Balochistan should operate Reko Dik, Saindak gold and copper projects

Published on – March 27, 2017 – 7:30 am

QUETTA: As expected the Arbitration Tribunal of the World Bank on International Investment Disputes had come out with a decision against the Government of Pakistan in the Reko Dik case.

QUETTA: As expected the Arbitration Tribunal of the World Bank on International Investment Disputes had come out with a decision against the Government of Pakistan in the Reko Dik case. The Tribunal upheld the petition filed by the TCC rejecting the contention of the Government of Pakistan. The TCC filed the complaints against Pakistan Government for creating hurdles in operating the project denying mining rights. After the verdict was announced by the Tribunal, it started working out the losses suffered by the TCC and recover the money spent by the company according to the international market rates.

According to the independent economists, the amount of money spent, including fine, may be around $ 300 million to 400 million US dollar or more the TCC would possibly claim against Pakistan.

The Geological Survey of Pakistan and its young geologists, most of them were from University of Karachi, discovered the copper and gold mines, besides other metals and mines in Chagai District and elsewhere in Balochistan worth around trillions of US dollar in 1960s and 1970s. After some years, the metal mines were confirmed.

For years, the Resources Development Corporation (RDC), a state owned corporation, conducted the exploratory works for over the years and finally established that copper and gold reserves and other metals are available in commercial quantity for exploitation. Massive drilling for the ore continued for years. RDC established a credible core lab using local talents.

In the process, machinery and equipment were purchased from China and installed subsequently. From day one, there were strong reservations about the copper and gold mine and a powerful section of the Pakistani bureaucracy opposed it tooth and nail for unknown reasons. They never came out in the open explaining their reservations. Probably, it was the State policy not to exploit the mineral riches of Balochistan.

However, the plant was complete and it gone to trial production under the supervision of the RDC, the State Owned Corporation. The trial production was successful and its products were sold in the international market at $ 50 million. The Saindak products attracted the world market and there were clear indications that the prospects of the company were bright as signaled by the international market forces.

The Corporation sought sovereign guarantee from the Government and also a guarantee to the consortium of the Pakistani Banks to provide resources and operate the copper and gold mine under the supervision and control of the Pakistan Government. RDC being the state owned corporation had never attempted to seek financial aid from other countries of the world or the international finance institutions. It approached the Federal Government which bluntly refused to provide loan and banks were also asked in clear words not to finance the Saindak Copper and Gold Project. Why?

Mian Nawaz Sharif was the Prime Minister. He paid a planned visit to Saindak Metal Plant site and inspected it fully and he was thoroughly briefed by the Managing Director, Mir Yaqub Bizenjo and other officials of RDC.

On the contrary, the Prime Minister of Pakistan refused to stand surety to banks offering credit line for the copper and gold project. He did not stop there, he also ordered immediate closure of all activities and the plant and it was closed down for good. Mian Nawaz Sharif was accompanied by the Federal Petroleum and Natural Resources Minister and all the announcements were made in presence of the Minister in-charge. At the behest of whom he took such a blunt and harsh decision against the promising project producing gold and copper?

The Prime Minister also asked the Chinese Company that built or installed the plant to leave Balochistan and take all the spares worth over billions of rupees in no time. He virtually declared Chinese technicians and experts at Saindak as persona non grata.  Why such a harsh action was taken against the highly promising copper and gold project, it is not known.

Years after, General Pervez Musharraf held a secret inquiry against the wild and unfounded charges against Saindak Project through his trusted army officers who report came out in favour of  operating the copper and gold mine. Thus an agreement was made with the Chinese company to operate the mine.  Since then, the Saindak Metals is functioning successfully generating substantial revenue for Pakistan and its people. But the basic job of separation of gold from copper is done in China. Pakistan has to trust the company whatever is percentage of gold is in the blister copper.

During these years, I as a reporter broke yet another major story that a bigger copper and gold reserve is found at Reko Dik. One of my University mate and a prominent geologist of the country disclosed it to me that copper reserves worth trillions of US dollars found. He told me that it is biggest in the world. Later on the world Press confirmed that story using official and credible sources.

When the copper and gold reserved were confirmed by the experts on the ground, the Australians jumped into the scene and BHP concluded an agreement with the Provincial Government exploiting the copper and gold mine. The agreement signing ceremony was held at the Quetta Hotel and BHP won the contract from Balochistan. The documents were signed in presence of the Ministers and officials of the Provincial Government.

Interestingly an obscure officer of BDA, Chaudhary Farooq, was made focal person by the Balochistan Government.  All the Ministers and officers at all level had no powers.  Farooq Chaudhary was wielding more power in regard to BHP than any other individual. He arranged foreign trips for Ministers and high officials abroad. He remained chummy to the Secretary Mines and Minerals for years.

During the first phase of accountability in early 2000, he was arrested and faced 19 corruption cases as an official of the BDA. The entire process of accountability during the days of General Pervez Musharraf was dubious, he along with others released by paying bribe to the right quarters.

When the security agencies reopened the Reko Dik case and started investigations to know more details, he was found reportedly missing and some people were claiming that he was in Saudi Arabia and operating a very big business.

For years, BHP listed the company on the stock exchange and earned profit without exploiting the resources on the ground and was involved in short term profit taking by manipulating its shares in the stock market.

BHP sold the Reko Dik rights to TCC owned by a Chilean and Canada company dominated by the Americans in the Board of Directors. They came into picture and started exploring the mines till they entered into a dispute with the ‘Government’ compelling the Chief Minister to deny them mining rights and exploiting the copper and gold.

The Supreme Court of Pakistan also gave a verdict against the agreement with the company. The TCC took the dispute to the Tribunal of the World Bank for arbitration of international investment disputes.

According to reliable sources, the Government made an attempt to settle the dispute outside the court. But it failed and the TCC refused to cooperate. It was also found reluctant to operate the mines even if the Government made an offer to that effect.

The TCC adopted a very tough stance demanding the money back it had spent on the project over the years. Naturally, the TCC will claim a huge amount which will be beyond the means of the Provincial Government. Under the 18th Constitutional Amendments, Reko Dik and other mines are owned by the Balochistan Government.

What will be the attitude of the Federal Government in this case? It is anybody’s guess. During a meeting in Paris, the Provincial Government was reportedly told to settle the dispute outside the court, award the contract to a new company, probably to a Chinese firm, and collect money from the new company and pay it to the TCC.

There was also a veiled threat to the Provincial Government that if the Federal Government had to pay the money and fine, the money would be recovered from the Federal receipts and Balochistan could be denied funds and budgetary allocations till the outstanding dues with the TCC are settled. It was not officially confirmed and the former Chief Minister, when asked, refused to offer comments.

The situation is very clear that Balochistan Government is real owner and master of Saindak and Reko Dik reserves and it should prepare a plan to operate both the giant plants generating revenue for the province.

For this, the Government should find competent officials who should be able to operate the giant companies on the pattern of multi-national corporations. Local experts and economic managers had operated the Saindak Project during the Trial Production and it was successful and the products fetched a reasonable price. Most of the buyers had shown interests in the Saindak Metals and offered cooperation to develop it further.

It is up to the Balochistan Government to prepare a robust team of economic managers at the earliest and train them so that they should operate it with the cooperation from the friendly countries, including Iran which is operating copper and gold mines in our neighbourhood.

Iran can help Pakistan in provide a refinery to separate gold from blister copper at the production plant site without sending them to China.