Pakistan restarts Reko Diq project with $11B penalty waived and $10B investment in Balochistan

The new agreement will bring $10 billion investment and 8000 jobs in Balochistan

Pakistan’s government has announced that the country has saved $11 billion as the penalty in the Reko Diq case has been waived and a new agreement was reached with the Canadian firm on March 20.

Under the out-of-court deal, the $11 billion penalties against Pakistan by a World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest $10 billion in the project, Pakistan Finance Minister Shaukat Tarin said.

Pakistan’s government has signed a new agreement with Canada’s Barrick Gold Corp. to restart the Reko Diq mine project in southwestern Balochistan, ending a long-running legal dispute with Tethyan Copper Company (TCC).

Reko Diq is one of the largest undeveloped copper and gold deposits in the world, capable of producing 200,000 tons of copper and 250,000 ounces of gold a year.

Prime Minister Imran Khan witnessed the signing ceremony. Speaking on the occasion, he expressed the hope that the investment would mark the beginning of large-scale investments in Balochistan. “In developing the project, nearly US$10 billion shall be invested in Balochistan, including US$1 billion that shall be invested in social uplift projects such as roads, schools, hospitals and creation of technical training institute for mining,” according to a statement by the PM Office.

“The investment shall create over 8000 new jobs. This project shall make Balochistan the largest recipient of foreign direct investment in Pakistan and the Reko Diq project shall be one of the largest copper and gold mining projects in the world.”

New Reko Diq agreement 2022

The new agreement was signed on Sunday by representatives of the federal and Balochistan governments with a delegation of Barrick Gold, led by Chief Executive Mark Bristow.

As per the terms of the new agreement, Barrick and Pakistan stakeholders will each hold 50% shareholding of the reconstituted project. Pakistani shareholders will include:

  • a 10% free-carried, non-contributing share held by the government of Balochistan
  • an additional 15% held by a special purpose company owned by the government of Balochistan
  • 25% owned by other federal state-owned enterprises

Federal Government’s 25% shareholding shall be divided equally amongst three state-owned-entities (SOEs) of the Federal Government, namely Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan Limited (GHPL). Balochistan’s share shall be held by a company wholly-owned and controlled by the Government of Balochistan.

A separate agreement provides for Barrick’s partner Antofagasta PLC  to exit the project and be replaced by the Pakistani parties.

Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period. The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan.

“This is a unique opportunity for substantial foreign investment in the Balochistan province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come,” Barrick’s President and Chief Executive Officer Mark Bristow said in a statement

Legal experts believe that the current settlement was the only solution and best deal for Balochistan government.

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