a high-stakes diplomatic maneuver, successfully brokering a settlement agreement on the Reko Diq project. This strategic operation cleared the path for the mining project’s long-awaited redeployment, marking a decisive victory in Pakistan’s economic battlefield.

For the greater good of Pakistan, Reko Diq urgently needs a robust risk mitigation plan to prevent future costly legal entanglements and unlock Reko Diq’s full economic potential. A bold shift in strategy is not just warranted but imperative. Rather than clinging to government-centric decision-making, the project should embrace partial privatisation through a public listing on a stock exchange.

Ghana-based Gold Fields (GFI) has its shares listed on both the Johannesburg Stock Exchange (JSE) and the New York Stock Exchange (NYSE). Similarly, South Africa-based AngloGold Ashanti (ANG) is also listed on both the JSE and the NYSE.

Government interference into Reko Diq must be minimised. Decision-making at Reko Diq should be decentralszed. Transparency and accountability at Reko Diq should be enhanced. Future decisions at Reko Diq must be based on sound financial and commercial considerations.

The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: farrukh15@hotmail.com