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Editorial

November 5, 2011

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The burden of Reko Diq

The burden of Reko Diq

The Supreme Court has been hearing the Reko Diq case since November last year. The exploration licences to look for copper and gold – in the strategically sensitive area of Chagai in Balochistan – given years ago, were challenged in the apex court and the issue of awarding a mining licence has been the real focus. The court, without concluding the proceedings, gave the Balochistan government 30 days to decide whether it would award the mining licence to the Tethyan Copper Company (TCC), which carried out the exploration in Reko Diq for several years under several licences. Since hundreds of billions of dollars are at stake, in September the Balochistan government raised 10 basic objections, accusing the TCC of violating laws and of not disclosing all the facts and data that it gathered during the exploration phase. The TCC was accused of providing a feasibility study for only a small part of the Reko Diq mines, said to be among the top three largest gold and copper deposits in the world. After a year of fighting the case, it seems that the TCC, or its parent company Barrick Gold, the largest gold mining company in the world, has given up its court battle inside Pakistan and is running to an international court of arbitration. What should Pakistan do next? Critical decisions have to be taken to save and then utilise this huge resource. A national policy has to be devised and a flawless strategy put in place now without corruption and favouritism – purely in the interest of Pakistan and not any individual, province, company or political party. The Supreme Court, which is seized of the matter, has thus to play a pivotal role. The TCC has to cross many legal hurdles here before it can even file a case internationally. The main obstacle in its path is a 2000 Supreme Court judgement in the Hubco case in which the apex court upheld a lower court ruling restraining Hubco from proceeding with ICC arbitration in London against Wapda and the government of Pakistan, because Hubco had indulged in corruption in getting a project. The TCC will try to wiggle out of this, but the SC has to fix responsibility for violations of law and punish the officials involved and the company which benefited from these violations and acts of corruption.
Corruption by the TCC in the past can become its biggest enemy in the future. Once it is found guilty as charged by the Balochistan government, it will have a very weak case to claim compensation or damages in any international court. The company should not be allowed to get away with lies told and claims made in the past when it thought it would be awarded the mining licence without any problem. It cunningly underreported the reserves saying the project would yield only $50 billion over its life, minus expenses. Independent figures range from $150 billion to $260 billion. The TCC also secured many licences owning 100 percent rights. The Supreme Court now has the responsibility to force the TCC to reveal its manipulations and what it found in Reko Diq, not just in one area but in the 300,000 metres it dug underground. A due diligence study would be essential to check whether claims of expenses and deposit size are in order. Balochistan and the federal government must use all their authority to make the TCC comply with the court orders. Failure to do so will cause a huge loss to the country. Former finance minister Shaukat Tareen, the first to raise his voice over the TCC deal, is on record saying: “I think we have sold our future.” It is now for the government to help the SC find out who sold this future and at what price.

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