BALOCHISTAN POISED TO APPEAR ON COPPER-PRODUCING MAP OF THE WORLD
May 11 - 17, 2009
With the exploitation of world' biggest untapped copper-gold deposits at Reko Diq in its Chagai district, Balochistan is poised to appear for the first time on the copper-producing map of the world. Though the actual size of Reko Diq deposits in Chagai is yet to be confirmed, yet the experts believe that it is bigger than Sarcheshmeh in Iranian province of Kerman and Escondida in Chile. The feasibility study of the Reko Diq project is expected to be completed by this month. The project would produce 250,000 tons of copper annually, according to an estimate.
With1.2 billion tons of resources, Sarcheshmeh is a large open cast copper mine, which is considered to be the second largest copper deposit in the world. While Escondida with 57.6 million tons of resources, is currently the highest producing copper mine in the world. Simply, it is however confirmed that Reko Diq is one of the biggest untapped copper deposits on the globe. Like Escondida, Reko Diq could become an important part of the national as well as provincial economy. In 2007, the Escondida produced 1.483 million tons of copper, mainly as copper concentrate, was worth $10.12 billion. From the average copper price in 2007, one can roughly evaluate the worth of Reko Diq mine in US dollars. Because of extensive drilling in Reko Diq area about 167 million tons copper ore reserves have been proved.
Chagai is poised to emerge as a hub for the mining industry in the country. Reko Diq copper deposit is four times larger in copper ore tonnage than Saindak where Metallurgical Construction Corporation (MCC) of China is operating since August 2003.
Saindak project is based on ore reserves of 412 million tones containing on the average 0.45%, 0.50 gram gold per ton and 1.50 gram silver per ton. The huge copper-gold deposits at Saindak and Reko Diq would soon globalize Chagai bringing it into the copper-producing map of the world.
Foreign mining firms including Antofagasta of Chile, Barrick Gold Corp of Canada and Australian Mincor Resources NL have purchased 75 percent interests in the Reko Diq project, which is currently in the feasibility stage. Critics say that Islamabad made a big blunder by selling Reko Diq deposits of worth over US$100-500 billion to foreign mining firms at a throw away price to the absolute disservice of the people of most backward province and the country's economy.
Reko Diq property is jointly owned by Chile's Antofagasta with 37.5 percent, Canada's Barrick Gold with 37.5 percent, and the government of Pakistan with 25 percent. The two foreign firms purchased these interests from the Australian Tethyan Copper Company Limited (TCC), a subsidiary of Mincor Resources NL. The TCC holds 75 percent interest in the exploration licence encompassing the highly prospective Reko Diq region. The new management has decided to launch a mega project with an investment of over $1 billion next year.
Listed on the London Stock Exchange (LSE) and a constituent of the FTSE 100 Index, Antofagasta is also active in mineral exploration in Chile and Peru. It has estimated two billion tons of copper deposits at Reko Diq in Balochistan. With a portfolio of 27 operating mines across the world, Barrick is the world's pre-eminent gold producer. The company's shares are traded on the Toronto and New York stock exchanges. Its shares of measured and indicated and inferred copper at Reko Diq are 4.3 and 13.4 billion pounds respectively.
In the international market, each stage of copper production is tradable from copper concentrate, smelted copper and blister copper to refined copper or pure copper. Copper is currently being sold at an average price of US$4,000 a ton in the world metal market. It is the key metal among metals traded in London Metal Exchange (LME). Last month, copper prices on the LME broke the US$4,000 mark for the first time since last November. Benchmark copper on the LME made record high of $8,940 a ton in July 2008. According to one estimate, if one ton of copper is currently being sold at an average price of $4,000, then one million ton of copper from Reko Diq can roughly bring $4000 million ($4billion) for the country.
With a production capacity of 40,000 tons copper metal per annum, H4 project is the only resource discovered so far at Reko Diq. The TCC has finalized a feasibility study of H4, the starter project with an investment of $200 million. Field studies to assess social and environmental impact of the project have also been completed.
Some people say that Pakistan could hold 100 percent interest in the project. Chinese engaged in Saindak copper project in Chagai are committed to transfer technology in copper mining and train Pakistani engineers and workers. Pakistan could get the required human capital and workforce from Saindak and could seek China's help in initiating the copper production process at Reko Diq in Chagai. It is true that new production takes years to commission as the scale of mining is large. It takes enormous financing and needs extensive infrastructure as well.
Critics contend that Pakistan could have sought foreign assistance from friendly countries or financial institutions to jumpstart a project associated with economic bonanza. The Reko Diq project could be presented in the forthcoming meeting of "Friends of Democratic Pakistan" in Tokyo this month. The wealth from Reko Diq could enable Pakistan to retire its external debt and liabilities, which has now surged to $50.9 billion. Economically backward Balochistan province could have attained enough fiscal space and financial health to finance its social sector development projects and run its financial affairs without relying on the centre.
Chagai hills region, which is part of an extended copper-gold belt, is known as Reko Diq, which includes the Tanjeel mineral resource and the western porphyries. Tanjeel resource is estimated at 128.8 million tons. The western porphyries, the four adjacent porphyry bodies with medium to long term potential, is the core resource of Reko Diq mine. The inferred resource for the western porphyries has been calculated at 729 million tons with a copper grade of 0.64% and a gold grade of 0.39 grams per ton.
A further 14 mineralized porphyry bodies are known to exist, with the potential to place the Reko Diq Project among the largest undeveloped copper resources on the globe. The TCC had estimated annual production 200 to 500 million copper tones from the project.
The project area is part of the Tethyan Magmatic Arc, which extends from Pakistan through Iran into Turkey. The Arc is a prospective setting for large porphyry deposits comparable to Pacific Rim settings such as the Chilean and North American Belts (e.g. the Escondida and Bingham Canyon porphyry copper mines).