Pakistan is Sitting on a Gold Mine

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A recent article in the ever insightful Stratfor Worldview this month underlines how the world is not short of copper ore deposits — they are, at least in this example, just in the wrong place.

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The article covers a long-running dispute between the Pakistani government and mining company Tethyan Copper Co., a joint venture between Canada’s Barrick Gold Corp. and Chile’s Antofagasta PLC, the article explains.

The dispute is over the legality of Tethyan’s claim and rights to exploit the copper and gold reserve at Reko Diq in Pakistan’s remote southwest Balochistan province, close to the Iran border.

Pakistan’s mining rights and practices, not to mention its infrastructure, are not fit for the purpose, as Tethyan’s story underlines all too well.

Rights were originally granted to BHP by way of a decades-old pact called the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), signed in 1993 between the Balochistan Development Authority and the Australian miner. The rights were subsequently acquired by Tethyan, which has been in a long-running dispute ever since.

The company has invested some $220 million in exploration to prove the resource and carry out feasibility studies. However, probably in a bid to wring more out of the firm, legal challenges were taken to the provincial courts. The resulting legal proceedings caused delays, which finally drove the firm to take the case to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) and the International Chamber of Commerce, resulting in a $5.9 billion fine against the Pakistani authorities.

The current impasse is in neither party’s interests.

Tethyan has offered to negotiate a settlement, but with the Chinese on the sidelines bidding to extend their Belt and Road involvement in the region, conflicting loyalties and priorities are in play.

A solution, though, would be very much in Pakistan’s interests.

The resource is said to be the largest untouched deposit in the world, containing an estimated 2.2 billion metric tons of mineable ore that could yield 200,000 metric tons of copper and 250,000 troy ounces of gold annually for over half a century, Stratfor reports.

But exploiting it requires international expertise and finance.

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The ore must be processed into a fine powder at the mine head before converting it into a slurry concentrate for transport through a 682-kilometer pipeline to the Arabian seaport of Gwadar. At the port, the company planned to dry the concentrate before loading it onto ships for smelting abroad — missing an opportunity to value add to refine it into pure metal.

Comments (4)

  1. Muhamma Aftab Khan says:

    When the expected life of the project is 50 years than why company cannot set up plant in Pakistan to process. That shows the company has a secret agenda behind its plan. This should never be agreed by the government

  2. Imran says:

    Totally disagree with the article.

    Pakistan can easily get international expertise by hiring engineering/mining firms to assist it with setting up the project and associated structures to refine the ore to later use to make value added products for export but under Pakistani ownership and management.

    Yes, money is in short supply right now but that will be corrected in time and with increased tax revenue collection by the government. The minerals aren’t going anywhere and they’re getting more valuable with time so its better to leave it in the ground until we are ready and able to exploit it ourselves.

    No foreign company should ever be allowed to mine and export raw ore or materials out of the country.

    Why export ore for pennies when we can earn big money from the production of value added products like jewelry, pipes, etc… from the mined minerals?

    I agree with Muhamma, this deal was utterly stupid and showed the sheer lack of understanding of the resources and outright corruption on the part of the old provincial and federal government who were likely taking kickbacks for this deal.

    1. Omar s. Khokhar says:

      Pakistan has mined table salt for millinium and export it as such.
      INDIA IS GRINDING IT,PACKING IT AND SELLING IT AT 8 DOLLAR PER POUND.
      Pakistan are big talk.no action.does grinding salt needs international expertise and finannce.
      IT IS PEOPLE SPIRIT OF ENTERPRENUEL WHICH PRODUCE VALUE AND JOBS.
      BOTH OF COMMENTATORS CAN START A COMPANY TO GRIND SALT AT KHEWRA AND MAKE MONEY FOR THEMSELVES AND THE COUNTRY.
      DO SOMETHING.

  3. First of all as responsible country we should honour our contracts,once agreed upon.secondly loyalty,honesty ,expertise is must to take up project like reko diq,and we are lacking these qualities.easiest job is criticism.who stopped us ,not to value addition in our khewra mine products.

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