The federal government is about to approve the filing of a presidential reference to the Supreme Court seeking validation of the new agreement on the Reko Diq project.
A senior official confirmed The Express Grandstand that the cabinet would give its approval on Friday, regarding the filing of the presidential reference as well as the parliamentary approval of the agreement on Reko Diq. The issue has been added to the agenda for today’s cabinet meeting, he added.
Barrick Gold Corporation, a Canadian-based mining group, had asked the government to get the Reko Diq gold and copper deal approved by parliament and the Supreme Court for the long-term sustainability of the company’s investment. company in the project.
According to the settlement, 50% of the shares of the new project would be held by Barrick Gold, while the remaining shares would be held by Pakistan, split equally between the Center and the government of Balochistan.
The federal government’s share of 25% will be divided equally between three public entities: Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL).
Interestingly, no private companies were included in the project by the Pakistani side despite efforts.
The Balochistan share will be held by a company wholly owned and controlled by the provincial government. As part of the Prime Minister’s vision for Balochistan, the provincial government’s share of the capital and operating costs of the project will be borne by the Centre.
The Government of Balochistan will not incur any expenditure in the development of the mines.
In the development of the project, almost 10 billion dollars will be invested in Balochistan, including 1 billion dollars for social improvement projects – roads, schools, hospitals and the establishment of technical training institutes for mining. The investment will create over 8,000 new jobs.
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The project will also make Balochistan the largest recipient of foreign direct investment in the country. In order to ensure optimal use of the country’s mineral wealth, the government also plans to create a foundry.
An agreement was reached after several rounds of negotiations over the past three years.
In August 2019, the Prime Minister set up a committee to lead negotiations for the early development of the mines. In this effort, the federal and provincial governments have been assisted by international advisers, including a law firm, White & Case, and an investment bank, Lazard.
To ensure that the deal complies with all laws, the government will take the case to parliament and the Supreme Court. Apparently, 10 future governments would pursue this project in which 100 billion dollars would be earned.
On July 29, 1993, BHP Minerals (BHP) and the Balochistan Development Authority (BDA) signed the Chagai Hills Exploration Joint Venture Agreement (CHEJVA). Subsequently, on November 23, 2006, TCC purchased BHP’s interest in CHEJVA for $240 million. It had become part of the CHEJVA under a novation agreement with the BHP and the government of Balochistan.
On August 26, 2011, TCC filed its feasibility report and mining lease application which was denied by the granting authority on November 15, 2011. On November 6, 2011, a petition was filed in the Supreme Court asking the court High Court to order the government of Balochistan to refrain from issuing a mining license in an arbitrary and illegal manner.
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On December 12, 2011, the ICC commenced proceedings before the International Center for Settlement of Investment Disputes i (ICSID) for alleged breaches by Pakistan of the Australia-Pakistan BIT, 1997; and, before the International Chamber of Commerce (ICC) for alleged breach by the Government of Balochistan of contractual obligations under CHEJVA. On January 6, 2013, the Supreme Court declared CHEJVA void ab initio.
The ICC tribunal suspended its proceedings out of respect for ICSID proceedings. On February 12, 2016, the court issued a draft decision on jurisdiction and liability and found that (i) it had jurisdiction over TCC’s claims; (ii) TCC had made an investment in Pakistan; and, (iii) Pakistan expropriated TCC’s investment in Pakistan and breached its obligations under the BIT.
On July 12, 2019, the ICSID tribunal had awarded the TCC compensation of $5.894 billion, plus interest of $700,000 per day in damages against Pakistan. Meanwhile, the London Court of Arbitration also imposed another $4 billion fine on Pakistan.
Shortly thereafter, the ICC initiated proceedings for the enforcement of the award in several jurisdictions, including Australia, the United States and the United Kingdom. The ICC also resumed proceedings and was expected to issue an additional sentence against the government of Balochistan.
At the same time, Pakistan challenged the ICSID award by initiating proceedings before it for annulment of the award.
Subsequently, Antofagasta decided not to participate in the reconstituted project and withdrew its claim of $3.9 billion instead of $900 million. All legal proceedings must now be withdrawn permanently by the TCC and Pakistan.