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July 16, 2019

Antofagasta for ‘negotiated settlement’ after winning $6 bn from Pakistan


July 16, 2019

LONDON: London-listed Chilean-focused miner Antofagasta has offered a “negotiated settlement” to Pakistan after winning a seven-year legal battle with the Pakistan government.

The company has been awarded almost six billion dollars (GBP4.8 billion) when the World Bank international arbitration tribunal ruled that Pakistan was wrong to block a mining lease for the Reko Diq project in Pakistan in 2011.

According to a news report, shares in Antofagasta jumped 4.4% to 900.6pc following the news but there were warnings that the joint venture, with Tethyan Copper Company and Canada's Barrick Gold, may struggle to get the money from Pakistan.

Damages include compensation of $4.087 billion by reference to the fair market value of the Reko Diq project at the time of the mining lease denial, and interest until the date of the award of $1.753 billion. The Tribunal also awarded TCC just under $62 million in costs incurred in enforcing its rights.

Analysts at Investec said on Monday: "This is positive news for Antofagasta on an all but forgotten project, but one that obviously cannot be fully relied on until the money is in the bank."

Tethyan was unexpectedly denied a mining lease for the Reko Diq project, one of the world's biggest undeveloped copper and gold projects, in 2011 following protests from locals. The tribunal ruled that it was unlawful to deny the lease, and four billion dollars of the payout relates to the value of the project and lost interest.

Tethyan 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."

Pakistan said it was disappointed but would be willing to continue discussions. A spokesman said: "The government of Pakistan welcomes this approach to work towards a mutually beneficial solution that works for both sides."

Pakistani news channel reported that Pakistan will appeal against the decisions but a spokesman of Antofagasta told The News here that the award was binding on both sides and there are limited grounds for challenging the award under the ICSID Convention.

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