Aug 23 - 29, 20

The feasibility study of Reko Diq copper and gold project in Balochistan has recently been completed by the Tethyan Copper Company (TCC), a joint venture co-owned by Canada's Barrick Gold Corporation and Chilean copper miner Antofagasta. The TCC, which has so far invested $200 million on feasibility and other allied works, plans to make an investment of $3.2 billion in mining of copper and gold in Reko Diq. Exploration of copper and gold has been completed in the Reko Diq area spread on 435 square kilometers allotted to the company. Feasibility of the environmental impact assessment (EIA) of the project in Chagai district has also been completed, showing no human population will be affected due to the project.

It is worth mentioning that Saindak copper project under Chinese firm was launched without undertaking EIA in the same district Chagai. The excessive mining by Chinese has depleted Chagai's meager water resources and polluted the environment with toxic substances. The Balochistan government in December had announced cancellation of the Reko Diq contract with the TCC which was alleged for violating the exploration agreement.

The TCC delegation led by Aron Regent, president and CEO of Barrick Gold Corporation and Antofagasta Minerals of Chile has reportedly convinced the federal government which has decided in principle to fully support the TCC and expects the project would be launched at the earliest.

Some analysts claim that the government and the international miners have reached a deal under which TCC will be given the first right to resume mining at Reko Diq as per international practice, while the company will invest to establish a refinery at the project site for refining minerals extracted from the mine.

Last month, a high profile delegation of TCC held meetings with Prime Minister Yousuf Raza Gilani and Balochistan Chief Minister Aslam Raisani and briefed their plan for development of Reko Diq mine. Prime Minister Gilani decided to fully support the TCC in its future plan and directed the ministries of finance, petroleum and natural resources to hold further discussions with the company and to coordinate with the government of Balochistan to finalise the details.

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. The feasibility study estimates the mineral resource of Reko Diq at 5.9 billion tones out of which, an estimated 2.2 billion tones are economically mineable, with an average copper grade of 0.5 per cent and an average gold grade of 0.3 g tonne. The mineable resource will produce 22 billion pounds of copper and 13 million ounces of gold during the life of mine, which is estimated at 50 years to 70 years.

Initial mine capital investment is estimated at $2 to $2.5 billion for development of state-of-the-art copper and gold mine facility and in second investment will add another $2.5 billion. Development of supporting infrastructure would require an investment of $500 million in Balochistan. The local procurement of goods and services of the project has been estimated at $300 million to $400 million annually. The project is expected to contribute one per cent growth in Balochistan's GDP annually, besides exports of this project will narrow national trade deficit.

International standards set by World Bank have been followed in EIA of the project in order to avoid, minimise, mitigate or compensate adverse impacts of the project, reported The Nation newspaper, citing Lucas Hekma, Manager Environment Impact Assessment of TCC. The company also plans to use renewable energy opportunities like wind farms, geothermal and bio-fuels for its operations in Reko Diq.

Reko Diq project shall generate revenue of about $3.5 billion for the federal government and $4.5 billion for Balochistan over the life of the mine, Dawn newspaper reported citing the briefing provided to Prime Minister by a TCC delegation in a meeting held last week at the PM secretariat in Islamabad.

Prime Minister was briefed that Reko Diq project would generate mass scale employment of about 6,500 skilled and unskilled workers, transfer of technology, promotion of downstream industries, establishment of new township in the region and would place the country on the world minerals map. The federal government has decided in principle to fully support the consortium and expects the project would be launched at the earliest.

TCC delegation also held a meeting with the Balochistan's chief minister Raisani on July 13 in Quetta. The chief minister said the government wanted a refinery established at the Reko Diq site for refining minerals because past experiences have shown that companies doing such business in the province exploited local resources at the cost of the people of Balochistan.

Raisani reportedly said the Reko Diq was a project of very vital nature for the people and keeping in view its importance the government has decided to run it single handed once its contract with the present management is expired.

Raisani welcomed foreign investors to explore mineral and other natural resources in the province, which could be mutually beneficial to both the investors and the people of Balochistan.

Critics however contend that the province does not maintain a good record for alluring foreign investors. It is not for the first time that the provincial authorities have cancelled the Reko Diq contract with a foreign firm.

In 2007, former Balochistan government had also cancelled the exploration licence of Gulf Minerals, a Dubai-based company, which had been engaged in setting up export-oriented mineral exploration and allied facilities at Sonmiani in Lasbela district. The company had started the project of the minerals sand with an investment of $199 million in 2006. The mineral sands project around Sonmiani was aimed at exploring zircon, garnet, hematite, rutile and other iron-associated minerals. The company unexpectedly received a notification from the provincial mines and minerals department that cancelled the license issued to the company and rejected its application for a mining lease without notice.

Such moves on the part of provincial authorities have been creating uncertainty among foreign companies interested in the exploration of minerals in the least developed but resource-rich province, sending a discouraging signal to the potential investors.

In January, Islamabad warned that it would bring in new copper firms to perform both mining and smelting works at Reko Diq unless the current players make a joint venture with a smelting firm.

TCC has been hopeful of salvaging over $3 billion copper venture despite a government threat to scrap the deal because of misgivings about the share of benefits. Reko Diq property is jointly owned by Chile's Antofagasta with 37.5 per cent, Canada's Barrick Gold with 37.5 per cent, and the government of Balochistan with 25 per cent. The two foreign firms purchased these interests from the TCC, a subsidiary of Mincor Resources NL. The TCC planned to start the Reko Diq copper project in 2003 with an investment of $130 million. Antofgasta and Barrick Gold took control of the project in 2006. During past three years, the project has made more progress than in the past 13 years since 1993 when Balochistan signed agreement with BHP Billiton. The feasibility of the project is currently in final stages.