Reko Diq: A way forward to shatter debt shackles

Reko Diq means sand and gold mounds in Balochi language.

QUETTA (APP) - Balochistan province, once known for insurgency and deteriorating law and order, is now ready to assist in boosting country’s economy as the government has successfully restructured and restarted the stalled multi-billion dollar RekoDiq project.

Reko Diq that means sand and gold mounds in Balochi language, has an estimated reserve of 5.9 billion tons of ore grading 0.41% copper and gold reserves.

Located in Chaghi district, about 70 kilometres north-west of Naukundi, a town near Iran and Afghanistan, Reko Diq is thought to have the world’s fifth largest untapped gold and copper deposits.

“We can say goodbye to International Monitory Fund and other international loan financiers for good, once Balochistan’s mines and minerals are fully explored,” Chief Minister Balochistan Abdul Quddus Bizenjo said.

Expressing desire for a prosper Balochistan, Bizenjo said that US$ eight billion Reko Diq project was the largest agreement ever signed in country’s history. “This project will not only end Balochistan’s sense of deprivation but also help to boost country’s economy, create jobs and bring positive changes to masses’ lifestyles.”

According to an agreement signed with Barrick Gold Company (BGC), Balochistan will reap dividends, royalties and other benefits associated with its 25% stake without having to contribute financially.

The project is expected to employ approximately an overall 7,500 people with 4,000 long term jobs once it goes operational as the BGC intends to complete an updated feasibility study by the end of 2024, with first production beginning in 2028.

According to updated feasibility study, Reko Diq will be starting a conventional open pit and milling operation to produce a high-quality copper-gold concentrate.It will be built in two phases, beginning with a plant capable of processing approximately 40 million tonsore per year, to be doubled in five years after first production from phase one.

With its unique combination of large scale, low strip and a good grade, Reko Diq will be a multi-generational mine with a life of at least 40 years.

Barrick President and Chief Executive Mark Bristow said the completion of legal processes is key to progressing Reko Diq into a world-class, long-life mine that would substantially benefit present and future generations of Pakistani.

“We are currently updating project’s 2010 feasibility and 2011 feasibility expansion studies. This should be completed by 2024 with 2028 targeted for first production,” Bristow said. “We expect it to be constructed in two phases with a combined process capacity of 80 million tons per annum.”

“RekoDiq’s ownership structure exemplifies Barrick’s commitment to partnering with its host countries and fairly sharing value of our operations with all of our stakeholders,” Bristow said.

Furthermore, Reko Diq will pay up to $50 million in royalties to the Balochistan government until commercial production begins.

Since an agreement was signed in 1993 with the Australian Tethyan Copper Company (TCC) for exploration of these reserves, the Reko Diq project faced numerous challenges. The TCC was later purchased by Canada’s Barrick Gold and Chile’s Anto Fagasta.

In response to another agreement signed in 2006, the two foreign companies’ shares were fixed at 37.5 percent and Balochistan’s share was fixed at 25 percent, CM Balochistan Nawab Aslam Raisani cancelled the company’s license in 2011 that was endorsed by the Supreme Court in 2013.

The TCC went to the World Bank Arbitration Court and the federal government agreed to restart the project with BGC in an out-of-court settlement.

Following the federal government’s reference, the Supreme Court ruled on December 9 the long-delayed rehabilitation agreement for the gold, silver, and copper mining project as legal.

“Pakistan has reached an out-of-court settlement with a foreign firm that has agreed to revive a mining project stalled since 2011,” Farah Azeem Shah, Balochistan government spokesperson said. “It is important that the Barrick Gold Company will invest $ eight billion in Balochistan.”

Recently, BGC has paid the first US$ three million (approximately Rs 750 million) to the Balochistan government as part of new Reko Diq partnership.

After signing definitive agreements and completion of legal process last month, Barrick and the Government of Balochistan recently agreed on timeline for disbursement of committed funds to the province.

The new Reko Diq agreement ensures that the project starts benefitting people of Balochistan through advance royalties and social development funds, well before the mine begins production,

“We’re making sure that Balochistan and its people will see these benefits quickly. Beginning early next year, Barrick will implement a range of social development programs for providing better healthcare, education, vocational training, food security and provision of potable water,” said BGC, CEO Mark Bristow.

BGC’s investment in these uplift projects is expected to be around $70 million over the feasibility and construction periods.

“The people of Chaghi, home of the RekoDiq project, are very optimistic about the district’s future development,” said Ali Raza Rind, a local journalist. “BGC enjoys good repute in Chaghi district due to its previous mineral drilling in the area and has started hiring local people purely on merit.”

He has urged the authorities to launch vocational and technical education programs for local community so the people are well equippedthem with latest techniques to become a part of RekoDiq project.

Balochistan Chief Minister Abdul Quddus Bizenjo has also promised to spend Rs 300 to 400 million annually on Chaghi development projects.

It is hoped that joint venture of the government and Barrick Gold Company will usher in a new era of development in Balochistan and the country as a whole.