Balochistan: Talks on Reko-Diq project remain deadlocked

[Naveed Yaseen]

ZAFAR BHUTTA
ISLAMABAD (October 29 2009): The Balochistan government has refused to bear any financial responsibility for a five-year investment of around five billion dollars under the Reko-Diq project, which has resulted in a deadlock in the ongoing negotiations with the Chilean-Canadian joint venture company, renamed Tethyan Copper Company (TCC).

The TCC, through diplomatic channels, has requested the Federal government for intervention to end the deadlock with the Balochistan government for early finalisation of the deal. According to the joint venture agreement of the project, the TCC holds 75 percent shares with equal distribution between the Chilean mining company, Antofagasta, and Canadian company, Barrick Gold.

The Balochistan government holds the remaining 25 percent share in the Reko-Diq project. Well-informed sources told Business Recorder on Wednesday that the TCC had estimated a total investment of five billion dollars 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.

After full commissioning of the project, the company believes that annual exports will go up to 400,000 tons of copper concentrate. According to the sources, the company has completed its initial field survey and detailed feasibility study is likely to be completed by the end of the year.

Sources said the Balochistan government and the TCC deadlocked on the issue of what precisely were the obligations of the Balochistan government with 25 percent share. The Balochistan government wants an agreement similar to the one it finalised with Chinese company on Dudder zinc-lead project. Under that agreement, the Balochistan government does not bear any financial responsibility.

The sources said that the TCC had presented a counter proposal based on "net profit interest", which promises 25 percent share to the Balochistan government out of the total sale of copper eight years subsequent to the commissioning the project after recovery of capital investment. But the Balochistan government had not responded to the TCC proposal, said the sources.

They said that Chairman of Antofagasta Minerals Jean Paul had expressed concern over the deadlock in the negotiation process, and requested the steering committee, constituted by the Federal government, to review the progress on the ongoing negotiations.

He also requested that proper guidance be provided to the Balochistan government to break the deadlock, and expressed firm commitment to the government of Pakistan to finalise the project immediately on receiving detailed feasibility study, which is due in December.

"We expect an investment of five billion dollars over a period of five years that would provide jobs to 3,000 people and another 4,000 daily wage workers to assist in massive infrastructure work-construction sites - roads, conveyor belt and port," the sources said quoting Chairman Juan Paul.

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