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How national cohesion can help Pakistan sail through Choppy Waters: The Case Study of Reko Diq Dispute

How national cohesion can help Pakistan sail through Choppy Waters: The Case Study of Reko Diq Dispute

By Muhammad Kamal 

ISLAMABAD - After much debate and concerted efforts from civilian and military leadership, finally Barrick Gold (Canadian Gold mining company) has formally launched work in Reko Diq. A consensus was achieved last year on the issue with a win-win situation for all the stake holders. In a formal ceremony held at the Chief Minister’s secretariat on Sunday, Barrick Gold Corporation Chief Executive Officer Mark Bristow said the company has also established a project office in Quetta. “We have hired the best team of experts while locals are also working on the project,” he added. Chief Minister Balochistan Mir Abdul Qudoos Bizenjo said: “We have reached this stage after passing through some difficulties, including legislation, taking the political leadership into confidence and removing hurdles in signing the historical agreement.” Mr Bristow said further recruitment process has also started at the Quetta office where the majority of the team will comprise of locals providing much needed job to the local community. The company is also developing the social sector in the area as per the agreement and more investment will be made to uplift the local community, the Barrick CEO added.

Chaghai Hills Joint Exploitation Agreement (CHEJVA) for the exploration of minerals in Riko Diq was signed from year 1993 to 2006 between Australian Company BHP Minerals and Balochistan Development Authority BDA. The shareholding ratio was 75% with the foreign corporation and 25% with the Balochistani government (GOB). The agreement also stipulated that in the event of a dispute, the International Center for Settlement of Investment Disputes (ICSID) of the World Bank would serve as a mediator.

In 2006, Tethyan Copper Company (TCC) which was a consortium between the Canadian based mining company Barrick Gold and Chile’s Antofagasta acquired the project namely (Barrick Gold and Antofagasta). In 2010-11, TCC completed feasibility on Western Porphyries (H13, H14, H15) and Tanjeel (H4), submitted same for mining lease which was rejected by government of Balochistan on the pretext that CHEJVA was exploitative in nature.

As a result, the subject was litigated. In 2013, the Pakistani Supreme Court invalidated the CHEJVA project and denied TCC a mining lease. TCC responded by filing a petition with the ICC and ICSID in accordance with the CHEJVA and the Pakistan-Australia Bilateral Investment Treaty. The decision was given in favor of TCC and $6 Billion were awarded in favour of TCC in 2019 as a penalty to Pakistan, while the hearing at ICC would have resulted in another award assessed to be $4-5 Billion, making a total of $11 Billion penalty. Since then, further rounds of negotiations were initiated and in 2022 a board settlement with the appropriate TCC partners was reached after extensive consultations and work.

The foreign company's shareholding structure has been decreased from 75% to 50%. Government of Balochistan (25%) and Three Pakistan State Owned Enterprises —OGDCL, PPL, and GHPL—will split the remaining 25%. The new agreement spares Pakistan not only from the $11 billion fine and a corresponding increase in award interest ($255 million annually), but also from the additional cost and time associated with holding new bidding, which would have required spending an additional $200–$300 million on feasibility studies and a period of 24–30 months.

Pakistan Army, while remaining in the background, has played the pivotal role towards resolution of Reko Diq issue, saving the State from economic loss of US $11 Bn which it will continue to do so in the future as well. The aforementioned developments were the result of extensive efforts from all stakeholders both civilian and military. A joint consensus helped in shaping a deal that would be extremely beneficial for the people of Balochistan and Pakistan. As per the agreed framework, $3M will be transferred to the Balochistan government this month under the Tanjeel agreement relating to gold and copper reserves. “We have not only come to invest in Reko Diq, but our priority is to open Balochistan to the world for investment,” said Mr Baristow, the CEO of Barrick Gold Corporation. Synergized efforts in good faith for the country can produce fruitful results and Reko Diq is a textbook example of this notion. Military leadership has helped Pakistan overcome many hurdles in coordination with the civilian government. Such consensus is the need of hour to take country out of severe economic crisis it is confronted with at the moment.

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