The sale of Reko Diq mining rights is currently being reviewed by Pakistan Supreme Court in response to allegations of lack of transprarency. The entire discussion in the courtroom is primarily centered on valuations and estimates of traditional metals like gold and copper. The second topic of discussion in the apex court is about the absence of any contract provisions for development of downstream job-creating industries to extract these metals.
What is conspicuously absent from the debate is the potential for extraction at Reqo Diq of rare earth elements that are even more precious and in much greater and growing demand for the latest high-tech equipment and batteries for all-electric autos, communications, and other applications than traditional precious metals like gold and silver. It is the estimates of these rare earths at Reqo Diq that could put the value of the contract at considerably more than the current best estimates of $500 billion for copper and gold.
Recent trade disputes between China and its major trading partners in the United States, Europe and Japan have been the result of China restricting rare earth exports.
A current production Toyota Prius nickel metal hydride battery pack uses 30 kilograms of nickel, 2 kilograms of cobalt and 12 kilograms of lanthanum because the active hydrogen storage alloy in the battery is either LaNi4.5Co0.5 or (Ce, La, Nd, Pr)Ni5. The Prius assembly plant in Japan has so far used one and 1.5 million rechargeable nickel metal hydride battery packs and achieved with them some of the lowest numbers of service issues ever seen in the OEM automotive industry. In fact most of the original Prius rechargeable nickel metal hydride battery packs have exceeded their 8-year 100,000 mile warranty and are still functioning, according to Resource Investor website.
China controls 95% of the world’s supply of rare earth elements, a class of ores used not just in Toyota Prius electric motors and batteries but in a wide range of high-technology applications, from sonar systems to wind turbines, mobile phones and fluorescent lights.
All this gives China an extraordinary - some might say unfair - advantage to lead the race to dominate the manufacture of cutting-edge technology, according to the Wall Street Journal. Even before any major technology partnership announcements, there are reports that the legendary US investor Warren Buffet is investing in BYD, an obscure Chinese battery, mobile phone, and electric car company.
Here is how an expert who asked not to be named explained the mining potential in Balochistan:
"The Pegmatite rock that covers much of Balochistan (and other parts of Pakistan as well) has several different gems, in it which have been mined for a long time. These are easy to visualize as they differ in color from the rest of the rock, and can be removed with a small geologist's hammer. Pegmatite, though, also contains uranium which can be separated using a Geiger Counter, and rare metals and rare earths. Some of these like Lithium can be separated relatively easily. Others like Samarium and Dysprosium are vastly more difficult to separate because you need X-Ray equipment to help identify them. Also, their presence is very small - that is why they are classed as "rare." The presence of many of these metals was not known to science until recently and until the Japanese began to use them in electronics, hardly any effort was made to mine them. Now, of course, they are all the rage because they have been found especially useful in the latest "green" generation equipment as well as in defense and other applications. Indeed, until China banned their sale to Japan, no one really even bothered about them - it suited the Japanese to remain quiet as they were getting very good prices for these resources from an unaware Chinese, and the same thing is now happening in other parts of the world, in Pakistan in this case.
Much of the testing that is involved here is difficult and requires very advanced technical equipment, and even methods like gas spectrometry etc may not help identify materials that exist in extremely small percentages in soil or rock. In India for example, some of these metal reserves were not known until the USGS first and then the Russians helped analyze soil and rocks across the country. If nothing else, the Indians formed a government owned company called Indian Rare earths Limited which comes under the Atomic Energy Commission and is directly under the Prime Minister of India. They do seem to have handled the conservation and exploitation of these reserves far better than is being done in Pakistan."
Given the potential for tremendous mineral wealth at Reqo Diq, Saindak and other similar sites in Balochistan and elsewhere in Pakistan, it is extremely important for the Supreme Court to insist on an independent panel of experts to evaluate it, and to base court orders on the findings of such panel. How the Supreme Court tackles these issues now will have a significant impact on the future well-being of Pakistan in terms of the availablity of public funds for spending on education, health care and other badly needed human development projects in Balochistan and elsewhere in the country.
Here is a video clip from GeoTV on Reko Diq:
Pakistan's Mineral Wealth
China's Electric Ambitions
Buffet Investing in Chinese Battery Maker
Remote Sensing Oil and Gas Fields in Pakistan
Pakistan's Mineral Yearbook 2005
US, NATO Fighting to Stalemate in Afghanistan
South Asia Slipping in Human Development
Abundant, Cheap Coal Electricity in Pakistan
Car Battery Battle Between Li-on and Nickel Metal Hydride
Auto Industry Prospects in India, Pakistan and China
Something else Pakistan can learn from China!
On October 28th, 2010
Mining is the easy bit: Separating rare earth elements is where the complexity comes in
Rare earth element mining is a tantalizing venture. Rare earths are not rare in the strict sense, as they are wildly distributed around the globe and their industrial uses require relatively small amounts of finished oxide. It may come as a surprise to learn that some of the rare earths are more abundant than copper, cadmium, lead and platinum. And yet the prices for small amounts of the valuable elements are going through the roof. Finding rare earths, and extracting the minerals in which they are distributed, is no more difficult than any other form of resource mining. But separating the elements into usable ores and metals has proved to be much more complex and expensive and has essentially stopped a headlong rush into rare-earth mining.
Rare earth elements are found in a variety of minerals, although most are found in bastnaesite and monazite; the former containing mostly light rare earth elements with small quantities of heavies while the latter contains light and higher concentrations of heavy.
The largest bastnaesite deposits are found in China and the US, although known deposits exist in sites as widespread as Canada, Russia, Malawi and Norway. Monazite deposits are found in Australia, Brazil, China, India, South Africa, South East Asia and Sri Lanka.
Expertise and commitment the key
To separate rare earth elements safely and effectively is a long, complex and expensive exercise, which demands a great deal of expertise and commitment to the process. There are currently very few operations outside of China that have the knowledge to carry out the process of extracting rare earth elements from ore and very few facilities and plants with the infrastructure in place to begin.
“The ability to process is very, very critical and very, very complex”
Mark Smith of Molycorp
’5th International Rare Earths Conference’ Hong Kong, 2009
Producing rare earth oxides is considerably harder than other mining processes. Extracting gold metal from ore, for example, is relatively easy. Mix gold ore with sodium cyanide and the gold metal is leached out.
Conversely, rare-earth element extraction involves many steps. In the case of bastnaesite, usually found in igneous rock formations, the ore is mined using traditional open-pit techniques. The bastnaesite is then removed from the rock by crushing the ore into a small gravel, and then grinding the crushed ore in a mill until it becomes a fine sand. That sand, or silt, gradually separates into different mineral grains — bastnaesite and other generally less valuable minerals. The silt is then run through a floatation process wherein a liquid element is added, and air bubbles introduced. The finer bastnaesite silt sticks to the bubbles and rises to the top of the liquid where it is skimmed off.i
That is the first process. The bastnaesite must now be separated into its constituent rare earth elements. The mineral is usually sent to a separation plant where each element is separated using an acid or solvent extraction process.
“It’s a very long and involved process. That’s one of the biggest risks.
Here are some excerpts of the Express Tribune story on Reko Diq:
The consortium will take away 75 per cent of the income while the Balochistan government will get a paltry 25 per cent of share from the project as part of the terms of agreement.
Geologists have estimated that Reko Diq contains mineral deposits worth $500 billion and if the authorities did not take action immediately, this golden opportunity of turning around Pakistan’s fate will be lost.
Preparations are believed to be under way to sign agreements for mining and excavation with a consortium of foreign companies without any effort being made to estimate the actual worth of the vast gold and copper reserves found in the Chaghi district of Balochistan. According to geologists the actual worth of the reserves can be upwards of $500 billion. Economists say that the reserves are not only a solution to the nation’s economic woes, but can also help wipe out Pakistan’s debt.
Geologists associated with the Geological Survey of Pakistan had discovered huge reserves of gold and copper in Chaghi and adjoining areas in 1978-79.
After this discovery, international consultants of repute were commissioned to prepare feasibility studies about Saindak under the supervision of the Resource Development Corporation. They included Mountains Estates Enterprises (USA), Cel Trust Engineering (UK), Oto Kumpo (Finland), RTB Bor (Yugoslavia).
But after the Saindak study, instead of appointing international consultants for assessing the value and quantum of Reko Diq reserves, the Balochistan government entered into an agreement in 1993 with an Australian company having vast investments in oil and gas sectors under which 75 per cent of the reserves of Reko Diq were to be given to BHP Billiton, while 25 per cent share was to go to the government of Pakistan.
The TCC completed its feasibility report last year and claimed that the feasibility study and social and environmental analysis cost it $250 million while the overall estimate of the project – $3.3 billion – will be spent in the next 56 years.
According to geologists who played important role in the Saindak project, foreign companies make such agreements with developing companies to take advantage of their lack of funds and earn hefty profits by purchasing mineral reserves at throwaway prices.
They said that it was strange that the successful process of Saindak was not replicated in this case.
Analysts said that in Saindak, the drilling was done 91,000 feet deep while the cost was just $20 million while according to the TCC website, drilling on this project was only done till a depth of 21,000 feet.
Geology expert Dr Suhail M Qureshi said that Deko Riq reserves were being sold at very cheap prices. He said that according to the information received, the average price of gold and copper reserves is agreed to be $4,000 per ton which is too low. He said that an area of 25 square kilometers has been given on a 30 year lease.
Former finance minister Shaukat Tareen said that such conflicts can be averted if transparent procedures are adopted and national interest remains uppermost when concluding agreements for natural resources. He said that all the steps that the government of Balochistan is taking now to make the deal transparent should have been taken much earlier.
He said that according to his information, Reko Diq has the fifth largest reserves of gold and copper in the world and under the raw material agreement Pakistan will get $40 billion in 30 years. He said that if Pakistan makes the agreement for the refining process done in Pakistan, the price and income may increase by 7 to 8 times. He said that according to a safe estimate, the income can be raised to $500 billion.
Thank you very much. I did a web search and found some very compelling arguments made by scientists in the Supreme Court - the Express Tribune has a piece at: http://tribune.com.pk/story/102611/reko-diq-pakistan-risks-squandering-billions-in-questionable-deal/ I think the Rare Earths and Rare Metals issue will come out. Geologists have now begun to testify in the Supreme Court, and they know this business best. The facts will come out and the world will see what is going on.
Pakistan's newspapers have a healthy combativeness to them, something that Indian newspapers sorely lack, because, they are, by and large, extremely conformist. Hopefully, this pillaging of a valuable resource will be stopped. While the Canadians and Chileans might refuse to renegotiate the business at present, please take it from me - they will agree when pressed. They know how much money there is in those sands and rocks. They are not going to throw that away. This is just posturing, nothing else.
Here's a story from The News on Reko Diq as Pakistan's "strategic asset":
ISLAMABAD: The Nuclear Command Authority (NCA), which handles all national strategic assets of the country including the nuclear weapons, has practically intervened in the multi-billion dollar Reko Diq gold mines case and has assured that Pakistani scientists can provide all resources and know-how to go ahead with the mining and refining projects.
In a major development, renowned Pakistani scientist Dr Samar Mubarakmand confirmed to The News that the NCA had assured him in writing that all available resources would be provided for exploration, mining and refining of the national assets of Reko Diq, including human resources from any sensitive organisation.
Dr Samar had on Wednesday told the Supreme Court of Pakistan in detail that Pakistan had the expertise to handle the project from A to Z. In another important development, a prominent lawyer, Raza Kazim, presented in the Supreme Court and later confirmed to The News that the federal government had signed a secret 101-page draft agreement with the TCC, which will provide the basic guidelines of the mining licence, which the Government of Balochistan is being forced to issue. “This is a conspiracy against the country,” he said.
Raza Kazim told The News that he had managed to get the secret document, which is the final draft of the agreement the federal government is bent upon signing with the foreign company. He said he had prayed to the SC to declare this draft an illegal document and stop the government from signing an agreement. He said the draft agreement he presented before the court bears the signature of the director general minerals of the Ministry of Petroleum and Natural Resources. He said that when the advocate general Balochistan said that no agreement had been signed, Justice Khalil-ur-Rehman Ramday stated that this document bears the signature as well as the official stamp of a top official.
Dr Samar told The News that the NCA, in its letter, had offered that trained and experienced human resources from the Pakistan Atomic Energy Commission (PAC), NESCOM and Kahuta Research Laboratories would be placed at the disposal of the strategically-important project of Reko Diq.
He said our technical teams will take up all upstream and downstream projects of mining, processing, smeltering and refining and will only start work when the foreign company leaves the area, as many companies had done after completing the exploration work in the Thar Coal project.
He also disclosed that Pakistan had been provided wrong estimates in a feasibility report on Reko Diq. Highly reliable sources said Dr Samar had obtained the real feasibility reports on the Reko Diq, which were totally different from the feasibility study presented to Pakistan. Sources said they tried to hide the volumes of copper and gold, which were much higher.
When asked to confirm, Dr Samar disclosed that in the feasibility study charts, red dots showing dense quantity of gold and copper are very fewer in number whereas the real charts are full of these red dots.
Dr Samar said the foreign company had drilled 1,020 metres in the area and had thus obtained complete data of the gold and copper deposits but these were not being disclosed. On the website of the company, it has been claimed that over 300,000 metres (186 miles) of drilling had been carried out, which is astonishing.
Dr Samar said only exploration licences had been issued in Reko Diq and now these companies should be asked to leave after Pakistan government pays them their expenses. “This happened in Thar Coal where eight exploration companies completed their work and were paid and told to leave. All of them left without demanding that mining rights be given to them,” he said.
Interesting! Why was Taseer concerned about this?
“The assassinated Governor of Punjab, Salmaan Taseer was a habitual Tweeter and his second last Tweet, hours before he was shot, was against me and the Jang Group about Reko Diq and its full-page advertisement in major newspapers on Jan 4. But he did not live to hear the other side of the story which may have changed his views. What he missed was that the largest foreign investment in mining in Pakistan was actually turning out to be the largest treasure loot of the country’s history.
In a strange twist of events, the Canadian-Chilean company trying to get the mining rights of Pakistan’s richest discovery of gold and copper at Reko Diq has cut down the share of Balochistan from 25 to 22 percent and offered to give the corruption-ridden government in Islamabad, a 31 percent share in the billions of dollars that will be made in the coming years.”
Taseer & the continuing saga of Reko Diq mystery
Here is a Reuters 2010 report about Barrick Gold's interest in Reko Diq:
(Reuters) - Barrick Gold (ABX.TO) Chief Executive Aaron Regent is optimistic the company can reach an agreement to develop the massive Reko Diq gold-copper project in Pakistan, he said on Tuesday.
The future of the $3 billion project, which is majority-owned by a joint venture of Barrick and Chilean copper company Antofagasta (ANTO.L), has been in doubt since the local government threatened to essentially cancel it -- by not granting a mining license -- because of misgivings about the share of benefits.
The project holds more than 11 billion pounds of copper and 9 million ounces of gold. Barrick and Antofagasta each own 37.5 percent of the project, while the provincial government of Baluchistan holds the remaining 25 percent.
"We have had discussions with (the government) and are going to continue to have a dialogue with them with the objective of getting a mining lease and I believe that we'll be able to do that," Regent said at the Reuters Global Mining and Steel Summit in New York. He added that any resolution could take months to conclude.
Reko Diq is one of a group of projects Barrick would seek to bring to production after its current generation of development projects, which includes the Pascua-Lama project on the border of Chile and Argentina, and Pueblo Viejo in the Dominican Republic.
With several big builds already in the pipeline, Regent said, the company would eye undeveloped projects as possible acquisition targets, rather than advance-stage projects or producing mines.
"Our focus is really more on greenfield type projects, projects that have a higher degree of uncertainty around them, whether they be technical risks or permitting risks, and that I think plays to the strengths," he said.
He noted Barrick's growth ambitions would not be thwarted by lack of funding, as the company generates rich cash flows, and holds $2.6 billion in cash and a $1.5 billion undrawn line of credit.
"We've got lots of financial capacity to fund the projects that we're currently constructing, or fund an acquisition if we want," he said.
If opportunities to deploy capital -- in other words acquire assets -- don't materialize, he said, share buybacks or a hike to the shareholder dividend would be "on the table."
Barrick currently pays a semi-annual dividend of 20 cents per share. The payout was last raised in May 2008.
Regent said he was optimistic on the price of gold, which peaked above $1,200 an ounce in early December, but has since pulled back somewhat. It was at $1,120 an ounce on Tuesday.
"There seems to be pretty significant support for gold around the $1,100 level. We have seen gold drop down slightly below that, and there seemed to be pretty firm purchasing from places like India and China," where there is good demand for physical gold, he said.
Here is a Dawn OpEd on the "neglect of mineral sector" in Pakistan:
The mineral sector has not been developed in Pakistan because it has not gone beyond the geological mapping and mineral exploration stage by and large.
The integrated role of geology, mining and metallurgy/ beneficiation has not been institutionalised to develop the natural resources in the country.
The mineral sector organisations such as Geological Survey of Pakistan, Pakistan Mineral Development Corporation and Pakistan Council of Scientific Research should play an integrated role to prepare pre-feasibility studies based on the modern concepts of mineral modelling.
The controversy of Reko Diq is due to this neglect and ignorance of already available research studies on Chaghi metallogenic belt in north western part of Balochistan.
Dozens of research papers and reports are available on porphyry deposits containing copper, molybdenum and gold in Chaghi metallogenic belt by GSP, UNDP and other international experts of repute.
The prominent cu porphyry type deposits distributed in Chaghi area are Saindak (leased to Chinese), Koh-i-Dalil (Reko Diq), Durban Chah, Dashte Kain, Ziarat Pir Sultan, Siah Koh, and a host of others.
GSP`s geologists Bhutta and Asad have published and unpublished reports in national and international journals on sulphide mineralisation in Chaghi.
Besides this, world renowned experts on porphyry copper and metallogeny, like Schmidt, Sillitoe and Jankovic have published research papers and reports along with GSP geologists.
Research and development (R&D) in mineral sector is criminally neglected while mineral resource cannot be developed and utilised without R & D.
Therefore, it is important that the full potential of all the mineral organisations should be put into operation, so that the stigma of less than one per cent contribution of mineral sector in national economy should be washed away.
MIRZA TALIB HASSAN
given pakistan's instability i think it is best for the rare earths to remain buried for now till there is a sane government which can figure out what to do with them.
Btw rare earths actually are not that rare the current supply constraint will almost cerrtainly be met by new mines coming on line in australia and canada among othr places.The thing is China can produce the stuff very cheaply so the other mines were unprofitable...
Indian rare earths are also not exported any longer.Japan has been begging India to supply it for 2 years(Indian rare earths are on the beach in kerela's monazite sand)till its newly acquired mines in usa canada and australia comes on line...
Anon: "Btw rare earths actually are not that rare the current supply constraint will almost cerrtainly be met by new mines coming on line in australia and canada among othr places"
Demand for rare earths is growing much faster than the supply as electronics applications and all-electric vehicles take off.
Here are some excerpts from a Bloomberg report on rare earths from 2010:
Prices of rare earths, used in the manufacture of disk drives and smart bombs, have climbed as much as sevenfold in the past six months as China in July reduced its second-half export quota for the minerals by 72 percent. Molycorp aims to restart a mine in California in the second half of next year and produce about 20,000 metric tons of rare earth oxides by the end of 2012.
The U.S. Government Accountability Office, the investigative arm of Congress, warned in April of “vulnerabilities” for the military because of the lack of domestic suppliers of rare-earth materials used in weapons systems. The Pentagon is studying how to secure future supplies, and its report is due to Congress this month.
Vietnam, which has emerged as a potential new source for Japanese companies including Toyota Motor Corp., won’t sell rare earths in raw form, the Thanh Nien newspaper reported, citing the Department of Geology and Minerals. Instead the country aims to export more valuable processed rare earths.
While the elements aren’t as rare in nature as the name implies, they are difficult to find in profitable concentrations, expensive for Western producers to extract and are often laced with radioactive elements.
China has come to dominate the market because it has been able to produce the elements more cheaply and with fewer environmental restrictions than its competitors.
China won’t use rare earths as a bargaining chip, Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, said today at a briefing in Beijing. The Chinese government has said it is reducing exports as part of a drive to improve efficiency in the industry and reduce environmental damage caused by mining.
“The Chinese are only exporting 30,000 tons of material to the rest of the world right now and the rest of the world needs 50,000 tons of this material a year,” said Molycorp’s Smith. “We don’t see the fundamentals of this changing anytime in the near future. The demand is like I’ve never seen it in 25 years in this business.”
Lynas Corp., a rare earths developer based in Sydney, estimates the global rare-earth market this year at $7.8 billion, or about a week’s sales at Wal-Mart Stores Inc. Still, China’s cutbacks have raised political tension because of the strategic importance of the metals used in Toyota’s Prius hybrid cars, Research in Motion Ltd. BlackBerrys, alternative energy generation and weapons.
The price of lanthanum oxide, used in hybrid batteries, has risen more than sixfold since second quarter to $50 a kilogram, according to Lynas Corp.’s website. Vehicles like the Prius contain about 10 kilograms of rare earths.
Japan’s Nidec Corp., the world’s biggest maker of motors for hard-disk drives, will start making motors for industrial machinery that don’t need rare-earth metals to reduce reliance on the materials, the Nikkei newspaper reported today. Production of motors that don’t use permanent magnets and don’t require rare earth metals will start in 2012, it said.
Molycorp rose 9.6 percent to $38.56 in New York yesterday after the U.S. House of Representative’s Science and Technology Committee Chairman Bart Gordon said he will seek to pass a measure that would boost rare-earth mining. The stock has tripled since the company raised $394 million in a July initial public offering.
Rare earths, a group of 17 metals including neodymium, lanthanum, cerium and europium, have industrial and national- security uses, such as in petroleum refining, fiber-optic transmission, computer disk drives, and military radar and missile-guidance systems.
I know of US EXIM Bank financing and Japanese government funding programs that are available for mineral exploration especially for rare earths and rare metals. The Japanese policy was drafted in consultation with the Japanese electronics and automobile industries and a lot of financial aid has already gone to countries like Kirghizstan, Kazakhstan, Azerbaijan etc. The Japanese have offered India aid as well. In any case, the USA, Japan, the UK, Germany, Sweden and some other countries have the technology to work on this and all of them have good relations with Pakistan.
Now that the Government of Pakistan has begun to see the potential in these mines, I don't think they would find it difficult to call for international assistance and also to start a competitive bidding process to benefit from the mines. The scrutiny of the earlier contracts should help ensure more transparency in the future. I like being optimistic - South Asia is mired in corruption in every country in the region, beyond doubt, but there are a lot of good people (easily the majority in every country, I am sure) and it is they who will ensure that progress takes place despite the worst efforts of the politicians and bureaucracies in trying to thwart it.
Pakistan's Federal Govt has filed its reply in SC on leasing Reko Diq mines, according to Daily Times:
ISLAMABAD: The federal government on Wednesday filed its comprehensive reply in the apex court regarding the petition, challenging the leasing of Reko Diq gold and copper mines in Balochistan worth over $260 billion to foreign exploration companies.
The government informed in its reply that it had not signed the contract with any foreign exploration company regarding the leasing of Reko Diq gold and copper mines in Balochistan worth over $260 billion. The government also submitted its own proposed draft of the agreement, which has not been signed with the foreign exploration company.
It is worth mentioning that the draft of the government regarding the agreement is different from Tethyan Copper Company (Pvt) Ltd’s draft. “All the discussion is going on a basis of foreign exploration company’s proposed draft”, the government said. According to the government’s proposed draft, the Balochistan government would own 25 percent of shares and would receive five percent royalty.
Dr Samar Mubarakmand has been a strong advocate for keeping out foreigners from Thar Coal and Reko Diq projecrs, saying we can do both ourselves and be energy independent and earn billions of dollars.
The News has an Op Ed today by Dr. A.Q.Khan titled "Projects We Cannot Handle" in which he attacks Mubarkmand without mentioning his name:
"...The Thar Coal Project was, until recently, a hot topic. We probably all remember that we were promised 50,000 MW of power for 500 years, plus hundreds of thousands of barrels of diesel. There were claims that we had 185 billion tons of coal reserves, while reliable estimates put this figure at only three billion tons, and that too of low grade. That balloon burst quite quickly....
I can say with authority that we do not have experienced and qualified engineers to handle such a complicated, giant project, to say nothing of my having had to cope with those who indulge in self-projection though they don’t have fundamental knowledge or qualifications in the required field.
In my earlier column of Nov 1 I had mentioned the statements made by Dr Ansar Parvez, chairman of the Pakistan Atomic Energy Commission (PAEC) in Vienna in which he claimed that 8,080 MW of power could be produced by 2030. In order for that to be produced, either 29 reactors of 300 MW each or ten reactors of 900 MW each would be required. A 300-MW reactor costs about $1 billion and requires eight to ten years for commissioning. A 900-MW reactor would naturally cost proportionately more and would take the same time, if not longer, to commission. I am at a loss to see how Dr Parvez aims to achieve this.
The PAEC has existed for more than 50 years and employs almost 20,000 people, but it has not been able to make a single power reactor, even of a small size. This is despite the fact that the technology itself is half-a-century old, and India and South Korea are among countries which have been producing reactors for years. The one at Karachi was supplied by Canada and the two at Chashma by China.
If important projects like those mentioned above are given to Pakistanis, they will become yet more PIAs and Pakistan Steel Mills. Nepotism, overstaffing with unqualified and inexperienced people, overabundance of persons of official cadre, fleets of land cruisers – you name it, it will be there. We have all heard details about the corruption related to the Agosta Submarine. Not only the fish’s head, but the whole body is rotten.
Disregarding the personal rivalry between two men, it's anybody's guess as to who is right.
Here are excerpts from a NY Times report on rare earth refining in Malaysia:
Once little known outside chemistry circles, rare earth metals have become increasingly vital to high-tech manufacturing. But as Malaysia learned the hard way a few decades ago, refining rare earth ore usually leaves thousands of tons of low-level radioactive waste behind.
So the world has largely left the dirty work to Chinese refineries — processing factories that are barely regulated and in some cases illegally operated, and have created vast toxic waste sites.
But other countries’ wariness has meant that China now mines and refines at least 95 percent of the global supply of rare earths. And Beijing has aroused international alarm by wielding that virtual monopoly as a global trade weapon.
Last September, for example, China imposed a two-month embargo on rare earth shipments to Japan during a territorial dispute, and for a short time even blocked some shipments to the United States and Europe. Beijing’s behavior, which has also included lowering the export limit on its rare earths, has helped propel world prices of the material to record highs — and sent industrial countries scrambling for alternatives.
Even now, though, countries with their own rare earth ore deposits are not always eager to play host to the refineries that process them. An American company, Molycorp, plans to reopen an abandoned mine near Death Valley in California; but Molycorp must completely rebuild the adjacent refinery to address environmental concerns.
All of this helps explain why a giant Australian mining company, Lynas, is hurrying to finish a $230 million rare earth refinery here, on the northern outskirts of Malaysia’s industrial port of Kuantan. The plant will refine slightly radioactive ore from the Mount Weld mine deep in the Australian desert, 2,500 miles away. The ore will be trucked to the Australian port of Fremantle and transported by container ship from there. As many as 2,500 construction workers will soon be racing to finish the world’s largest refinery for so-called rare earth metals — the first rare earth ore processing plant to be built outside China in nearly three decades.
Pakistan improves incentives in new tight gas exploration policy, according to platts.com:
Pakistan has approved a new tight gas exploration policy with improved incentives as compared with its 2009 policy, to overcome the country's gas shortfall and attract foreign investment, a petroleum ministry official said Wednesday.
Under the new policy, exploration companies will be offered 40-50% higher prices for the gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009.
Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price.
Besides, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.
Even with the improved prices for the tight gas to be paid to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.5/Btu for the gas compared with $12.3/Btu for gas imports.
"It [tight gas] is a more feasible option for the economy as even after giving additional incentives the cost of gas available will be less than imported gas and there will be no burden on the foreign exchange reserves for additional imports," Umer Bin Ayaz, a research analyst at JS Global Equities in Karachi, said.
Tight gas is typically stuck in very tight formations underground -- trapped in hard rock or in a sandstone or limestone formations that are unusually impermeable and non-porous.
As exploration is more difficult and the technology required more expensive, companies do not typically go in for exploration until given attractive incentives.
The country's supreme decision-making body, the Council of Common Interest, chaired by Prime Minister Yousuf Raza Gillani Tuesday evening approved tight gas policy, a government statement said.
The country had a potential 40 trillion cubic feet of tight gas. Separately, Pakistan's current recoverable gas reserves stand at around 27 Tcf.
Pakistan now faces a gas shortfall of 1-1.2 Bcf/day.
Meanwhile, the government is working on plans to import 3.5 million mt/year of LNG to tackle its energy crisis.
I have a feeling this is not the only Rare Earth Elements mine in Pakistan. We may have a few more Riqo Digs in other parts of baluchistan.
Here's Reuters on the likely bid winners for Reko Diq mining rights:
ISLAMABAD, June 26 (Reuters) - Chile's Antofagasta and Canada's Barrick Gold are likely to win mining rights for a $3.3 billion copper and gold project in Pakistan, a senior provincial government official said on Sunday.
The companies are partners in the Tethyan Copper Co (TCC) joint venture, which has a 75 percent interest in the Reko Diq project in the southwestern Baluchistan province.
TCC has carried out exploration but wants to expand its presence through mining.
Baluchistan has huge natural resources. However, growing anger over outsiders exploiting Pakistan's biggest and poorest province makes it difficult for investors to gain access.
Separatists have for decades waged a low-level revolt over control of Baluchistan's resources, which they say are unfairly exploited by the country's richer and more powerful provinces.
Reko Diq holds an estimated 5.9 billion tonnes of mineral resources with an average copper grade of 0.41 percent and an average gold grade of 0.22 grams a tonne, according to data released by Antofagasta.
TCC completed exploration on Reko Diq last year and submitted a feasibility report for mining.
A senior Baluchistan government official told Reuters that TCC's request for a mining licence was under consideration.
"If they fulfil the conditions then we have no objection at all," Baluchistan chief secretary, Ahmed Bakhsh Lehri, said.
No other companies have applied for mining permission, mining and government officials say.
Last week, the Baluchistan government announced it would set up a facility to refine copper and gold concentrates extracted from Riko Diq.
TCC has said it would sell the concentrate from Reko Diq to the provincial government on a commercial basis if it gains permission to mine.
In a bid to secure the deal, TCC has also offered to arrange financing for the government's 25 percent share of investment in the project through a soft loan and to pay the interest, according to a company document seen by Reuters.
The first stage of the project, which is hoped to start production in 2015, would produce 200,000 tonnes of copper and up to 300,000 ounces of gold a year, the company said.
Here's a Wall Street Journal report on the latest developments in Reko Diq saga:
A Pakistan province says a 200,000-page feasibility study for the development of a massive gold and copper deposit doesn't go far enough.
The government of Baluchistan raised observations and objections on the mining-license application for the deposit, which is one of the largest in the world, and has given the project developer 30 days to respond, said a senior official in the provincial government.
The $3.4 billion project is slated to become Pakistan's largest single foreign investment but faces potential delays or even cancellation, depending on the conditions that may be imposed on the mining license.
The observations and objections ...
Here's an opinion piece by an Indian writer Sajith Kumar in commditiyonline on the size and significance of Reko Diq:
The Reko Diq project is a large gold and copper porphyry resource located in the dry desert conditions of southwest Pakistan within the remote and sparsely populated province of Balochistan .
It is expected to contain some 20.9 million ounces of gold and 12.3 million tons of copper .The copper-gold deposits at Reko Diq are believed to be even bigger than those of Sarcheshmeh in Iran and Escondida in Chile.
A further 14 mineralized porphyry bodies are known to exist, with the potential to place the Reko Diq Project among the largest undeveloped copper resources on the globe.
At today’s international prices of Gold at $1650 an ounce (with cost of production $375/ounce), and Copper with cost of production at $1,500/ton , the profit works out to almost $4 billion for gold and $2 billion for copper annually.
BHP Billiton initially signed the exploration licence with the government of Balochistan in 1993, while Tethyan Copper Company (TCC) was being formed in Australia, with BHP Billiton having 75 per cent and the Balochistan government 25 per cent.
With gold and copper established in substantial quantity, BHP sold its stake 37.5 per cent each to the Chilean Conglomerate Antofagasta Minerals and the Canadian company Barrick Gold.
However, the project might take a long way to happen as advancing influence of terrorists in the region is the single most threat that needed to address immediately.
Even if the authorities cleared the project, it will required a massive effort by the parties involved in the mining to actually start digging the treasure out, analysts said.
Pakistan is at the moment remained a dangerous place to start any kind of business for foreigners, especially to westerners as some forces within the government are promoting and providing safe haven to terrorists operating in the country, analysts added.
Considering the situation, country’s dream gold project is unlikely to happen atleast in the next ten years, they added.
TCC is seeking arbitration after Balochistan govt's refusal to grant license for Reko Diq, according to The Express Tribune:
A dispute between Balochistan government and Tethyan Copper Company (TCC) has taken an ugly turn that is likely to jeopardise $3.5 billion in foreign investment and a potential bilateral treaty between Pakistan and Canada.
TCC, a joint venture between Chile-based Antofagasta Company and Canada’s Barrick Gold Corp, seeking a mining license for Reko Diq copper and gold reserves, served a “notice of dispute” to the Balochistan government on Wednesday.
The partners filed the notice after the provincial government refused to meet the company executives and did not extend the 30-day deadline for it to respond to objections that the provincial government had risen over a mining lease.
The provincial government’s attitude disappointed the company which did not have any other option but to invoke dispute resolution clauses of the Chagai Hills Exploration Joint Venture Agreement, Canadian High Commission officials told The Express Tribune.
The provincial government had raised ten objections over mining licence application submitted by the TCC and gave it a month’s deadline to respond. The company repeatedly requested for time to better understand the objections but the government refused to either give time or extend deadline to file a comprehensive response, the diplomats said.
Under the safeguard clauses of the treaty, the two sides now have 120 days to meet and reach an agreement.
High Commission officials said if both parties could not resolve the dispute, the company will have to seek a resolution through international arbitration and seek compensation.
Reuters quoted the TCC Chief Executive Tim Livesey as saying: “It is my feeling that there is a degree of confusion … and I hope we can resolve the dispute”.
The company has so far spent about $400 million in the exploration and feasibility study and would not leave so easily, the diplomats added.
According to the feasibility study of the project, there is approximately $127 billion worth gold and copper reserves – an estimate contested by the Pakistani experts who say that the real value is over $260 billon. Of the earnings, 52% would go to the federal and provincial governments in shape of taxes, royalty and other incomes while the provincial government would have 25% equity partnership without risk investment.
Here's a Daily Times report on gold, silver and copper reserves in Pakistan:
ISLAMABAD: Pakistan has 1,339.25 tonnes of gold reserves situated in Balochistan with 63.50 tonnes at Saindak and 1275.75 tonnes at Reko Diq, sources told Daily Times on Monday.
These two major gold reserves are situated in district Chagi, Balochistan. The sources further said the Saindak Copper-Gold Project, Balochistan is the only project in the country, which is producing gold/silver as a by-product in a normal quantity. The gold production was 7.891 tonnes and silver 11.293 tonnes during five years from 2005 to 2009. Occurrence and showing of gold and silver had been reported from various parts of the country, including Balochistan, Gilgit-Baltistan and Khyber Pakhtunkhwa. However, reserves of these occurrences had not been confirmed except in Saindak and Reko Diq.
In 2006, the production of gold was 1.410 tonnes, while silver was 2.403 tonnes, in 2007 gold was 1.576 tonnes and silver 2.136 tonnes, in 2008 gold was 1.542 tonnes and silver 2.088 tonnes, while in 2009, the gold production was 1.592 tonnes and silver 2.157 tonnes. The country also has rich copper resources, and according to estimates there are about 4.805 billion tonnes copper reserves of which majority are in Balochistan and some nominal quantity in Federally Administered Tribal Area (FATA) and Gilgit-Baltistan. Balochistan’s copper reserves consists of Saindak with 412 million tonnes, Reko Diq 3.720 billion tonnes, Dhasht-e-Kain 200 million tonnes, Ziarat Pir Suyltan 200 million tonnes, Kabul Koh 50 million tonnes, Missi 100 million tonnes and Bandegan 0.032 million tonnes.
About 123 million tonnes of copper reserves in FATA areas Boya, Shinkari-North Waziristan have been found, the sources added. In Gilgit-Baltistan (Bulashgah, Gilgit) 0.5 million tonnes of copper reserves were discovered. Officials in the Ministry of Petroleum and Natural Resources told this scribe that feasibility studies have been conducted for copper-gold projects at Saindak and Reko Diq in the year 1988 and 2010, respectively. The Saindak project is in production since 2003.
Reko Diq deposit is in development phase and government of Balochistan as regulator is processing application for conversion of exploration licence into long-term lease. At present, the officials said two foreign companies are working for the copper-gold deposits, MCC of China on Saindak Project and Tethyan Copper Company, joint venture of government of Balochistan 25 percent, Antofagasta-Chile 37.5 percent and Barrick Gold-Canada 37.5 percent on Reko Diq project.
The officials further said Saindak Copper Gold project is the only productive unit in the country. The government of Balochistan receives royalty at the rate of five percent of sale proceeds and 60 percent share from Saindak Metals Limited/government of Pakistan.
Based on current production level, the annual revenue of the province from this project is estimated at Rs 1.300 billion. As per feasibility study, the life of mine of Reko Diq project is 56 years and estimated annual revenue of government of Balochistan during the above period is $110.8 million, the officials maintained.
However, private sources opposed the Reko Diq project exploration/mining lease to foreign companies. They describe it as the most unfair business deal of the decade, the multi-billion-dollar Reko Diq copper-and-gold project has been placed at the mercy of a consortium of companies who may walk away with its riches, robbing the country of a golden opportunity to lift itself out of its growing external debt. Private sector said that the geologists have estimated that Reko Diq contains mineral deposits worth $500 billion and if the authorities did not take action immediately, this golden opportunity of turning around Pakistan’s fate will be lost.
At $1500 per ounce, a ton of gold (32,000 ounces) is worth $48 million, and 1300 tons of gold reserves in Pakistan are worth US$62 billion.
And 500 million tons of copper at $7,000 a ton is worth US$3.5 trillion.
At current prices, Reko Diq gold & copper deposits are worth over US$4 trillion.
TCC, the Canadian-Chilean joint venture, disagrees with the above.
According to the TCC, the mineral resource at Reko Diq is estimated at 5.9 billion tonnes. From this resource, an estimated 2.2 billion tonnes of economically mineable ore, with an average copper grade of 0.5 per cent and an average gold grade of 0.3 gms/tonne will be processed to produce 10 million tonnes of copper and 13 million ounces of gold in the form of payable metal in about 56 years of mine life.
On May 25, the Supreme Court, while hearing several petitions against the possibility of giving to a foreign company (TCC) a contract for mining copper and gold deposits in Reko Diq, had vacated its stay order which restrained the Balochistan government from issuing mining lease to any company, according to Dawn newspaper.
Here's a TCC press release on Reko Diq:
Islamabad, November 5, 2010: CEO Tethyan Copper Company Pakistan (Pvt.) Limited (TCC) Gerhard Von Borries said that TCC is sensitive to all of Government of Balochistan concerns and, within the viability parameters of the project, committed to addressing them.
While speaking to the media, he said that overall more than 50% of the project’s revenues (after investment and operating costs) will go both to the provincial and federal governments combined in form of royalties, profits and taxes. Reko Diq project is being developed by TCC in a total transparent manner; in accordance with the joint venture agreement in place and as per the rules and regulations of the country. The agreement to work on Reko Diq project was signed between Government of Balochistan and BHP in 1993, called Chagai Hills Exploration Joint Venture Agreement (CHEJVA). Under this agreement government had 25% interest in the exploration license while BHP held the remaining 75%. In 2006, TCC shares were bought by world’s two leading companies, Antofagsata plc (Chile) and Barrick Gold (Canadian). All transactions were fully compliant with existing laws and regulations. The legality of the transactions was confirmed by Balochistan High Court in its 2007 ruling.
Since 2006, profile of the project has improved significantly with to-date investment of around US$ 220 million; extensive exploratory drilling (more than 280,000m) has established a much larger combined resource estimate (5.9 billion tons) than declared by previous owners; and also in terms employment currently 400 (permanent+contractors) people are working for the project as compared to 50 prior to takeover.
According to world class bankable Feasibility report completed by TCC recently, the mineral resource at Reko Diq is estimated at 5.9 billion tons. From this resource, an estimated 2.2 billion tons of economically mineable ore, with an average copper grade of 0.5% and an average gold grade of 0.3 gr/tonne will be processed to produce 2.2 billion pounds of copper (10.000.000 tons) and 13 million ounces of gold in form of payable metal in about 56 years of mine life. The rest of the resources are not economically mineable with the current existing technology. (TCC reports its resources and reserves to two International Minerals Reporting Standards: JORC (Australia) and CIM (Canada).
For a mining project financial modeling several factors are taken into account like mineable portion of the resource including transformation costs of taking the ore out and processing it to a saleable product. The value being quoted in certain press reports does not take into account the investment expenditures in the project, the operating expenses to produce a pound of copper and an ounce of gold, the economically mineable portion of the resources and the average long term prices of the metal and not the current market price which will not prevail in the future.
Reko Diq project has the tremendous potential to contribute in the uplift of Balochistan’s economy in specific and the national economy in general. A clear social, business and economic understanding needs to be developed around this very important JV which is the first of its scale and sophistication in Pakistan’s mining history. The TCC Reko Diq project shall lay foundations of a world class skilled mining resource, cutting-edge technology transfer, health and safety standards and nurturing the value chain for sustaining the mining industry towards the development of Balochistan’s economy....
Here's Wall Street Journal story on a rare earths deal:
SHANGHAI—Molycorp Inc.'s $1.3 billion deal to acquire a key processor of rare-earth minerals has sparked a warning from industry officials that it could reinforce China as the main source for specialized magnets used in consumer electronics and sophisticated weapons.
Molycorp said Thursday it plans to buy Toronto-listed Neo Material Technologies Inc., one of the world's leading experts in chemistry needed to transform rare earths—minerals used in applications that range from car batteries to advanced weaponry—into specialized magnets. Molycorp said the deal creates the most diversified rare-earth company outside of China, which dominates the industry.
The transaction, said Mark A. Smith, president and chief executive of Greenwood Village, Colo.-based Molycorp, links a world-class miner with a world-class processing company.
But the deal also paves the way for Molycorp to ship minerals from its California mine to the Chinese operations of a Neo Material arm called Magnequench, in a reminder of how much technological rare-earth capability resides in China.
Ed Richardson, president of the U.S. Magnetic Materials Association, says the plan is worrisome. The U.S. is already "dangerously dependent on China" for rare-earth-magnet materials, including to supply its weapons systems, Mr. Richardson said in an email. Molycorp's "export of U.S. rare earth assets into China will only exacerbate this problem," he added.
Mr. Smith played down political and historical implications of the deal that now ties Molycorp, Magnequench and China. He said sending rare-earth oxides to China is a bid for "higher volume, higher margin" that will only reduce production costs in the U.S. and by implication boost supply of the metals for industrial users. "It does not in any way deplete our ability to serve the market outside of China whatsoever," Mr. Smith said.
While much of the debate over China's hold on the rare-earths market has focused on mining, the Molycorp deal highlights China's ability to process mined oxides into metals that help electric cars hold their charge, make wind turbines turn and bring precision to military gyroscopes.
Like most developments in the tiny but critical rare-earth industry, the merger is a response to China's market supremacy. Companies such as Molycorp and Australia's Lynas Corp. are trying to provide supply alternatives to China, which has 90% market share in many aspects of the industry. It comes as analysts predict a formal challenge of China at the World Trade Organization over its rules to limit export of some rare-earth materials, rules that Beijing says are meant to protect the environment but Washington labels a trade barrier.
Analysts concur with Molycorp's assertion that the acquisition of Neo Material gives it significant new technological capability, particularly in powders used in sophisticated high-performance bonded magnets. The U.S. company becomes more global, with production and sales in a number of new markets. Molycorp argues that the deal also can lower production costs as the company restarts its California mine, which was once the world's No. 1 rare-earth mine before it was closed several years ago due to falling rare-earth prices and environmental concerns....
Here's a Dawn report on the latest Reko Diq saga:
QUETTA: The federal government has agreed to declare Reko Diq gold and copper mining project area as export processing zone and the Balochistan government and the EPZ Authority will sign a memorandum of understanding soon.
Dr Samar Mubarakmand, vice chairman of board of governors of the Reko Diq Project, informed Chief Minister Nawab Raisani about the centre’s willingness during a briefing on the project here on Tuesday. The provincial government had requested the EPZ Authority to declare the project area as export processing zone.
The chief minister, who is chairman of the project’s board of governors, reiterated his government’s stance to run the project on its own.
“Whether we remain in power or not, we will give these great assets to Balochistan and the country as gift,” Mr Raisani said, adding that he and his government had faced immense pressure in efforts to make the stakeholders realise that the people of Balochistan were real owners of the project.
“We rejected all pressures and did not bow down to the forces who wanted to deprive the province of ownership of the Reko Diq project,” Mr Raisani said.
He alleged that some elements had tried to “sell the project at a throwaway price” with the connivance of some vested interests. “But my government has foiled all conspiracies.”
The chief minister said some “international forces” did not want Balochistan and Pakistan to benefit from the Reko Diq project.
Earlier, Mr Raisani approved a proposal for allocating Rs1.8 billion in the next budget for the project and revival of the recruitment committee.
The chief minister was informed that the Geological Survey of Pakistan had promised to extend all help and cooperation, including training facilities and making geographical survey drawing of the project.
Mr Mubarakmand said the authorities concerned were vetting applications for recruiting technical and other staff.
The chief minister said recruitment should be made on merit and local people be given priority.
Here's PakTribune on British High Commissioner's comments on the impact of Reko Diq on foreign investmemt:
British High Commissioner to Pakistan Adam Thomson has said that the verdict in international arbitration on the Reko Diq saga may have chilling affects on foreign investors.
“Supreme Court of Pakistan's verdict in certain cases whether it relates to Reko Diq or others is a sign of discouragement for foreign investors,” Adam Thomson said while talking to selected journalists on Wednesday night.
Tethyan Copper Company (TCC) filed for international arbitration to protect its legal rights after Balochistan rejected its mining lease application. Tethyan Copper – a joint venture between Chilean copper producer Antofagasta and Canada's Barrick Gold – owns the massive Reko Diq project in Balochistan with reserves estimated at 2.2 billion tons of gold and copper.
“There is a risk of misconception from some of its decisions and Reqo Diq is the latest one,” He said that Pakistan should think carefully about it.
Responding to questions about litigation between government of Pakistan and international companies, the British High Commissioner said that a strong judicial system will not only uphold Pakistan's interest but was extremely important to foreign companies.
He said that Pakistan and the United Kingdom signed a Bilateral Investment Treaty (BIT) in 1994 providing protection to companies in both countries. Pakistan is attracting British companies after promulgation of this agreement, he added.
He said that the 10% increase in trade compared to the previous year was not bad keeping in mind the global recession.
“UK-based exploration company Premier Oil has been working in the oil and gas sector of Pakistan for the last 10 years,” he said adding that there are more such companies.
He said that British companies are doing very well in Pakistan which reflected from their profits. “These companies also face challenges with regulatory bodies being the biggest challenge,” he said. Although, he said, Pakistan in South Asia is comparatively a good place to do business, corruption is also a problem as few companies find it difficult to work in certain sectors.
UK has very stringent Anti-Bribery Act which governs UK companies in Pakistan so that they would stay clean. “Some changes in reorganisation in government, ministries, regulatory bodies after the 18th Constitutional Amendment are also challenging to those British companies considering to invest in Pakistan,” he said adding that perception of insecurity is very high among them. “When I'm in UK, I try hard to overcome such impressions,” he added.
“India is second largest investor foreign manufacture holder in UK,” he said adding that all Pakistani companies should also see UK as a gateway to European Union. “We are the second largest investor in Pakistan and aim to become the largest,” he concluded.
For those with misgivings about this project I would suggest the excellent analysis by Akhtar Ali, a Harvard Professsor.
@RH: "What is conspicuously absent from the debate is the potential for extraction at Reqo Diq of rare earth elements that are even more precious and in much greater and growing demand for..."
Some facts to keep in mind:
1) Rare Earth materials are not "rare" at all. They are ubiquitous and abundunt.
2) They are called "Rare" Earth materials, because their USAGE is "rare" or in very limited quantities for special applications.
3) The only reason for the current "demand hullabaloo" is because China imposed an export ban on these materials as a way to PUNISH Japan (politics, not economics).
4) It is not that China has these rare earths and other countries do not. The ONLY reason China dominates their production is because they can produce these materials at the lowest price (after subsidies & suppressed yuan).
5) To overcome this dangerous dependence on China and to stll keep costs down, the Japanese Government has just entered into contracts with Indian Government-owned mining companies to produce rare earths in India for specific and guaranteed export to Japan, Taiwan, Korea et cetera.
6) So China's dominance is soon going to be a matter of the past. The issue is political and has nothing to do with the rarity or precious nature of "rare" earths.
There is no harm in our country mining and refining rare earths, but they are a small matter compared to copper & gold as far as Balochistan is concerned.
Please research this topic further.
"..Rare earths ..China..Japan.."
More Information on Rare Earths:
Here's Daily Times on Reko Diq:
Reko Diq mining is once again topping the country’s legal discourse. At stake is one of the world’s largest gold and copper reserves worth tens of billions of dollars.
It all started in the early nineties when BHP – a global mining giant — identified the mineral potential of Chaghai’s Tethyan belt in western Balochistan. This was inferred from the 1956-58 basic geophysical reports of the American Geological Survey complemented by satellite imagery of the earth’s crust over 13,000 square kilometres of Chaghai.
Having done the basic homework and waiting for the right opportunity, BHP signed the Chagai Hills Exploration Joint Venture Agreement ( CHEJVA) with the Balochistan Development Authority (BDA) when the caretaker government of Sardar Nasir Mengal took charge in July 1993 and World Bank executive Moeen Qureshi was Pakistan’s interim prime minister.
It was morally and politically incorrect for both the caretaker government and a global corporation like BHP to sign off Balochistan’s largest sub-surface asset to a single party without proper international bidding and through the BDA and not Balochistan’s Ministry of Minerals. At stake was over $ 500 billion worth of copper and gold extractable over the next century.
The reserves are shallow, only 21 metres deep and ideal for an open pit going down till 1,000 metres.
CHEJVA was in favour of BHP, Australia 75 percent to BDA’s 25 percent on a joint investment basis. Only 2 percent royalty was stipulated for the government of Balochistan against exploration rights over 3.3 million acres for a period of 56 years.
In comparison, the Afghan government gave a similar licence of gold mining at 26 percent plain royalty for 10 years at their Qara Zaghan Gold Project in 2011.
“Its not simple corruption but more a case of culpable national incompetence,” boils Raza Kazim.
Over the next three years and as a result of basic shallow drilling samples, around 14 potential areas were identified by BHP, including the goldmine Reko Diq. The Balochistan government awarded 10 prospecting licences to BHP out of these. Then in 2000, BHP relinquished all those licences except one, i.e. PL-4, and this was then amalgamated with PL-14, i.e. Reko Diq.
According to TCC’s feasibility, an ore extraction of some six billion tonnes is projected over the next five years with an output of 200,000 tonnes of extracted copper and around 250,000 ounces of gold every year. This capacity could double if needed.
The processing copper concentrate facility at Reko Diq will process 120,000 tonnes of copper ore every day.
Reko Diq project, which took over 20 years to reach this feasibility and national and international litigation levels is the second major copper/gold project of Balochistan, the first being Saindak.
In the Saindak project, the federal government spent over $ 200 million to develop a mine and processing facility for concentrate copper ore in the early nineties when Reko Diq just got started. Having worked and apparently failed at the project, the federal government handed the whole project to MCC China at only $ half a million per annum fee in 2001.
The Chinese have been extracting copper ore and shipping its concentrate to China over the last 12 years and giving the federal government around $ 60 million per annum as share of its 50 percent profits. The remaining 50 percent stays with the Chinese.
The government’s attitude towards strategic national assets can be gauged from the fact that the federal government has less than 10 employees to look after the whole of Saindak Copper Project in the Ministry of Petroleum while it employs over 90,000 persons for Pakistan Railways for the same amount of revenue.
Pakistan Supreme Court has voided Reko Diq lease with Tethyan, reports Globe & Mail:
Pakistan’s top court on Monday declared invalid a lease for one of the world’s richest deposits of gold and copper held by a Canadian-Chilean consortium that includes Vancouver-based giant Barrick Gold Corp.
Barrick, the world’s largest gold producer, and Chile’s Antofagasta Minerals, each own a 37.5-per-cent share, as the Tethyan Copper Company, in the largest Foreign Direct Investment mining project in Pakistan.
Their plan was to build and operate a copper and gold open-pit mine at Reko Diq in the Chagai district of the southwestern province Baluchistan, the most deprived part of Pakistan, rife with Taliban, sectarian and separatist violence.
Barrick and Antofagasta say the proposed plant could produce 600,000 tons of copper and 250,000 ounces of gold a year, but in 2011 work came to a standstill after the local government refused to renew the consortium’s mining lease.
The provincial government in Baluchistan is also the sleeping partner in the Reko Diq project with a 25-per-cent stake.
Reasons for the dispute are murky, but some analysts suggest that China, a close Pakistan ally, is also interested in the deposits.
Pakistan’s Supreme Court on Monday declared “not valid” the initial 1993 exploration agreement between the Baluchistan government and Australian mining group BHP, since BHP Billiton Ltd.
It said the agreement ran counter to Pakistan’s mineral development act and mining concession rules, and therefore to transfer it to the Canadian-Chilean consortium is also “illegal, void and non est”.
Experts say mining in Baluchistan is dominated by small companies focused primarily on marble and granite, which waste up to 80 per cent of mined minerals because of poor blasting techniques.
They also call for more transparent polices to allow business to flourish
Pakistan has more shale oil than Canada, according to the US Energy Information Administration (EIA) report released on June 13, 2013.
The US EIA report estimates Pakistan's total shale oil reserves at 227 billion barrels of which 9.1 billion barrels are technically recoverable with today's technology. In addition, the latest report says Pakistan has 586 trillion cubic feet of shale gas of which 105 trillion cubic feet (up from 51 trillion cubic feet reported in 2011) is technically recoverable with current technology.
The top ten countries by shale oil reserves include Russia (75 billion barrels), United States (58 billion barrels), China (32 billion barrels), Argentina (27 billion barrels), Libya (26 billion barrels), Venezuela (13 billion barrels), Mexico (13 billion barrels), Pakistan (9.1 billion barrels), Canada (8.8 billion barrels) and Indonesia (7.9 billion barrels).
Pakistan's current annual consumption of oil is only 150 million barrels. Even if it more than triples in the next few years, the 9.1 billion barrels currently technically recoverable would be enough for over 18 years. Similarly, even if Pakistan current gas demand of 1.6 trillion cubic feet triples in the next few years, it can be met with 105 trillion cubic feet of technically recoverable shale gas for more than 20 years. And with newer technologies on the horizon, the level of technically recoverable shale oil and gas resources could increase substantially in the future.
Here's a National Geographic piece on Reko Diq:
During a recent research visit to Chile, I had a rare opportunity to meet, Fernando Crisosto, a social engagement officer who had worked with Antofagasta Minerals and visited Pakistan several times when the project still had some potential for development through joint foreign engagement. Fernando was very nostalgic about the time he spent on the Reko Diq site and showed tremendous affection for the people of Balochistan and of Pakistan. Unfortunately due to mismanagement at various tiers of government, errant data being communicated, and the rise of resource nationalism, the project is now stuck in the courts and international arbitration mechanisms. No doubt the distrust was also exacerbated by badly sourcing the feasibility study of the project by a Canadian firm SNC-Lavalin which was subsequently been ”blacklisted” by the World Bank. Fernando indicated to me that even though their plans for social development were far more detailed than the neighbouring Saindak mine which is operated by a Chinese government partnership, there was a deficiency of community engagement and communicating those plans effectively to tribal leaders.
Nevertheless, Baloch or Pakistani nationalists alike should first of all be very cautious about believing random data points and value of the reserve at Reko Diq which are asserted in media appearances by said “experts.” The geologic reality of the Reko Diq deposit is that it is essentially a low-grade copper-gold porphyry which clearly has much potential but is by no means “Solomon’s fortune” as it is sometimes made out to be. Utterly absurd and unsubstantiated numbers for the value of gold and copper reserves in Afghanistan and Pakistan are wantonly paraded in prominent media venues in both countries. For example one news story in Pakistan’s most widely circulating English daily this year asserted that the value of the mineral wealth in Reko Diq was in excess of $3 trillion. This number has absolutely no empirical or even remotely rational basis. Indeed the estimated value by the World Gold Council at current prices of all the gold ever mined in the history of the planet is around $8.8 trillion. It would be delusional to think that a low-grade deposit in Balochistan has more than 1/3 the value of the gold ever mined in the history of the Earth!
Pakistan’s media should consult more deliberately with international geological experts who do not have any particular vested interest in the development of the project rather than interviewing hyper-nationalist geologists that have limited substantiation of facts and grossly exaggerate value of the reserve as well as Pakistani technical expertise to extract the resource. In particular the research of Pakistani-Canadian mining academic Professor Laeeque K Daneshmend deserves greater appreciation and engagement to counter the unsubstantiated data being branded about in the media.
Yet conspiracy theorists continue to churn out estimates which have no basis in reality and are misleading the Baloch and Pakistani public. Further misinformation about the Chilean company that invested in this project has also been spread by some of these negative elements. For example in my last visit to Pakistan I heard baseless rumours that the Reko Diq mining concessions was now owned by “Zionist” family interests. Regardless of whether or not such ownership should even be a concern in commercial contracts, it is patently not true. Antofagasta Minerals is owned by the Luksic family of Chile that has Croatian origin. The founder of the company and family patriarch Andronico Luksic (died in 2005) had a Croatian father and a Bolivian mother and absolutely no connection to any ethno-religious causes.
Balochis 40% of #Balochistan's population. #BLA, #BLF, #BRA, #UBA 3-4K fighters fighting #Pakistan are deeply divided http://shar.es/FdNz1
Uncertainty surrounds the future of a world-class gold mine in Pakistan due to poor handling of the project by regional authorities.
Reko Diq is a copper and gold mine in Chagai district of Balochistan province with a value up to $500bn. It holds about 5.9 billion tonnes of ore, making it the world’s fifth largest deposit of gold and copper.
But the huge project has ground to a halt over a dispute between the provincial government and the miners.
Tethyan Copper Company (TCC) – a joint venture of Barrick Gold of Canada and Antofagasta of Chile – had been awarded a licence for exploration in the Reko Diq area in 2006. In 2011, TCC’s application for a mining lease for the project was rejected by the Balochistan government of then-chief minister Aslam Raisani, which decided to run the project on its own.
TCC took the case to the international arbitration court claiming damages because it had invested more than $500 million in exploration and feasibility studies.
“There is potential … for multiple mine developments over the next few decades. By refusing a mining licence without good grounds, it’s sending quite a negative signal to the exploration/mining community,” said Tim Livesey, the chief executive of TCC, in 2012.
The rejection of a mining licence to the company after an exploration permit had been granted was an unusual decision by the government. Mr Raisani abruptly closed off communication with the company and even refused to meet its executives.
Mr Raisani rejected the TCC bid in the name of protecting the legitimate interest of Balochistan, but did his decision really help the least developed province and its people?
Metallurgical Corporation of China (MCC) came with a counter proposal for a mining lease for Reko Diq and offered Balochistan a larger share in income and royalty.
In 2002, MCC had acquired a lease the Saindak copper and gold project in the same district as Chagai, which expired in 2012. If the Raisani government was serious in its desire to develop deposits using local firms, why did it not oppose the five-year extension in the lease period of the Saindak project?
The Reko Diq project became controversial after news stories alleged that the Reko Diq gold mines were being secretly sold to foreign firms for peanuts.
The dispute between TCC and Balochistan began after the resignation of Mr Musharraf in 2008. Under his administration, TCC was awarded the project with mining rights and it signed a joint-venture agreement with Balochistan holding 25 per cent interest in the project. But in December 2009, Balochistan said it was cancelling the TCC deal.
That triggered a blame game, with each side accusing the other of violating mineral rules. In January 2013, former chief justice of the supreme court Iftikhar Chaudhry declared the Reko Diq contract between the Balochistan and TCC void.
Arbitration proceedings have further delayed the mine’s development, which has not been worked since 1993 when BHP Billiton signed a deal with Balochistan. While BHP had an exploration deal, it did no practical work and sold its 75 per cent interest to TCC in 2000. In 2006, TCC was taken over by Antofagasta and Barrick Gold.
TCC deserves credit for the discovery of the huge Reko Diq deposits. The company was willing to make an investment of $5bn over five years. It could have been the biggest foreign-financed project in the country’s history. But the short-sighted policy of the government meant this potential game changer never got off the ground.
What has been the outcome of the dispute so far? The country has missed a huge foreign investment. It has closed the door on technology transfer in mining into Pakistan and discouraged foreign firms eyeing up its mineral deposits.
Raisani is a patent ass. He is famous for saying "Degree Degree Hoti Hay....." And he was misguided by no one else but Pakistan's 'famous'' scientist Dr. Samamand - who had assured him and Iftekhar Choudhry that the project can easily be handled by local talent and funds - neither of which is locally available. Reko Diq project demands massive amount of water which must be brought up from the sea many hundredc miles to the west and then there are other limitations the project operators have to manage. Baluchistan doesn't have the talent or money to manage this project locally.
Syed: "Dr. Samamand - who had assured him and Iftekhar Choudhry that the project can easily be handled by local talent and funds - neither of which is locally available."
Large scale commercial mining is a serious industry that requires huge investments and specialized expertise which are both lacking in Pakistan at the moment. Dr. Samar Mubarakmand either does not understand or deliberately misleads to score points with the unsuspecting Pakistanis who hold him in high regard for his contribution to Pak nuke program...a contribution that many believe is real but highly exaggerated.
Pakistan discovers 'huge' reserves of iron ore
Pakistan on Wednesday said it has discovered major reserves of iron ore as well as copper, silver and gold in its central province of Punjab.
The reserves were found in Chiniot, around 160 kilometres northwest of Lahore, by Chinese group the Metallurgical Cooperation of China.
A senior provincial administrative official told AFP that initial estimates indicated 500 million tonnes of iron ore, a primary ingredient in steelmaking, had been discovered.
He said the Chinese company has expressed interest in setting up a steel mill on the site, adding that the extracted iron had been tested in Swiss and Canadian laboratories, which found 60-65 per cent of it to be high grade.
The official added that silver, copper and gold samples would also be sent for testing soon.
Speaking at the site on Wednesday, Prime Minister Nawaz Sharif said the discovery could help Pakistan's stuttering economy turn a corner and end its “begging bowl” culture.
“It is Allah's blessing that under the lush green fields rich deposits of copper, iron and gold have been found, which will help the country get rid of the 'begging bowl' for good,” Nawaz said.
Conflict, instability, corruption and a chronic energy shortage have hampered Pakistan's economy for years. The IMF granted a $6.6-billion loan to Pakistan in September 2013 on the condition that it carry out extensive economic reforms, particularly in the energy and taxation sectors.
Why is organized illegal #mining flourishing in #Pakistan?
Many challenges face Pakistan as it strives to stamp out illegal mining and attract investment to take full advantage of its rich variety of resources. As the eight-year ban on excavation in the Northern Province of Khyber Pakhtunkhwa ends, Molly Lempriere takes a look at the challenges in this region and the country as whole, and asks what the government can do to unlock the next step in Pakistan’s mineral journey.
Mining is a crucial industry in Pakistan, but one which faces a host of challenges. Regional and national governments are working to improve the regulatory and operational landscape for miners and mining companies, but with regional instability and illegal mining pervasive, is there still a long way to go?
Pakistan is a resource-wealthy country with large quantities of coal, iron and copper, as well as gold and gemstones. Currently, Pakistan hosts the world’s second-largest coal deposits with as much as 185 billion tonnes, as well as being the third-largest producer of iron ore pigments.
Pakistan has only begun to scratch the surface of its resource potential. The last few years have seen large mineral deposits being unearthed, including an iron ore body in the central province of Punjab. This discovery, announced in 2015, reportedly contains an estimated 500 million tonnes (Mt) of iron ore and is owned by the Metallurgical Corporation of China.
However, a history of corruption and illegal mining has deterred international investment in the mining industry. Globally, mining has a long history of operating in dangerous and underdeveloped areas, but the insecurity of assets in Pakistan continues to deter many companies from investing.
A moratorium on mining excavation in the northern Khyber Pakhtunkhwa province was introduced eight years ago, but this has been repealed by an ordinance in August 2016. The ordinance brings in a series of regulations that the local government claims will increase international investment, but some have reacted with anger. The province, which has been plagued by illegal mining, highlights the widespread problems affecting the country as a whole.
Illegal mining has flourished in Khyber Pakhtunkhwa since the ban; as legitimate mining efforts have ceased, mafia groups and other gangs have taken over. GlobalData head of research and analysis for mining Clifford Smee says the mafia’s presence is unsurprising, as “mining needs a somewhat sophisticated organisation to successfully operate”.
“Illegal mining is always an issue in developing countries,” Smee adds. “We see large illegal mining in major producing countries such as Indonesia (100Mt of coal is illegally mined), and we have seen issues with illegal mining in neighbouring India.
“Typically, illegal mining flourishes in periods of high prices, such as the high coal and iron ore prices which drove illegal mining of these commodities in South East Asia during the Chinese mining super cycle,” Smee continues.
"Khyber Pakhtunkhwa is an area rich in gems and semiprecious stones, with Swat alone boasting 70 million carats of emerald reserves."
Khyber Pakhtunkhwa is an area rich in gems and semiprecious stones, with Swat alone boasting 70 million carats of emerald reserves. The Mardan district has nine million carats of pink topaz reserves while Kohistan has ten million carats of peridot, all of which are currently being illegally traded by organised gangs.
Barrick #Gold, partner win dispute over $3 billion cancelled #Pakistan mining project at Reko Diq https://www.thestar.com/business/2017/03/21/barrick-gold-partner-win-dispute-over-cancelled-pakistan-mining-project.html … via @torontostar
The Reko Diq project sits in the restive province of Balochistan, which shares a border with Afghanistan and Iran, and was estimated to have cost more than $3 billion to develop.
Barrick Gold Corp. says an international trade tribunal has ruled in its favour on a dispute over a multibillion-dollar mining project in Pakistan.
The company, along with joint venture partner Antofagasta plc, took the Pakistani government to the World Bank’s International Center for Settlement of Investment Disputes after the country denied a mining lease for the Reko Diq copper-gold project in 2011.
Barrick says the tribunal rejected Pakistan’s final defence against liability on Monday and ruled the country violated terms of an investment treaty with Australia, where the Tethyan Copper Co. joint venture is based.
The tribunal will start proceedings to determine the size of the damages on March 22 with a ruling expected in 2018, Barrick said.
The Reko Diq project sits in the restive province of Balochistan, which shares a border with Afghanistan and Iran.
Barrick said the Reko Diq project was estimated to have cost more than $3 billion (U.S.) to develop and is one of the world’s largest undeveloped copper and gold deposits.
THE EXPRESS TRIBUNE > BUSINESS
Balochistan can earn Pakistan up to $1 billion a year
Balochistan alone has the potential to earn Pakistan up to $1 billion a year from fruit and vegetable exports, according to initial findings of All Pakistan Fruit and Vegetable Exporters, Importers & Merchants Association (PFVA).
But this will happen if international good practices are adopted, added the representative organisation of fresh food exporters that has recently completed a consultative process with stakeholders in Balochistan to develop a road map for the sector.
“The PFVA’s vision would provide long-lasting solutions of problems like food security,” a press release quoted former PFVA chairman Waheed Ahmed as saying.
A PFVA delegation recently met Balochistan Governor Mohammad Khan Achakzai, growers and trade organisations and briefed them about the vision of the association to develop a national policy of horticulture.
The PFVA is gathering support throughout the country for its upcoming “National conference on Horticulture” which will be organised in February 2018.
The association briefed the governor and held consultative meetings at the Quetta Chamber of Commerce to increase the participation of farmers and other stakeholders in highlighting issues of the sector.
The current share of export volume of fruits and vegetables from the province is $45 million, which can be enhanced to $1 billion by establishing Research and Development facilities, Ahmed said.
Pakistan suffers due to low volume of exports overall, aggravating economic issues like a widening trade and current account deficit. Experts have time and again highlighted the need to increase exports and tap sectors other than textile to address economic issues.
The PFVA says that the establishment of grading, processing and packing plants as common facilities in various parts of Balochistan is imminent to achieve this objective. The governor assured to render full support and assistance is setting up common facilities centres in Balochistan, the release added.
Pakistan exported $641 million worth of horticulture products in fiscal year 2016. However, PFVA officials say the country can touch a volume of up to $7 billion within a decade if the federal and provincial governments frame friendlier policies.
Economist Magazine: "Just 1% of the vast #Thar #coal reserve discovered in 1992 could supply a fifth of #Pakistan's current #electricity generation for half a century" #CPEC #energy #infrastructure
PAKISTAN’s enormous mineral wealth has long lain untapped. Since a 1992 geological survey spotted one of the world’s largest coal reserves in Thar, a scrubby desert in the southern province of Sindh, prospectors have hardly dug up a lump. Among those to flounder is a national hero. Samar Mubarakmand, feted for his role in Pakistan’s nuclear-weapons programme, has just shut the coal-gasification company he founded in 2010, when he vowed on live television to crack Thar.
To such qualms, the government offers three rejoinders. First, severe power shortages have long blighted the nation, and renewable sources cannot offer the daylong, year-round power it needs. Second, coal accounts for less than 1% of current generation, compared with 70% in neighbouring India and China. And third, domestic coal would allow the country to forgo expensive imports of the fuel for newly built power stations, a drain on fast-dwindling foreign-exchange reserves.
Eight years ago Engro bought the rights to one of Thar’s 13 blocks, containing 1% of the reserve (more than enough given the gargantuan size of the mine). To work on extraction, it formed the country’s biggest ever public-private partnership, the Sindh Engro Coal Mining Company (SECMC), in which Engro digs and the state provides infrastructure. Relying on the state can break strong firms. Engro itself almost went bankrupt in 2012 after the government refused to honour a sovereign guarantee to provide gas to one of its fertiliser plants. Yet without similar government support, no other Thar block-owners have secured financing, leaving Engro’s diggers, which began work last year, to move ahead.
The endeavour benefits from being in the group of infrastructure projects that make up the $62bn China Pakistan Economic Corridor, a hoped-for trade route. Western banks shook their heads when approached about a coal project, so Engro has relied on Chinese financing. Analysts note an irony in China’s promotion of coal abroad as it withdraws from the fuel at home. Handling the extraction at Thar is the China Machinery Engineering Corporation, a state-owned firm with expertise beyond Pakistan’s reach.
Around 126 metres below the sands of Thar, with just 20 more to go, Engro’s diggers can now almost touch their prize. When the coal is reached, as is expected in mid-2018, it will feed a pit-mouth power station constructed by Engro, and, in time, three others owned by partners in the SECMC. These stations will furnish around a fifth of the country’s electricity for the next 50 years. The financial rewards could be vast. “All my richest friends are jumping up and down [because they did not get there first]”, says the boss of one big multinational construction business.
Hurdles remain, not least complaints from nearby villagers about the disposal of the vast quantities of wastewater from the mine on their ancestral grazing lands in the form of a reservoir. In reply, Engro stresses its social work in the surrounding district of Tharparkar, the poorest in Sindh, which includes the construction of several free schools. More self-interestedly, it is training locals to drive so they can man the dump trucks that trundle day and night around the mine. According to Shamsuddin Shaikh, chief executive of Engro Powergen, the conglomerate’s energy division, Engro also has its sights on Reko Diq, a gargantuan and long-stalled copper mine in Balochistan, the least developed of Pakistan’s provinces. To tap one of the country’s two largest and most niggardly mines is hard enough. Imagine cracking them both.
#Pakistan military eyes key role developing Reko Diq, giant #copper and #gold mine. It has “substantial” #mining capability in recent years. FWO could be part of a consortium alongside global miners who have the know-how to mine such a gargantuan deposit https://reut.rs/2F7eeLh
State-run companies from resource-hungry China have long coveted Reko Diq and more recently Saudi Arabia has shown interest, according to Pakistani officials.
Some Western diplomats say the Reko Diq dispute has been a significant foreign investment deterrent, with international businesses unnerved at how Pakistan dealt with the companies that had pledged to invest $3.3 billion to develop the country’s then-biggest mining project.
Barrick Gold and Antofagasta, whose joint venture Tethyan Copper Company (TCC) discovered vast mineral wealth in Reko Diq, say they had invested more than $220 million by the time the Baluchistan government, in 2011, unexpectedly refused to grant them the critical mining lease needed to keep operating.
Pakistan argued its move was legitimate because TCC’s feasibility study was incomplete and the country’s Supreme Court voided the deal in 2013. But in 2017 the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled against Pakistan.
TCC did not respond to requests for comment and Antofagasta and Barrick Gold both declined to comment. Reuters could not determine whether either company would be willing to return to the project.
The last serious attempt at settling the Reko Diq case was scuppered in 2016 by the military, which vetoed paying hundreds of millions of dollars to TCC, according to a senior Baluchistan official and two former senior officials in Islamabad.
But the military has since changed its stance and is more open to a settlement with TCC, according to a lawmaker close to the military and a source close to Prime Minister Khan. The military was also involved in appointing Pakistan’s current legal team.
In response to a Reuters question about blocking the previous settlement effort, the military said: “Let’s see how the case progresses.” It did not elaborate or comment on whether it was playing any role in the latest negotiations.
Some mining experts say a likely solution would be for a new investment consortium to pay the settlement fee on behalf of cash-strapped Pakistan in exchange for future royalty fees or mining rights.
China grounds Boeing 737 MAX jets after crash
Information Minister Chaudhry said Pakistan was engaged in negotiations with “both” the current investors about a settlement and also potential new investors, with interest coming from the Middle East and Europe. He declined to name the potential investors.
Pakistani Finance Minister Asad Umar said in October that Saudi Arabia has inquired about investing in Reko Diq and another government official confirmed talks were ongoing.
Saudi Arabia did not respond to a Reuters request for comment on Reko Diq. During Crown Prince bin Salman’s visit to Pakistan last month, the kingdom pledged to invest $2 billion in mineral development projects, though the provisional agreements were vague and did not mention any specific projects.
China’s state-owned miner China Metallurgical Group Corporation (MCC), which operates the Saindak copper and gold mine close to Reko Diq, has been eyeing the bigger deposit for more than a decade, according to mining and MCC officials.
A few years ago Chinese state giant Norinco also made an approach, according to two sources familiar with Norinco’s offer.
MCC and Norinco did not respond to requests for comment.
When a mining company approached former general Abdul Quadir Baloch about Reko Diq around 2016, when he was federal minister for the frontier regions, he took their proposal not only to then-premier Nawaz Sharif, but also to the army chief.
“The military has to give a (security) guarantee to any company coming in to explore or exploit this project, so they are a stakeholder,” said Baloch.
#Pakistan fined $5.9 billion over #RekoDiq contract breach. The mine has gold reserves estimated at $100+ billion. #China may make a bid to take over the #gold mine project and pay the penalty in return for long-term lease and exclusive mining rights. https://asia.nikkei.com/Politics/International-relations/China-rescue-option-emerges-as-Pakistan-slapped-with-5.9bn-fine
The possibility of Pakistan seeking assistance from China is emerging after the government was slapped with a $5.95 billion fine in a legal dispute over rights for a copper and gold mine in the country.
Tethyan Copper had filed a case against Pakistan with the International Court for Settlement of Investment Disputes in 2012 for violating an agreement that the company signed with Pakistan for exploration and mining of the Reko Diq mine.
The court issued its decision in 2017 in favor of Tethyan Copper, a joint venture between Barrick Gold of Canada and Antofagasta Minerals of Chile, with hearings continuing to determine the amount of damages to be paid by Pakistan. On Saturday, the court announced that the government of Prime Minister Imran Khan must pay a total fine of $5.9 billion -- a $4.08 billion penalty and $1.87 billion in interest.
Legal experts say Pakistan cannot appeal the court's decision and that it can only apply for technical review, whereby the government can ask the court to review the amount of damages. That process could take up to three years, which would offer Pakistan more time before the fine is due.
The amount of damages Pakistan has been ordered to pay is nearly equal to the recently approved bailout package from the International Monetary Fund.
The damages also are twice the amount of Balochistan's annual budgeted expenditures, which means Pakistan in all likelihood will have to look quickly for payment options. One of the strongest options, according to analysts, is its northern neighbor: China.
Reko Diq sits in Pakistan's southwest Balochistan province, at the triangular border with Iran and Afghanistan. The mine has gold reserves with an estimated value of more than $100 billion.
Work at Reko Diq has been suspended since 2011, when Pakistan rejected the application of Tethyan Copper to mine the area. Before that, Pakistan and Tethyan Copper agreed that the company would conduct a feasibility study under an exploration license and that it would apply for a mining license to carry out the mining.
The board chairman of Tethyan Copper, William Hayes, has said that his company is ready to enter a settlement for a mutually beneficial solution with Pakistan. That could pave the way for a third party like China to help settle the case.
"Given the ever-growing domestic consumption of gold in China and Beijing's interest in investing in gold and copper mining industries abroad, I won't be surprised if China makes a bid to take over the Reko Diq gold mine project and offers to pay the penalty in return for long-term lease and exclusive ownership rights," said Mohan Malik, a professor at the Asia-Pacific Center for Security Studies in Hawaii.
World Bank ruling against Pakistan shows global economic governance is broken
The International Centre for the Settlement of Investment Disputes was established in 1966 as part of the World Bank Group. The centre oversees arbitrations between foreign companies and states in a process known as the investor-state dispute settlement (ISDS).
ISDS is hugely controversial for a variety of reasons ranging from the secrecy of the hearings to the substantial costs associated with defending a claim and the ability of corporations to challenge health and environmental measures.
The case that cost Pakistan $5.8 billion did not revolve around such measures but rather the decision of a provincial government to backtrack on a sweetheart deal that had been offered to a mining firm, allegedly the result of corruption. Leaving the merits of the case to one side — it is difficult to assess the tribunal’s reasoning when the award isn’t public, after all — let’s take a closer look at the payout.
According to the mining company — Tethyan Copper, partially owned by Canada’s Barrick Gold — it spent US$220 million on exploration activities before things went south. One might argue that a fair outcome, if the government was solely to blame, would be for the award to cover these sunk costs. Instead it was more than 25 times that amount. That is because the tribunal chose to award the company “lost future profits” from the project.
Arbitrators don’t have crystal balls. They don’t know what the value of a mineral will be in a year, let alone 30 years. And they are lawyers, not market analysts. So how do they decide how much profit a firm would have made in a hypothetical alternative future?
The answer is, partially, that they rely on “experts” brought in by each of the parties to the dispute. These experts provide a best guess for what they think a project is worth. International law scholar Robert Howse calls this “junk science.”
Unsurprisingly, the state’s expert often provides a low-ball estimate for the value of a project and the investor’s expert gives an inflated value. Faced with this discrepancy, arbitrators will often choose to go down the middle and pick an arbitrary value. Tethyan Copper had originally sought more than US$11 billion in damages, suggesting that the tribunal in this case may have taken this approach.
#Pakistan's Golden Opportunity in #Balochistan. It has large deposits of #gold, #copper, #chromite, #bauxite (aluminum), iron ore, rubies, emeralds, topaz, mineral salt and coal located in Balochistan whose land area is the same as Germany's https://stratforshare.page.link/9EMa via @Stratfor
Until Pakistan and the Tethyan Copper Co. settle their dispute, development of the country's Reko Diq gold and copper mine will languish, leaving a potentially abundant revenue stream dry.
Growing foreign investment in the sector will heighten the need for an effective dispute resolution mechanism.
Unless Pakistan implements the necessary reforms to attract foreign investment, the country's mining sector will not grow beyond its current 3 percent contribution to Pakistan's gross domestic product.
In a remote and arid corner of southwestern Pakistan, Islamabad has found itself embroiled in a difficult battle: a multibillion-dollar dispute with a global mining company over one of the world's richest untapped deposits of copper and gold. In July, the World Bank's International Centre for Settlement of Investment Disputes (ICSID) ordered Pakistan to pay $5.9 billion in damages to the Tethyan Copper Co., a joint venture between Canada's Barrick Gold Corp. and Chile's Antofagasta PLC. The ruling stems from a 2012 case that Tethyan lodged at the ICSID against Islamabad for failing to issue a license to mine gold and copper at the Reko Diq site.
The case draws attention to the rich resources of Balochistan, Pakistan's rugged southwestern frontier in which Reko Diq is located, as well as the tug of war between domestic Pakistani law and international arbitration in resolving investor disputes. But above all, the Reko Diq affair shines a light on Pakistan's numerous underground resources and its broader failure to exploit them — something that will continue to haunt the country if it is to fulfill Prime Minister Imran Khan's goal of rapidly ramping up foreign investment.
The Big Picture
Pakistan's Balochistan province plays a vital role in the China-Pakistan Economic Corridor because of its location on the Arabian Sea. It's also known for its resource riches that include an abundance of gold and copper deposits. But a longstanding dispute between the government and a mining company point to the need for reforms, without which mining's contribution to Pakistan's economy won't exceed 3 percent.
.....Its strategically located coastline faces vital shipping lanes in the Arabian Sea, including traffic destined for the Strait of Hormuz. As a result, Balochistan is the site of a variety of projects as part of the multibillion-dollar China-Pakistan Economic Corridor, which aims to create a direct overland route linking western China and the Arabian Sea through Balochistan's port of Gwadar. At the same time, however, Balochistan is also home to an insurgent movement that seeks independence from Pakistan on cultural and economic grounds; indeed, Chinese investment in Balochistan has exacerbated long-standing separatist grievances of foreign exploitation in the province.
The mine itself is located in Chagai, Pakistan's largest and westernmost district. According to Tethyan, Reko Diq contains 2.2 billion metric tons of mineable ore that could yield 200,000 metric tons of copper and 250,000 troy ounces of gold annually for over half a century. To extract the precious metals, the company must shovel, crush and grind the ore into a fine powder before converting it into a slurry concentrate for transport through a 682-kilometer underground pipeline to Gwadar. At the port, the company plans to dry the concentrate before loading it onto ships for smelting abroad.
But for all of its lucrative potential — $353 million annually at current gold and copper rates — the development of Reko Diq has stagnated because of the long-running legal battle that culminated in last month's $5.9 billion fine.
#Pakistan's top biz tycoons, incl. Arif Habib, M.A. Tabba & Yunus Bros offer to take over Reko Diq, among the largest underdeveloped copper and gold deposits in the world, with annual production capacity of 200,000 tons #copper and 250,000 oz of #gold.
Reko Diq is one of the largest underdeveloped copper and gold deposits in the world, capable of producing each year 200,000 tons of copper and 250,000 ounces of gold.
Pakistan’s top business tycoons have offered to take over a disputed copper and gold deposit that was once explored by Barrick Gold Corp. and Antofagasta Plc, according to people familiar with the matter.
Officials at the provincial Balochistan government are said to have met with a consortium of four business groups including tycoons Arif Habib and Muhammad Ali Tabba who are willing to invest about $1 billion of their own cash in the project, the people said, asking not to be named because the discussions are private. The consortium is willing to go through a bidding process to take over the project, the people said. Pakistan’s provincial government spokesman didn’t respond to requests for comment.
An international tribunal run by the World Bank in July ordered Pakistan to pay $5.8 billion in damages to Barrick Gold and Antofagasta after the country denied them a license to develop the Reko Diq mine in 2011. Collecting the funds though may be a challenge, given Pakistan’s fragile economic state. The damages almost match the International Monetary Fund’s $6 billion bailout for Pakistan earlier this year to help the South Asian nation avert an economic crisis.
The provincial chief minister has expressed a preference for Pakistani companies to take over the mine, the Dawn newspaper reported earlier this month. The business groups that showed interest in the mining project are: Yunus Brothers Group that owns Lucky Cement Ltd., Arif Habib Group, Fatima Group and the owners of Liberty Power Tech Ltd., the people said. The four are being led by Shamsuddin Shaikh, who spearheaded a group of companies to mine coal from Pakistan’s Thar desert for the first time.
Reko Diq is one of the largest undeveloped copper and gold deposits in the world, capable of producing 200,000 tons of copper and 250,000 ounces of gold a year for more than half a century, according to a feasibility study before the dispute. The capital investment at the time would have exceeded $3 billion.
#Pakistan's #copper #export to #China up 400%
in 3 years from $106 million to $550 million in 2019. Metallurgical Corporation of China (MCC) that is #mining Saindak expects to grow export to $10 billion per year once Reko Diq is settled. #economy #CPEC https://nation.com.pk/31-Mar-2020/pakistan-copper-s-export-to-china-increase-by-400-percent
Pakistan has confirmed a 400 percent increase in the export of copper products to China in the recent year.
According to a report published by China Economic Net, this huge rise in the export of copper and other copper-related products from the country has helped to boost local industry.
Three year back exports of copper from Pakistan were of only 106 million dollars, however, In the year 2019, copper exports to China have risen to 550 million dollars.
The current rise in exports is seen though the largest copper reserves of Pakistan "Reko Diq project" which is under dispute at the international court of justice.
If the dispute settles down shortly then one of the biggest players in the copper industry of China, Metallurgical Corporation of China (MCC) that is mining in Saindak mines expects to take the export to $10 billion per year.
It is to be noted that mining and processing of copper requires a high-end technology and the expertise of Chinese copper processing companies like MCC have played a very vital role to develop the Saindak copper mines from the year 1995 onwards.
Talking to CEN, Director of Administration Office Song Guozhao said that Saindak Copper-Gold Project is designed to produce and process 12,800 tons of copper ores per day (4.25 million tons per year); currently, the output of copper blister is about 13,000 tons annually.
“By the end of February 2020, the project has a total of 1,977 employees, 256 Chinese and 1,721 Pakistani, of which the number of local employees accounts for 87% of the total,” he mentioned.
He stated that as the Pakistani managerial and technical personnel continuously improve their capacity, the company will further, carry forward the process of localized administration.
Saindak Copper-Gold Project composes of three ore bodies, that is the South, the North and the East Ore Bodies (SOB, NOB & EOB). The MCC has been working in SOB and NOB, and the mineable resources in the two ore bodies are going to run out soon.
The Chinese and Pakistani sides are in close communication on its feasibility. Since the other two ore bodies are going to run out of resources soon,
it is imperative to find supplementary resources so that the development of the project would be sustained, the employment of local people will be secured, and more continuous contributions will be made to local economy, Song said.
Saindak is an open-pit mining project rather than underground mining, so there is no sinking problem in the mining area. We have been operating the project for so many years and we have a good knowledge and understanding of the country, especially the mining industry, cultural environment, religious practices in Balochistan.
We also enjoy sound cooperation with federal and local governments and other partners in Pakistan. Given this, we are willing to expand our investment in the mining sector in Pakistan.
We are interested in the development of the H4 and Reko-Diq, and we hope that the Pakistani government will conduct international tenders for these projects as soon as possible, Song added.
Talking with CEN, Commercial Counselor of Pakistan Embassy in China Badar u Zaman said that the Pakistani government is eager to increase the exports of copper to China.
The commercial section of the embassy is putting huge efforts which have resulted in a 400 percent increase in copper exports in the last two years.
#Pakistan's #copper #exports to #China jump 400% to $550 million last year from $106 three years ago. https://swarajyamag.com/news-brief/pakistan-gains-from-sterlite-plant-closure-in-tns-thoothukudi-its-copper-exports-to-china-surge-400-per-cent via @swarajyamag
The Sterlite copper plant was ordered shut by the Tamil Nadu government on 28 May 2018 after protests demanding its closure turned violent.
In the violence that occurred on 22 May 2018, at least 13 persons were killed when police fired at protesters who turned violent and began damaging vehicles and properties.
The protests demanding the closure of Sterlite began in February 2018 after Vedanta launched works for further expansion of the Thoothukudi plant.
The Sterlite Copper plant contributed 40 per cent of the country’s total copper production when it was forced to shut down.
The Union government told Parliament earlier this year that the plant’s closure had led to a domino effect with imports rising and exports slipping.
In view of the Thoothukudi plant’s closure, India became a net importer of copper after 18 years. Imports more than doubled to 92,990 tonnes during the 2018-19 financial year, while exports dropped to a meagre 47,917 tonnes from 3.78 lakh tonnes.
A total of $605.20 million of precious foreign exchange was spent on imports during the 2018-19 financial year, while $684.02 million was spent during the April-September period of 2019-20 financial year.
According to Trading Economics, Pakistani exports of copper and articles increased over 66 per cent to $353.87 million in 2019 from around $210 million the previous year.
The News said that Pakistan increased its exports to China through one of its largest copper reserves, the ‘Reko Diq project’.
Reko Diq is a small desert area town in Balochistan province bordering Afghanistan and Iran. The “Reko Diq project” is under dispute since Anglo-Australian mining firm BHP discovered large deposits of gold and copper ores.
BHP sold its stakes to Tethyan Copper Company (TCC) but the Balochistan government failed to acknowledge it.
TCC went to the World Bank’s International Centre for Settlement of Investment Disputes and got $5.95 billion order in its favour.
However, the dispute is yet to be resolved.
China’s biggest copper industry player, Metallurgical Corporation of China, is looking forward to increasing Pakistan copper exports to $10 billion a year if the “Reko Diq project” dispute is resolved.
The Metallurgical Corporation is executing the Saindak gold-copper project in Balochistan since 1995.
The Saindak project produces 4.5 million tonnes of copper ores a year that helps smelt 13,000 tonnes of copper blister annually.
Since the resources are fast depleting at Saindak, the Chinese company is keen on taking over the operations at the ‘Reko Diq project’.
Beijing has asked Pakistan to call for international tenders for this and another project called H4, even as Islamabad sounds confident of increasing its copper exports to China.
#Pakistan $6 Billion Reko Diq (copper-gold mine) Penalty Might Get Annulled After Arbitrator Found Guilty. #ICSID has also annulled penalty imposed on #Spain by the same arbitrator after finding him guilty of partiality
The prospects of Pakistan’s $6 billion penalty in the Reko Diq case to be waived off have received a significant boost.
Recently, the International Centre for Settlement of Investment Disputes (ICSID) nixed a €128 million penalty imposed on Spain after an arbitrator Stanimir Alexandrov, who had represented the claimants in the case against Pakistan as well, was found guilty of conflict of interest.
It is pertinent to note that ICSID has annulled an award for the first time due to the arbitrator’s lack of impartiality and independence.
Following the development, Pakistan has once again knocked on ICSID’s door for the annulment of the $6 billion penalty in the Reko Diq case.
Legal experts have suggested Pakistan should raise objection over the inclusion of Stanimir Alexandrov of Bulgaria in the tribunal.
Pakistan’s legal team Allen & Overy LLP had also previously applied for the disqualification of the Bulgarian arbitrator from the tribunal but failed to convince the ICSID.
In July 2019, the ICSID had imposed a $6 billion penalty on Pakistan following the Supreme Court’s decision in 2011 which revoked the mining lease of Tethyan Copper Company (TCC), a consortium of Chilean and Canadian companies, for the Reko Diq project.
ICSID had concluded that Pakistan unlawfully annulled the lease of TCC and violated the Australia-Pakistan bilateral investment treaty.
Reko Diq, a small town in Chagai, Balochistan, has the biggest gold and copper deposits in Pakistan. Once fully developed, 250,000 ounces of gold and 200,000 tons of copper can be extracted from the mines each year for the next 50 years.
Local consortium proposes to develop #Pakistan #copper & #gold mine at Reko Diq #Balochistan after arbitration. Consortium comprises Arif Habib Limited, Mari Petroleum, Liberty Mills Limited, Fatima group, Lucky group and South Western Mining. #resources https://reut.rs/3om3GNd
A local consortium has made a proposal to develop a major copper and gold mine in southwest Pakistan after a court decision blocked the mine’s development by a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold.
Pakistan’s Supreme Court blocked the joint venture, Tethyan Copper, in 2013 from developing Reko Diq - one of the world’s biggest untapped deposits of copper and gold - following a court case over how the contract had been awarded.
Pakistan’s government was later ordered by a global arbitration body to pay $5.8 billion in damages after Tethyan Copper took it to court.
The local consortium, National Resources Private Limited, said in a statement on Sunday that it had submitted a proposal to develop Reko Diq and another major copper and gold mine, also in Balochistan province.
“The consortium has proposed (to the) government to develop and implement the Tanjeel reserves as a starter project, followed by development of the vast Reko Diq area reserves,” National Resources Private Limited said.
The Balochistan government said it was studying the proposal, the financial aspects of which were not disclosed.
The Reko Diq porphyry copper-gold district, Chagai Belt, Balochistan Province, Pakistan
Reko Diq, located in in the Chagai belt of western Pakistan near the border with Afghanistan and Iran, is one of the world´s largest porphyry Cu-Au districts. The western Chagai belt hosts several porphyry Cu and Cu-Au deposits and prospects, including the clusters at Saindak, Sor Baroot, Koh-Dalil and Reko Diq. Porphyry Cu-Au ± Mo mineralization at Reko Diq is associated with multi-stage intrusions of Miocene calcalkaline, commonly cigar-shape stock and dykes, emplaced into late Oligocene volcanic and sedimentary rocks. The H14-H15 deposit (4,100 Mt at 0.50% Cu and 0.29 g/t Au) is the largest deposit in the district and is characterized by Au-rich, Cu-Fe-sulfide mineralization associated with intense, magnetite-bearing K-silicate alteration. Supergene Cu oxidation and enrichment is weak in the district and is only well preserved in the form of a chalcocite blanket (0.70% Cu) in the central Tanjeel porphyry Cu deposit.
#Tech #economy needs rare earths (#Lithium), and #Afghanistan has got a lot of them. "The #Chinese and the #Pakistanis and the #Russians are very much interested. And China has been dominating the critical, rare strategic metals market for the last decades"https://www.marketplace.org/2021/09/03/afghanistan-has-minerals-tech-economy-needs/
Ryssdal: All right, so make the turn here toward geopolitics for me, and I realize that’s not necessarily your specialty. But if the United States and the U.K. and most of Europe is not in the foreseeable future going to have business dealings with Afghanistan, as it’s run by the Taliban, but the Chinese are and the Russians might, that’s a balance of power thing.
Pitron: The Chinese and the Pakistanis and the Russians are very much interested. And China has been dominating the critical, rare strategic metals market for the last decades. So the fact that this potential is available, at least potentially to the Chinese, shows that after the 19th century, which was dominated by the English with the coal industry, and the 20th century, which was dominated by the Americans, thanks to their domination of the oil industry, then we’re moving to an age of where the Chinese are already controlling the metals industry for the [inaudible] energy revolution.
The United States has pulled out of Afghanistan. But 11 years ago, Pentagon officials and American geologists discovered nearly $1 trillion in mineral deposits there, including elements and metals that are needed to power the growing tech economy. Lithium, for instance, is key material in making batteries for cellphones, laptops and electric vehicles. Getting those minerals out of the ground and building an industry around them is another issue in a country with deep political and economic instability.
“Marketplace” host Kai Ryssdal spoke with Guillaume Pitron, a French journalist and author of “The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies,” about the geopolitics of rare materials. The following is an edited transcript of their conversation.
Guillaume Pitron: [Afghanistan] is said to be a country where you can find lots of copper, lots of lithium, rare earths elements, platinum, bauxite and other resources of this kind.
Kai Ryssdal: And the net worth, as it were, of those things even in the ground, before we get to actually getting them out of the ground in Afghanistan, the thing that makes it dynamic right now, is that we more than ever depend on those minerals — the lithium and the cobalt and all of that — for batteries and all of the things we need for this economy right now.
Pitron: The energy transition is a metallic transition. we would like to do away with oil and coal. But on the other side, we’ll have to tap into these minerals. And actually, the International Energy Agency, recently this year, published a report saying that our needs for these commodities will explode in the next decades for making the green revolution possible. And Afghanistan has these resources.
The Pakistan International Airlines (PIA) has performed a successful test flight at a Chinese-built runway in the mineral-rich region of Balochistan’s Saindak town, China Urdu reported.
The development comes a day after Juzzak Airport in the Chagai district of Balochistan was made operational for flights to and from Karachi mainly for the Chinese engineers working on projects in the region.
Last month, the Parliamentary Committee on China-Pakistan Economic Corridor (CPEC) was informed that the progress on New Gwadar International Airport (NGIA) was on track and it would be fully operational by September 2023.
In a meeting of the committee presided over by Sher Ali Arbab, the Aviation Division secretary told the panel that the project, which was originally expected to be completed by next year, has been postponed till October 2023.
The China Airport Construction Group informed the Pakistan Civil Aviation Authority (PCAA) about the new time limit for the project, deferring the project funded by the Chinese company.
According to the document obtained by The Express Tribune, the passenger terminal building of the project will be completed by June 2023; work related to air traffic control will be completed by March 2023 while the overall construction of the airport will finish by October 2023.
Chinese company allowed exploration in Saindak area
The Balochistan government has allowed Chinese firm Metrological Construction Company of China (MCC) — registered locally with the name of Saindak Metals Limited (SML) — the exploration and development of East Ore Body in Saindak lease area and the company has been issued an NoC for the purpose.
Official sources said on Monday that the provincial government also extended the contract of MCC/SML for another 15 years under which the company would continue exploration work on East Ore Body site after the expiry of its present contract on Oct 31, 2022. The MCC, working at the Saindak-Gold-cum-Copper Project since 2002, applied the Balochistan Mines and Mineral Department to allow the company to start exploration work on the East Ore Body of Saindak lease area as its exploration work at the present Saindak site had almost finished.
Officials said the contract agreement of the SML/MCC was scheduled to expire on Oct 31, 2022, and the Balochistan chief minister approved it for another 15 years. “The extension of MCC-SML contract would ensure investment of $45 million by MCC/SML at their own risk for exploration and development of East Ore Body in Saindak area,” said an official letter sent to the Ministry of Energy, Petroleum Division.
However, the letter said that the matter of extension of the SML mining lease (valid up to 2025) would be dealt with separately as per provisions of the Balochistan Minerals Rules, 2002.
MCC mining project winning hearts and minds of families in Pakistan
By promoting the local economy and helping to improve social welfare, China Metallurgical Group Corp, or MCC, is dedicated to becoming a model business in boosting economic cooperation between China and Pakistan.
As a State-owned company in the iron and steel industry, MCC is one of the earliest Chinese companies to operate businesses and projects in Pakistan.
In 1990, MCC managed the construction of the Saindak Copper-Gold Mine based on an engineering, procurement and construction contract-.
The Saindak Copper-Gold Mine was set up by Saindak Metals Ltd, a company owned by the government of Pakistan, at the end of 1995. In 2002, MCC beat the competition in the project bidding and began the first phase of the lease.
Saindak Copper-Gold Mine has made a steady profit for 18 consecutive years, becoming a major driver of local economy and praised by governments on both sides as "a model of China-Pakistan economic cooperation-"-.
Located in Saindak in Chagai district, Balochistan, the project has helped to improve local livelihoods in aspects such as water, electricity, healthcare and education.
To illustrate, Saindak Copper-Gold Mine has tackled problems in water and power supplies for local residents. It offers more than 15,000 cubic meters of purified water and more than 20,000 cu m of raw water for free, at an annual expenditure of over $100,000. It supplies electricity 24/7 for nearby villages free of charge, incurring related cost for the project at $1 million annually.
To date, Saindak Copper-Gold Mine has more than 1,500 Pakistani employees. Every year, MCC assigns its Chinese engineers to conduct skills training.
During the last 18 years, more than 10,000 training sessions of various kinds were held covering approximately 100,000 man-hours. Thousands of Pakistani employees have become skilled through the systematic training. Some of them took their skills out of the project and are contributing to the economic and social advancement of different sectors in Pakistan.
In addition, amid the COVID-19 pandemic, MCC actively played its part in contributing medical supplies for Pakistanis and maintained steady production in 2020.
Apart from providing anti-pandemic materials, MCC also organized charity events to assist disadvantaged households in Balochistan-last year. It helped more than 3,000 needy families in Chagai district and 300 families in six local villages by sending daily necessities such as flour, rice and cooking oil.
Such moves have been appreciated by local people and are part of MCC's effort to fulfill corporate social responsibility as a State-owned enterprise-.
Under the support of the two countries' governments, MCC will continue to cooperate with Pakistani people and build closer partnerships between the two sides.
The average annual copper price is forecast to drop by 6% y-o-y to $8,800 per tonne this year. Boosting supply in the global copper ore market is to push prices down while the worldwide demand languishes with slowed construction activity in China.
In 2020, approx. 1.7M tonnes of copper were exported worldwide, growing by 16% compared with 2019 figures. In value terms, supplies surged to $11.1B.
Zambia represented the major exporter of copper globally, with the volume of exports amounting to 675K tonnes, which was nearly 40% of total supplies. Chile (283K tonnes) ranks second with a 17% share, followed by Bulgaria (7.1%) and the Democratic Republic of the Congo (5%). Belgium (76K tonnes), Namibia (61K tonnes), Spain (56K tonnes), Slovakia (55K tonnes), South Africa (52K tonnes), Pakistan (38K tonnes), the Philippines (34K tonnes) and South Korea (31K tonnes) were a long way behind the leaders.
In value terms, Zambia ($4.2B) remains the largest copper supplier, comprising 38% of global exports. The second position in the ranking was occupied by Chile ($1.7B), with a 16% share of total supplies. It was followed by Bulgaria, with a 9.4% share.
One more record for CY 2021 was Pakistan copper exports which touched 717m$ in CY 2021.
Pakistan Copper exports increased more than 3 times since 2018 from 233m$ to 717m$ .
Details about Reko Diq to be disclosed soon: CM Bizenjo
CHAGAI: Balochistan Chief Minister Mir Abdul Qudoos Bizenjo said on Monday that details with facts and figures about Reko Diq copper and gold mining project would be disclosed soon.
Talking to local journalists outside Dalbandin airport along with Balochistan Governor Zahoor Ahmed Agha and Rakhshan Division Commissioner Saifullah Khetran, Mr Bizenjo said that for the first time a detailed briefing about Reko Diq project was conducted for the elected representatives of Balochistan at the provincial assembly.
He was referring to a Balochistan Assembly session held last month in which lawmakers from the opposition and treasury benches were given an in-camera briefing on the Reko Diq copper and gold mining project.
In 2019, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ordered Pakistan to pay damages of $5.84 billion to Tethyan Copper — a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold — for blocking Tethyan from developing the asset after it had already sunk more than $220 million into the project.
“As we know that we have lost the Reko Diq case in the international court. Therefore, striking a bargain is not easy, but we are trying our best to gain maximum share for Balochistan in this regard,” the chief minister said.
The share of Balochistan in the previous agreement was 25 per cent despite investment by the provincial government, Mr Bizenjo said, adding that the province would get a good share in the upcoming proposed agreement and without having to make an investment.
The chief minister said it had been proposed that the companies involved in Reko Diq project would spend Rs30 to 40 billion during three years for the development of Chagai district besides billions of rupees that would come under the head of corporate social responsibility.
Answering a question, Mr Bizenjo said his government had removed several unnecessary check-posts on highways and more would be removed soon. He also asked the commissioner to remove speed breakers and rooms made for security check-posts constructed on and alongside the main highway.
He also warned that the commissioner, deputy inspector general of police, deputy commissioner, assistant commissioner and tehsildar would be suspended if a security man is found taking bribes at a check-post.
On a lack of healthcare facilities in the district headquarters hospital, he said that all district health officials were directed to purchase medicines and appoint doctors on a contract basis to facilitate the masses.
According to details (of the agreement between Pakistan and Barrick Gold), Pakistan and TCC agreed to divide shares with each side getting 50 percent of them. Pertinent to mention, Pakistan had a stake of 25 percent in the previous deal.
Sources claim that Pakistan and TCC will most likely sign the deal in February. If finalized, the deal will avert the threat of imposition of a $10 billion dollar fine on Pakistan.
Sources revealed to The Express Tribune that the project’s development would result in an investment of approximately $10 billion in Balochistan, including $1 billion which would be invested in social uplift projects such as roads, schools, hospitals, and the creation of technical training institute for mining. The investment is also said to result in the creation of over 8,000 jobs.
“This project shall make Balochistan the largest recipient of foreign direct investment in Pakistan and the Reko Diq project shall be one of the largest copper and gold mining projects in the world”, sources added.
50 per cent of the new project’s shares will be owned by Barrick Gold, while the remaining shares shall be owned by Pakistan, divided equally between the federal government and the provincial government of Balochistan.
The federal government’s shares of 25% shall be divided equally amongst three state-owned entities (SOE), namely Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan Limited (GHPL).
The reconstituted project will be held 50% by Barrick and 50% by Pakistan stakeholders, comprising a 10% free-carried, non-contributing share held by the government of Balochistan, an additional 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises. A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties.
Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period. The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan. If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce.
Barrick Gold Corporation - Reko Diq Alliance Between Pakistan and Barrick Set to Create Long-Term Value
Subject to the updated feasibility study, Reko Diq is envisaged as a conventional open pit and milling operation, producing a high-quality copper-gold concentrate. It will be constructed in two phases, starting with a plant that will be able to process approximately 40 million tonnes of ore per annum which could be doubled in five years. With its unique combination of large scale, low strip and good grade, Reko Diq will be a multi-generational mine with a life of at least 40 years. During peak construction the project is expected to employ 7,500 people and once in production it will create 4,000 long-term jobs. Barrick’s policy of prioritizing local employment and suppliers will have a positive impact on the downstream economy.
ISLAMABAD, PAKISTAN – Finance Minister Miftah Ismail and Barrick president and chief executive Mark Bristow said after their meeting here today that they shared a clear vision of the national strategic importance of the Reko Diq copper-gold project and were committed to developing it as a world-class mine that would create value for the country and its people through multiple generations.
Reko Diq is one of the world’s largest undeveloped copper-gold deposits. An agreement in principle reached between the government of Pakistan, the provincial government of Balochistan and Barrick earlier this year provides for the reconstitution and restart of the project, which has been on hold since 2011. It will be operated by Barrick and owned 50% by Barrick, 25% by the Balochistan Provincial Government and 25% by Pakistani state-owned enterprises.
The definitive agreements underlying the framework agreement are currently being finalized by teams from Barrick and Pakistan. Once this has been completed and the necessary legalization steps have been taken, Barrick will update the original feasibility study, a process expected to take two years. Construction of the first phase will follow that with first production of copper and gold expected in 2027/2028.
“During the negotiations the federal government and Barrick confirmed that Balochistan and its people should receive their fair share of the benefits as part of the Pakistan ownership group,” Bristow said.
“At Barrick we know that our long-term success depends on sharing the benefits we create equitably with our host governments and communities. At Reko Diq, Balochistan’s shareholding will be fully funded by the project and the Federal Government, allowing the province to reap the dividends, royalties and other benefits of its 25% ownership without having to contribute financially to the project’s construction or operation. It’s equally important that Balochistan and its people should see these benefits from day one. Even before construction starts, when the legalization process has been completed we will implement a range of social development programs, supported by an upfront commitment to the improvement of healthcare, education, food security and the provision of potable water in a region where the groundwater has a high saline content.”
Finance Minister Ismail said the development of Reko Diq represented the largest direct foreign investment in Balochistan and one of the largest in Pakistan.
“Like Barrick, we believe that the future of mining lies in mutually beneficial partnerships between host countries and world-class mining companies. The Reko Diq agreement exemplifies this philosophy and also signals to the international community that Pakistan is open for business,” he said.
REMs – the most precious commodities
Pakistan should hire experts, finance rare earth metal projects through budget
REMs constitute a group of 17 elements that occur together in the periodic table, including yttrium and 15 lanthanides. The use of REMs within industrial sectors is both high stakes and high wager.
These sectors include defence, electronics, medicinal, industrial, automotive, etc and they are used in specialised applications such as aircraft engines, nuclear batteries, lasers, magnets, optic fibres, high-strength alloys, superconductors, storage disks, signal amplifiers, to name a few.
REMs deposits in Pakistan have been discovered in Khyber-Pakhtunkhwa (Koga, Tarbela, Jawar), Gilgit-Baltistan (Gilgit, Skardu), and Balochistan (Reko Diq, Chagai, Saindak).
Initial geochemical analysis showed that 12 out of 17 REMs had been found with varying potential. Still, the exact size is yet to be determined and required an in-depth exploration study. REMs are the most precious commodities today and Pakistan needs to place maximum bets on it to cash in on the opportunities. Realistically, Pakistan is not a manufacturing or a processing country, hence, it should earmark the commerce potential with both revenue from sales and barter trade.
Due to REMs strategic importance, an organisational setup should be put in place, under the prime minister, and in close collaboration with supporting arms of armed forces and Pakistan Atomic Energy Commission.
The entire exercise can be done in stages with exploration, extraction, ramp-up production and global marketing with mass production over a five-year timeline.
Experts should be freshly hired or may be brought from different government departments (Geological Survey of Pakistan, Survey of Pakistan, Khan Laboratories, etc), including geologists, radiometric surveyors, drilling/smelting specialists, and security experts.
The project financing should come from the national budget under the ambit of “special strategic projects”. The global REMs market is valued at $10 billion with an 8-10% CAGR and production of 170,000 tons per annum by 2022. If Pakistan secures 2-5% of this market share – with annual output of 3,500-8,500 tons, it can inject $1-2 billion per year into the national pocket over the next five to seven years.
This could change Pakistan’s international status as a high-value player at a high stakes table in the global arena.
The writer is a PhD in Engineering from the University of Cambridge, United Kingdom. He currently serves as Vice President of Core Group in Pakistan
#Pakistan's top court endorses #Canadian mining giant Barrick Gold's $10 billion #investment at Reko Diq in #Balochistan. It is one of the world's largest underdeveloped sites of #copper and #gold deposits.
Pakistan's Supreme Court endorsed on Friday a settlement for Barrick Gold (ABX.TO) to resume mining at the Reko Diq project, one of the world's largest underdeveloped sites of copper and gold deposits, it said in an order.
The endorsement was a condition of the settlement for Barrick to resume work on the project in the southwestern province of Balochistan, bordering Afghanistan and Iran, in which it will invest $10 billion.
Chief Justice Umar Ata Bandial, the head of a five-judge panel, read out the operative part of the brief order in court.
"The agreements ... have not been found by us to be unconstitutional or illegal on the parameters and grounds spelt out," read the order seen by Reuters.
President Arif Alvi had asked the court to review the deal.
In an out of court agreement this year, Barrick Gold ended a long-running dispute with Pakistan, and agreed to restart development.
Under the deal, the company withdrew its case in an international arbitration court, which had slapped a penalty of $11 billion on Pakistan for suspending the contracts of the company and its partners in 2011.
The company's licence to mine the untapped deposits was cancelled after the Supreme Court ruled illegal the award granted to it and its partner, Chile's Antofagasta (ANTO.L).
Antofagasta had agreed to exit the project, saying its growth strategy was focused on production of copper and by-products in the Americas.
Pakistan's mineral-rich province of Balochistan is home to both Islamist militants and separatist Baloch insurgents, who have engaged in insurgency against the government for decades, demanding a greater share of the region's resources.
Barrick Gold strikes final deal with Pakistan for Reko Diq project
Published by Joe Toft, Editorial Assistant
Global Mining Review
Barrick Gold Corporationhas announced that it has completed the reconstitution of the Reko Diq project, having received a favourable opinion from the Supreme Court of Pakistan and the required legislation having been passed into law.
One of the largest undeveloped copper-gold projects in the world, Reko Diq is owned 50% by Barrick, 25% by three federal state-owned enterprises, 15% by the Province of Balochistan on a fully funded basis and 10% by the Province of Balochistan on a free carried basis.
Barrick president and chief executive Mark Bristow said the completion of the legal processes was a key step in progressing the development of Reko Diq into a world-class, long-life mine which would substantially expand the company’s strategically significant copper portfolio and benefit its Pakistani stakeholders for generations to come.
“We are currently updating the project’s 2010 feasibility and 2011 feasibility expansion studies. This should be completed by 2024, with 2028 targeted for first production,” Bristow said.
“With its unique combination of large scale, low strip and good grade, Reko Diq is expected to have a life of at least 40 years. We envisage a truck-and-shovel open cast operation with processing facilities producing a high-quality copper-gold concentrate. We expect it to be constructed in two phases with a combined process capacity of 80 million tpy.
Reko Diq will be a major contributor to Pakistan’s economy which is expected to have a transformative impact on the underdeveloped Balochistan province where, in addition to the economic benefits it will generate, the mine will also create jobs, promote the growth of a regional economy and invest in development programs. The province’s interest in the mine will be fully funded, which means that Balochistan will reap the dividends, royalties and other benefits of its 25% shareholding without having to contribute financially to its construction and operation.
“Reko Diq’s ownership structure is a further manifestation of Barrick’s commitment to partnership with its host countries and communities and to sharing the value our operations create fairly with all our stakeholders,” Bristow said.
“We’re making sure that Balochistan and its people will see these benefits quickly. Starting early next year, Barrick will implement a range of social development programs prioritising the improvement of healthcare, education, vocational training, food security and the provision of potable water. Our investment in these is expected to amount to around US$70 million over the feasibility and construction period. In addition, Reko Diq will advance royalties to the government of Balochistan of up to US$50 million until commercial production starts.”
During peak construction the project is expected to employ 7500 people and once in production it will create around 4000 long-term jobs. As elsewhere in the group, Barrick prioritises the employment of local people and host country nationals.
Bristow said Barrick already had the industry's best gold assets and the addition of Reko Diq would promote its copper portfolio into the world-class league, accelerating the company towards its goal of creating the world's most valued gold and copper mining business.
Surging demand for copper means its price is rising too
The world cannot seem to get enough copper. This metal is mined in places as disparate as China, the Democratic Republic of Congo and Utah.
Copper prices have risen around 10% since the start of this year, in part because the metal is crucial to renewable energy technology and the transition away from fossil fuels.
Copper is often referred to as “Dr. Copper,” because it’s considered a barometer for the health of the global economy.
Traders like to play off that saying, according to Bobby Iaccino, co-founder of Path Trading Partners.
“They say copper has a Ph.D. in economics,” he said. “That still doesn’t really explain it, OK? So anywhere where there’s electricity, there’s copper usage.”
Demand for copper is especially high now as the market for renewable energy expands, said Michael Klare, a professor emeritus at Hampshire College.
“You’re going to need a lot more copper for wiring to connect various sources of renewable energy — wind farms and solar farms — to wherever you’re going to use the renewable energy,” Klare said.
And in electric vehicles, the amount of copper needed can be more than double what’s used to make traditional gas-powered vehicles.
This year’s surge in copper prices is in part due to China and its emergence from pandemic-related shutdowns, said Rohan Reddy, director of research at Global X ETFs.
“China makes up about half of all global copper demand. So typically, there’s a saying, ‘As China goes, so does copper,'” Reddy said.
That’s the other copper adage you’ll hear a lot — and one that seems to be holding true. The question now is what happens next in China, said Bart Melek, global head of commodity strategy for TD Securities.
“We continue to see a very significant amount of infections in that country,” Melek said. “And that is something that will take time to work its way through.”
That’s why Melek’s call on copper for the coming months is relatively cautious. Rising interest rates, a potential global economic slowdown — all of it, he said, could take the shine off copper demand.
Lithium, fresh silver lining on economic horizon of Pakistan
By Yasir Masood | Gwadar ProDec 12, 2022
Pakistan possesses substantial lithium reserves. According to the Metal Mining Agency of Japan, these reserves may fulfil global demand for nearly 500 years. With China and India, two of Pakistan's major trading partners, investing extensively in electric vehicles (EVs), Pakistan has a significant chance of becoming a bigsupplier and a major consumer of this essential commodity.
“Given the existence of favorable geological environments in Pakistan which are found elsewhere for the occurrence of Lithium on a global level, Balochistan, KPK, and GB Provinces have been identified as target areas for finding this commodity in substantial quantities”, said Mr. Muhammad Yaqoob Shah, ex-General Manager (Geology) Pakistan Mineral Development Corporation Islamabad.
Pakistan is sitting on a gold mine
The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world.
Reko Diq is a small desert village in the Balochistan district of Chagai, 70 kilometers northwest of Naukundi and close to Pakistan's border with Iran and Afghanistan. This region is situated within the Tethyan belt, which extends from Turkey and Iran to Pakistan. Reko Diq, which in Balochi means "sandy mountain," is also the name of an extinct volcano.
The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world. The mine is in a small desert area in the northeast of Balochistan, near the border with Iran and Afghanistan.
600,000 tons of concentrate produce an estimated 200,000 tons of copper and 250,000 ounces of gold on a yearly basis. The annual profit from the mines is estimated by the TCC to be approximately $1.14 billion for copper and $2.50 billion for gold, totaling $3.64 billion annually. Independent estimates suggest the number is as high as $500 billion, which is significantly higher than the TCC's estimation of $200 billion.
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