Pakistan looks to sell its Reko Diq shares to Saudi investors

ISLAMABAD: The federal government is considering selling the shares it holds in the Reko Diq project to Saudi Arabia to attract investment from the gulf state which is keen to become part of this copper-gold project, The News has learnt reliably and confirmed from the relevant officials.

Under the revised agreement, 50 percent of shares are held by Canadian company Barrick Gold Corporation whereas Antofagasta of Chile has exited the project in return for $900m deposited by three entities of the federal government – Oil & Gas Development Company Limited, Pakistan Petroleum Limited and Government Holdings Private Limited. These entities hold a 25 percent share in the project whereas as many shares are owned by Balochistan. Of them, 15 percent are on a fully funded basis and 10 percent on a free carried basis.

The newly constituted, Special Investment Facilitation Council (SIFC), has written to the federal entities to conclude the transaction with Saudi companies in the coming months. A source privy to the details said that initial instruction suggested doing the needful by the end of December, however, the date was later extended till the end of March next year. It has been learnt that PPL and OGDCL have also shared this material information with the Pakistan Stock Exchange (PSX) where Government Holdings Private Limited (GHPL) wasn’t bound to do that because it is not listed with PSX. “We are pleased to disclose that the Board of Directors at its meeting held on September 28th, 2023 has decided to evaluate a potential engagement with sovereign foreign investors with respect to the Reko Diq Project and has decided to appoint advisors through its associated company M/s Pakistan Minerals (Private) Limited to assist in this regard,” reads the information posted by PPL in compliance of the rules of the Securities Act, 2015 and of PSX regulations.

The News also approached SIFC for further verification. Confirming the development, a well-placed official said Pakistan wanted the Saudi government to undertake exploration in a separate block of Reko Diq but the brotherly state is interested in investing in the existing project because, like any investor, Saudis don’t want to take risks by venturing into an unexplored mining area. Keeping that in view, the value of shares is being assessed through a third party in order to have a better negotiation, he said. Barrick Gold is also interested in having Saudis as partners in the project. However, there are some issues yet to be settled, he added. “Pakistan wants Barrick Gold to also sell some shares to the Saudi government,” he said but the official was not sure if the Canadian company would concede to this demand. The key question at the heart of this ongoing negotiation is who will have major share-holding.

Right now, Barrick Gold as well as the federal and provincial governments combined have 50 percent shares each but this balance will tilt towards the Canadian company if the federal government only surrenders its shares. Asked if the provincial government can be asked to sell instead of the federal government, the official said there was no such plan under consideration nor was it likely as it would not be fair for Balochistan.

Asked if the Saudi investors are the Saudi government or Saudi companies, the official said that they have their own shareholding structure. The Saudi government will have its shares even if the company is privately owned. He said although the federal government was not very excited to sell its shares, it intended to do so with the hope that this decision would bring further investment in other sectors. According to that official, a third-party assessment of the value of shares would be completed by the beginning of December this year.