PM orders probe into Reko Diq ‘predicament’

ISLAMABAD: Prime Minister Imran Khan has ordered the formation of a commission to investigate the role of individuals in the Reko Diq “predicament” that led to the imposition of $6 billion in penalties by the International Center for Settlement of Investment Disputes (ICSID), the Attorney General for Pakistan (AGP) office has said.

“The Prime Minister has directed the formation of a commission to investigate into the reasons as to how Pakistan ended up in this predicament; who was responsible for making the country suffer such a loss and what are the lessons learnt, so that mistakes made are not repeated in the future,” said a notification.

The Attorney General’s office said: “The international tribunals are urged to consider the implications of their decisions and the impact on development and poverty alleviation in Balochistan.”

The government said in the response of the statement by William Hayes, the Chairman of the Board of Directors of TCC, in which he expressed a willingness to work towards a negotiated settlement, it (the government) welcomes this approach to work towards a mutually beneficial solution that works for both sides.

The move comes a day after Pakistan was ordered to pay almost $6 billion in damages to the foreign gold mining firm whose dig was shut down in 2011. The consortium TCC — of which Canadian gold firm Barrick and Chile’s Antofagasta Minerals control 37.5 per cent each — is the largest foreign direct investment mining project in the country.

More than a decade ago the group found vast gold and copper deposits at Reko Diq in Balochistan, and had planned a hugely lucrative open-pit mine. But the project came to a standstill in 2011 after the local government refused to renew the consortium’s lease, and in 2013 the Supreme Court declared it invalid.

Over the weekend, the World Bank’s international arbitration tribunal committee awarded $5.9 billion in damages to Tethyan, according to a statement from the company, because of the government’s decision to shut down the mine.

Attorney General for Pakistan Anwar Mansoor Khan said in a statement the decision was noted “with disappointment”. Legal experts were “studying the Award and reflecting upon its financial and legal implications,” the statement continued.

Consortium Chairman William Hayes said: “We remain willing to discuss the potential for a negotiated settlement with Pakistan and will continue to protect our commercial interests and legal rights until the conclusion of this dispute.”

It comes weeks after the government secured a $6 billion bailout from the International Monetary Fund (IMF), amid devaluations of the rupee and soaring inflation.Barrick and Antofagasta say the proposed plant could produce 600,000 tonnes of copper and 250,000 ounces of gold a year. The provincial government is also a sleeping partner in the Reko Diq project with a 25 per cent stake.

Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts say, which waste up to 80 per cent of potential because of poor extraction techniques. Experts have called for more transparent policies to allow mining to flourish.