Nov 8 - 14, 2010

Chile has also expressed its interest in making further investments in the exploration of the Reko Diq copper-gold mine in Balochistan, which is home to one of the largest copper deposits in the world. A Chilean delegation of Consortium of Mineral Exploring Company led by Andronico Luksic, vice-chairman board of directors Banco De Chile recently called on Prime Minister Yousuf Raza Gilani in Islamabad and informed the prime minister that the company would invest $3.5 billion over the four years in the Reko Diq project. The state-owned corporation Codelco is currently the largest copper producing company in the world and it owns the world's largest known copper reserves and resources.

Analysts believe that provincial government and TCC 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.

The visiting Chilean delegation recently held meeting with President Asif Ali Zardari and the Chief Minister Balochistan Nawab Aslam Raisani to resolve the issues on Reko-Diq project. Vice Chairman Bank of Chile, Andronico Lucksic, recently reached Pakistan with his delegation to discuss issues relating Reko Diq Copper Gold project with Balochistan government. The issues have reportedly been resolved.

Balochistan and Tethyan Copper Co. Ltd (TCC), a joint venture between Canada's Barrick Gold and Chile's Antofagasta Plc, have reportedly entered into a joint venture agreement to move ahead with the world-class copper-gold mining project at Reko Diq in Chagai district in Balochistan. The TCC, which had been granted exploration licence for Reko Diq site in 2006, has already submitted the feasibility report of the project to the provincial authorities in order to get a mining license to exploit the mineral wealth at an estimated cost of $3.3 billion.

The Balochistan government has reportedly agreed to bear the financial responsibility for multi-billion dollars copper-gold mine Reko Diq project paving the way for moving ahead with the project with TCC. TCC has estimated a total investment of $5 billion over a period of five years. In the first phase, an investment of one to three billion dollars will be made to produce 72,000 tons of copper per annum. The project is expected to contribute one per cent in the country's overall GDP, as annual exports from the project are expected to go up to 400,000 tons of copper concentrate.

"We are waiting for approval of the deal," Saleem Mandviwala, the chairman board of investment (BoI) told reporters at a press conference. 'There have been constructive dialogue with Balochistan government on Reko-Diq project.'

Under the deal, the project will create a facility for processing 15000 tons of copper per day on three shifts basis at an estimated cost of Rs8698.70 million, including foreign exchange component of Rs3489.70 million, which would be completed over a period of four years and provide direct employment to 917 people.

Reko Diq is the fifth largest copper-gold resource of world with proven reserves of over three billion tons where Chilean-Canadian joint venture company TCC has invested $200 million on completion of scope study and related exploration work. Since 2006, TCC has undertaken extensive exploration of copper and gold minerals in Reko Diq areas in the Chagai under a joint venture agreement of government of Balochistan, called Chagai Hill Exploration Joint Venture Agreement.

The prime minister Gilani assured visiting Chilean delegation of full support and fair deal in handling the Reko Diq project and said it would provide all possible cooperation for early launching of this mega project.

The Balochistan government in December had announced cancellation of the Reko Diq contract with the TCC, which was alleged for violating the exploration agreement. TCC has since been battling for salvaging copper venture despite a government threat to scrap the deal because of misgivings about the share of benefits. Provincial government intends to operate the Reko Diq project in the public sector denying mining rights to the TCC.

The chief executive of TCC Gerhard Von Borries recently said Reko Diq project would go as planned despite plans by the provincial government to cancel it.

"The project is going ahead and will not be cancelled, we are now in talks with the government and we expect production to start by the end of 2015," the news agencies quoted Gerhard Von Borries, chief executive of Tethyan Copper Co. Ltd., as saying on the sidelines of an industry event in Dubai. "Once production starts we are planning to double our investment in the project, so we'll add another $3 billion".

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.

Balochistan government this year revealed its plan to merge the Siandak copper project and Reko Diq in district Chagai into a single metal mining company and operating it under the government control. 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.

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 tonnes out of which, an estimated 2.2 billion tonnes are economically mineable, with an average copper grade of 0.5 per cent and an average gold grade of 0.3 g tonne. The minable 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.

Critics say that the least developed province should not lose the huge foreign investment, as Reko Diq will be the biggest foreign financed project in the history of Pakistan. What the provincial government needs to do, the critics say, is only to collect taxes and royalties, implement the laws protecting environment and improve the law and order situation in the province, which is presently facing a low-intensity insurgency.