Friday, January 14, 2011

Rare Earths at Reko Diq, Pakistan?

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:



Related Links:

Haq's Musings

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

45 comments:

Mayraj said...

Something else Pakistan can learn from China!

http://www.kidela.com/kidela/separating-rare-earth-elements
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.

Riaz Haq said...

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.

Mayraj said...

Looks like China is interested, accrding to The Express Tribune. This looks better than the other alternative and as that posting on rare earth processing indicated, China is one of rare places with this competency.
I hope Pakistanis raise rare earth issue with the Chinese.
There is no indication this is being discussed.
http://tribune.com.pk/story/90678/chinese-dragon-counterproposal-submitted-for-reko-diq-project/

Anonymous said...

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.

Riaz Haq said...

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.

Mayraj 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.”


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=24580&Cat=2&dt=1/8/2011
Taseer & the continuing saga of Reko Diq mystery

Riaz Haq said...

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.

Riaz Haq 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
Karachi

Anonymous said...

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...

Riaz Haq said...

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.

Riaz Haq said...

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.

Strong Fundamentals

“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.

Alternatives

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.

Anonymous said...

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.

Riaz Haq said...

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.

Riaz Haq said...

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.

Riaz Haq said...

Chaghai district of Balochistan in Pakistan has huge deposits of gold, copper and other precious metals, The Express Tribune quotes the experts as saying.

Shahid Noor Khan, a geologist at the Geological Survey of Pakistan, had discovered gold and copper deposits in the area in 1962.

Apart from Reko Diq and Saindak, eight more reserves were also discovered in the district with the help of international geologists. However, initial work has yet not been started.

Chaghai is the largest district of Pakistan spread over an area of over 700 kilometres – equal to the entire landmass of Khyber-Pakhtunkhwa province. The district includes plains, deserts and mountain ranges. Its population is about 150,000. Chaghai shares borders with Afghanistan and Iran. Baloch tribes straddle both sides of the border.

Geologist Khan’s discovery was not given proper attention by government authorities. However, later the government hired UN experts, who identified 10 gold and copper reserves. The Resource Development Corporation was established to exploit minerals in Saindak. In the 1990s an agreement was signed with a Chinese firm for the mining and processing of minerals there. Another contract was signed in 1993 for the exploration and pre-mining feasibility report and other technical works. According to geologists, the other reserves include Siah Chang reserves, spread over 3,000,000 square metres, Kabul Koh reserves, covering an area of 5,500,000 square metres, Ziarat Pir Sultan reserves over 16,200,000 squrare meters, OMI reserves, Gatori reserves, Cangord, Missi, Darban Chah and Max G White.

UN geologist Dr RH Sletto discovered all these reserves and informed the Pakistan government that feasibility studies can lead to acquisition of gold, copper and other precious metals from these reserves on a large scale.

According to experts, if Pakistan focuses on the development of infrastructure, technical expertise and manpower, it can get precious metals from these places for hundreds of years.

Riaz Haq said...

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.
---

Riaz Haq said...

Here's an interesting Op Ed warning Obama about possible loss of Pakistan to Chinese influence:

The United States and Pakistan are becoming increasingly divided over the fight against the Taliban in neighboring Afghanistan. There are strong elements in Pakistani intelligence (ISI) who openly back the Taliban. And there is deep resentment against the United States for drone strikes and attacks against Taliban sanctuaries in Pakistan. Now the Pakistani government is warming up further to China in the hopes of counterbalancing US strength in the region. Pakistan has already invited China to deploy 11,000 troops in their country. A high-ranking Chinese PLA delegation visited the Pakistan-Afghan border last year. At the same time, Pakistan is pushing for the Chinese to become more heavily involved in Afghanistan and they are actively buying Chinese weapons, aircraft and ships.

The fate of Pakistan matters not just because of how it will affect the fight against radical Islam. It also matters because Pakistan has nuclear weapons. And China is the source of nuclear reactors for Pakistan. Were Pakistan to move into firmly China’s orbit, it would be a big geopolitical win for Beijing. It would give the Chinese a foothold in the Middle East. It would give Pakistan a protector, with China providing cover much as it already does for North Korea. And we all know how loose the leash is for Kim Jung Il. Hello, but do we really want a nuclear-armed Pakistan where we have little or no influence?

The Obama Administration needs to stand tough and firm before we lose Pakistan to China.

Riaz Haq said...

Pakistan Petroleum is seeking tenders to develop oil and gas resources in Pakistan, according to Oil Voice:

Exploration in these licenses is expected to convert conventional and unconventional hydrocarbon resources in to reserves. There are stratigraphic traps, tight gas, shale gas etc.
----------
Dera Ismail Khan Block Overview:
The block lies in the Suleiman Foredeep with Sargodha High in the East, Khishor & Marwat Ranges in the North, Suleiman Foldbelt in the West and the Zindapir anticlinorium in the South. The development of Suleiman Foredeep is related with an uplift of the Suleiman Range, which is believed to be related to early and late Tertiary inversion of extensional and trans-tensional basins along the northwest margins of the Indian continental plate.
-------------
The block contains the stratigraphic play at Eocene and Paleocene levels. The Sembar Formation (Cretaceous) is the proven source rock in the nearby Dhodak & Salsabil Gas Fields, which lies in the Gas window in the West of D. I. Khan block. The primary reservoir targets are the Stratigraphic pinch out of Habib Rahi Limestone (Eocene) and the truncations of Lower Ranikot Formation (Paleocene). The Secondary target is the Pab Sandstone (Cretaceous). The seal is comprised of Intra Eocene Shales and the Shales of Chitarwata Formation (Oligocene) above the Base Oligocene unconformity. The Lower Ranikot and Pab Sandstone are the proven Gas/Condensate reservoir in the Dhodak and Salsabil Gas Fields.

The Kamiab-1 well (Amoco, 1974) drilled in the East encountered the significant Gas shows in the Lower Ranikot Formation.
--------
Sirani Block Overview:
The Sembar Formation (Lower-Cretaceous) is the proven source rock in the area. Sands of Lower Goru Formation (Lower Cretaceous) are producing in nearby fields and have good reservoir quality. Shales of Upper Goru & intraformational shales provide the seal. Tilted Faults Blocks are expected in the Block.
• Four leads identified on vintage seismic data. New seismic likely to yield more leads
• Proximity to the producing Badin Oil fields to the west
• Possibility of finding additional leads in southern marshy area where no seismic data has been acquired. Good shows encountered in some wells in the block
• Nearby existing infrastructure
• Low cost drilling operations as minimum problems are expected.
• Early production through Extended Well Testing (EWT)

Naushahro Firoz Block Overview:
The Naushahro Firoz block lies in a zone with a proven petroleum system from different reservoirs. The Zamzama gas condensate discovery (2.3 Tcf and 12 MMbo)) from Late Cretaceous Pab sandstone lies to the west and Sawan gas discovery (1.5 Tcf) from Lower Cretaceous Lower Goru sandstone lies to the East of the block. Sui Main Limestone (SML) of Eocene age is a proven reservoir in a number of discoveries (over 2 Tcf reserves) located in the north of the block. The reservoir quality of SML is also proven by the Sagyun-01 well drilled in the block and wells drilled in the surrounding area. One lead and a possibility of another lead identified at SML level on sparse vintage data.
-----------
Jungshahi Block Overview:
The Jungshahi block lies to the east of two gas discoveries. An untested surface lead is separated from a gas field by a broad syncline. The Block is close to the Kitchen area. Untested surface anticlines are present in the block. Proven reservoir rocks of Paleocene and Cretaceous are present. Significant gas shows have been observed in Lower and Upper Ranikot formations in the wells drilled in the block. The Block is located close to an existing gas pipeline / infrastructure and commercial hub at Karachi. Early production is expected through EWT.

Riaz Haq said...

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.

Jawed Iqbal said...

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.

Riaz Haq said...

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.


http://www.reuters.com/article/2011/06/26/pakistan-mining-baluchistan-idUSL3E7HQ02920110626

Riaz Haq said...

Here's India's Economic Times fretting about China-Pakistan growing collaboration in Gilgit Baltistan:

At a time when the distance between American and Pakistani priorities in the post-Osama period continues to grow, China is passionately vouching for Pakistan's entry into the Shanghai Cooperation Organization (SCO), which is seen as the upcoming Asian NATO . For some time now, China and Pakistan have aspired to create a regional alliance comprising the Arab countries, Central Asian Republics, Iran, Afghanistan and Turkey, and SCO could most likely help that dream come true.

But there is more to it than meets the eye. The lynchpin connecting these countries will be Gilgit Baltistan, a disputed region rivaling Serbia in area. Although constitutionally a part of India and bordering China's Xinjiang province, Afghanistan and Tajikistan, Gilgit Baltistan remains in Pakistani control since 1947.

The political uncertainty owing to India's claim to the region is especially worrisome for China, which currently depends on her southern neighbour for two reasons. Firstly, China uses transit routes of Gilgit Baltistan to reach Pakistan, Iran, Afghanistan and the ports along the coastline of Arabian Sea; and secondly, Chinese mining companies control the region's much valued mineral deposits of uranium, gold, copper, marble and precious stones.
---------------
But the person, making the headlines in local newspapers for criticizing foreign miners, is Advocate Shahbaz Khan, the chairperson of Metals, Minerals and Gems Association of Gilgit Baltistan , who has recently accused some individuals of acquiring 35 tonnes of certain mineral deposits from uranium-rich Karkalti village of Ghizer district, and smuggling to China.

Shahbaz is also critical of a uranium exploration company called Mohsin Industries, which has sought partnership with the locals as well as Chinese and Korean miners. Last year, Mohsin Industries was banned for attempting to smuggle uranium outside Pakistan. However, the company has recently been awarded exploration licenses in the uranium-rich areas of Sakwar, Minawar, Pari Bangla and Bonji, as well as parts of Shigar district and Skardo.

Locals accuse Mohsin Industries of bypassing standard procedures to obtain licenses. Mirza Hussain, a member of the Gilgit Baltistan Legislative Assembly (GBLA) from Nagar, believes that the owner of the Mohsin Industries receives special treatment due to his close links with the director general of the Federal Mineral Development Agency and Syed Mehdi Shah, who is currently the chief minister of Gilgit Baltistan. Hussain also suspects that its owner has established links with members of pro-Taliban groups such as Jamiat Ulema-e-Islam of Maulana Fazlur Rehman.

Today, Chinese miners and their affiliates are everywhere in Gilgit Baltistan especially in the Hunza-Nagar district, which is rich in uranium and certain minerals used in space technology. Some areas in upper Hunza, for instance, like the Chapursan valley have become no-go areas, where the Chinese continue their work on tunnel building and mineral exploration.

Riaz Haq 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 ...


http://online.wsj.com/article/SB10001424053111903791504576586391736854676.html

Riaz Haq said...

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.


http://www.commodityonline.com/news/Pakistans-dream-gold-project-still-a-long-way-away-42605-3-1.html

Riaz Haq said...

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.


http://tribune.com.pk/story/279462/reko-diq-reserves-mining-aspirant-serves-notice-to-provincial-government/

Riaz Haq said...

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.


http://www.dailytimes.com.pk/default.asp?page=2011\11\15\story_15-11-2011_pg5_1

Riaz Haq said...

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.

Riaz Haq said...

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....


http://www.tethyan.com/NewsCenter/PressReleases/TCCcommittedtotransparencyinRekoDiqdeal.aspx

Riaz Haq said...

Here's the latest from Dawn on Reko Diq license:

LONDON: Pakistan’s Balochistan province has rejected a mining lease application from Chilean copper producer Antofagasta and Canada’s Barrick Gold, raising questions over the future of their Reko Diq copper-gold project.

The two miners’ joint venture, Tethyan Copper, said last month it had filed a “notice of dispute” with the province over Reko Diq, after Balochistan government officials refused to meet the company’s executives or extend a deadline for a response to objections raised over the lease.

The mining lease application, for an area including the Reko Diq deposit, was submitted in February.

“Tethyan strongly believes that the Reko Diq project can contribute significantly to the development of a modern mining industry in Balochistan and will consider its options for further courses of action,” Antofagasta said in a statement on Wednesday.

Reko Diq – only the second significant project in the mineral-rich region and potentially a source of much needed inward investment for Pakistan – holds an estimated 5.9 billion tonnes of mineral resources, with an average copper grade of 0.41 per cent and an average gold grade of 0.22 grams a tonne.

The joint venture partners spent $200 million in 2006 buying the exploration licence from rival BHP Billiton.

Construction has been projected to cost some $3.3 billion, but that is expected to climb given rising costs faced by the mining industry, particularly in remote locations like Balochistan.


http://www.dawn.com/2011/11/16/pakistan-says-no-to-antofagasta-barrick-gold-mine.html

Riaz Haq said...

Here's a Reuters' report on Reko Diq status:

Pakistan's Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the country's mining sector, but it's beginning to look more like fool's gold to the companies involved.

Set in one of the most godforsaken places on earth, in a Baluchistan desert at the foot of an extinct volcano, Reko Diq was expected to yield revenues of at least $60 billion over the 56-year life of the mine.

Tethyan Copper Company (TCC), a joint venture between Chile's Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit in the ochre sand desert, where temperatures reach 130 degrees Fahrenheit in the summer. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year.

TCC says it never did get an explanation.

"It's been difficult to define what their actual issues were," Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. "We went back to them for clarification, as many of their issues are not covered in the Baluchistan Mining Regulations."

A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was "cheating" Baluchistan by under-valuing the worth of the copper and gold.

"They are the monopoly," the official said angrily. "They are the monopolists of the gold! They don't want to disclose the worth of the gold in Baluchistan."

The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Baluchistan government, meanwhile, has recently handed out exploration permits in the area around Reko Diq to new Pakistani and Chinese companies with no mining experience.

Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list.
-------------
The Baluchis have staged five uprisings since the province was incorporated into Pakistan in 1948, each time demanding more control over their natural resources.

Because of this, some analysts speculate that the powerful Pakistani army sees Reko Diq as a strategic resource and hopes to keep the mineral wealth out of the hands of the Baluchistan government, in case separatist political parties win provincial elections.

The army, acknowledging Pakistan's inexperience in large-scale commercial mining, might also want to bring China into the picture. China is the world's largest consumer of copper, has experience in large-scale mining, and has a record of building infrastructure in exchange for resources in developing countries.

"Everywhere I look, there are indications of Chinese interest in developing this area, more than Barrick Gold could," said Shamila Chaudhary of Eurasia Group.

The Chinese government-owned Metallurgical Construction Corp (MCC) already runs the nearby Saindak Copper-Gold Project, and submitted a counter-proposal to develop the Reko Diq mine during a visit to Pakistan by Chinese Prime Minister Wen Jibbao in December 2010. Pakistan media say MCC's proposal was similar to TCC's, but was sweetened with a larger share of the royalties going to the government. This was after TCC had submitted its feasibility report. MCC has not commented on those reports.

TCC is still hoping for a negotiated settlement outside arbitration, but Chaudhary thinks its parent companies are looking to cut their losses.

"From what I hear on the Barrick Gold side ... they're looking to come to closure on this issue," she said.


http://www.reuters.com/article/2012/02/17/us-pakistan-goldmine-idUSTRE81G06E20120217

Riaz Haq said...

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....


http://online.wsj.com/article/SB10001424052702303717304577274882847317306.html

Riaz Haq said...

Here's a Daily Times Op Ed on oil and gas reserves in Balochistan:

Khattan oil would be more valuable to the railway now than it was formerly. As fuel it was worth not more than 1½ times in weight to Khost coal and so could not possibly compete, but it was mainly as a possible substitute for pitch, the agglomerate used in fuel briquette manufacture, that it is to be now considered. Borings were also commenced in 1891 at Pir Koh near Spintangi, but were abandoned after they had reached a depth of 560 feet as no signs of petroleum were discovered. Gypsum occurs in considerable quantities near Khattan and Tung near Spintangi.

Another detailed, modern, scientific seismic survey was conducted in the mid-1990s, which proved the presence of tremendous gas and oil deposits across Balochistan, including the Marri Bugti areas, near the Quetta Zargoon belt. There are proven big gas fields, very good quality and at a large scale, explored near Barkhan at Jandran in the 1970s, and only require to be linked to the Dera Ghazi Khan pipeline. Oil also has been found at Kingari District Loralai and it needs to be pumped out. In Dera Bugti near Sui three more gas fields with very big deposits; all three estimated to hold about ten trillion cubic meters, have been explored very recently. According to reports, all proven explored gas is estimated to be about 20 trillion cubic meters, whereas Pakistan requires 700 million cubic feet and is clamouring to get it from Tajikistan, Turkmenistan, Iran or Qatar.

It is also reported that the cost of imported gas either from Central Asia, Iran or Qatar would be double of local available gas in Balochistan. The important point worthy of attention in any case is that if a pipeline is built to import gas from Central Asia, Iran or Qatar, it has to cross Balochistan. Now the question is, why is the local Balochistan oil and gas not extracted to meet Pakistan’s life and death energy crisis?
------------
The reports observe that this security assessment about shifting trends in the insurgency comes with the warning that the “unthinkable situation” may worsen, which could further aggravate if the political leadership does not wake up to the situation. One high security official in the briefing realises, “Balochistan is no longer a local issue. It has acquired the international limelight.” Now the main question is, whose is the policy failure in Balochistan, politicians or the use of force? If at all the political leadership wakes up to the situation today, what options are left to them? Recently, moderate pro-federation, former chief minister Sardar Ataullah Mengal said that the Baloch are pushed to a position of no return. In this background, the basic question under discussion is how to cope with the energy crisis. In any case, exploration of local Balochistan resources or the pipeline have to be laid across thousand of miles of the Baloch land.


http://www.dailytimes.com.pk/default.asp?page=2012\03\19\story_19-3-2012_pg3_4

Riaz Haq said...

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.


http://dawn.com/2012/04/11/reko-diq-project-area-to-be-declared-epz/

Riaz Haq said...

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.


http://paktribune.com/business/news/Pakistan-should-think-about-Reko-Diq-carefully-Thomson-9994.html

Akram said...

For those with misgivings about this project I would suggest the excellent analysis by Akhtar Ali, a Harvard Professsor.

http://forum.pakistanidefence.com/index.php?showtopic=92701

HopeWins Junior said...

@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..."

-------

Dr. Haq,

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.

HopeWins Junior said...

^^^HWJ Said:
"..Rare earths ..China..Japan.."

----

More Information on Rare Earths:
http://alturl.com/ogrrz

Riaz Haq said...

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.


http://www.dailytimes.com.pk/default.asp?page=2012\12\17\story_17-12-2012_pg7_16

Riaz Haq said...

Here's BR on PPL introducing new petroleum exploration technology in Pakistan:

A PPL statement here on Saturday said that developed by NXT Energy Solutions (NXT), a geophysical service company based in Canada, SFD is a proprietary cutting edge, eco-friendly airborne reconnaissance method to identify potential hydrocarbon traps and reservoirs in a time- and cost-effective manner, especially in unexplored on- and off-shore frontier regions with limited access and infrastructure.



It said that the SFD is expected to be particularly useful in the current energy scenario, warranting fast track identification of, and production from, relatively deeper, more complex reserves of hydrocarbons to bridge the supply-demand gap.



Welcoming the guests, PPL's Managing Director and Chief Executive Officer, Asim Murtaza Khan, underscored the increasing importance of deploying latest exploration technology to meet production and reserves replacement targets to address the current deficit and ensure future energy security. SFD technology has been successfully applied by leading oil and gas companies in North America, Colombia and other countries. PPL is proud to be the first company to apply the technology in Pakistan', he said.


http://www.brecorder.com/top-news/108-pakistan-top-news/98349-ppl-introduces-stress-field-detection-technology-in-pakistan.html

Riaz Haq said...

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


http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/pakistan-voids-gold-copper-lease-held-by-barrick-consortium/article6994959/

Riaz Haq said...

Here's WSJ on Reko Diq lease cancellation:

TORONTO—Pakistan's top court has declared invalid a lease that would allow a consortium that includes industry giant Barrick Gold Corp. ABX.T -1.67% to mine one of the world's richest deposits of copper and gold, a person familiar with the matter said.

Pakistan's Supreme Court made the ruling on Monday, the person said. The move adds further uncertainty to a project that has been beset by local squabbles.

The Reko Diq project is being run by Tethyan Copper Co., in which Toronto-based Barrick Gold and Chilean copper giant Antofagasta Minerals ANTO.LN -1.56% each own a 37.5% share. The remaining 25% is owned by the government of Baluchistan, the region of Pakistan where the mine is to be based.

The proposed plant could produce 600,000 tons of copper and 250,000 ounces of gold a year, according to industry estimates.

Last year, Tethyan filed arbitration proceedings against the Islamic Republic of Pakistan and the local Baluchistan government after officials refused to grant a mining lease to develop the $3.3 billion project.

Tethyan has already invested more than $220 million since 2006 in the project and completed a feasibility study to develop it. The project is slated to become the country's largest single foreign direct investment if it goes ahead.

Given the early-stage nature of the project, Barrick doesn't include Tethyan in statements of its reserves.


http://online.wsj.com/article/SB10001424127887323482504578227692948679694.html

Riaz Haq said...

Here's a Eurasia report on oil and gas in Pakistan's FATA region:

According to an OilPrice.com Energy Intelligence Report, Pakistan’s tribal areas are believed to have massive reserves of oil and natural gas—which Pakistani officials have suddenly become very keen to demonstrate. But this is a highly restive, war-torn area where one right move could make all the difference, and one wrong move could ignite a conflict with irreversible consequences.

For now, the area remains unexplored and it was only in 2008 when Pakistani geologists began to study the area in earnest, with the support of the local authorities. The results of this research were collected, processed and digitized in June 2012. The geologists discovered seven new oil and gas seepages during the mapping. The geologists also claim that 11 oil and gas exploration companies have already reserved 16 blocks in Fata.

Geologists say the area, bursting at the seams with gas, is poised to become a ‘new oil state’ whose production could rival Dubai’s in only five years.

The interest is evident from: 1) seventeen companies have initiated operations in Khyber, Orakzai, North and South Waziristan, Peshawar, Kohat, Bannu, Tank and Dera Ismail Khan), 2) Tullow has been active in Pakistan since 1991, but since 2008 it has sought to transfer its Asian licenses to focus on Africa and the Atlantic Margin, 3) other players include Mari Gas Company (Pakistan), HYCARBEX (part of American Energy Group ), Saif Energy (Pakistan), MOL Pakistan Oil and Gas, Orient Petroleum International (Ocean Pakistan/Cayman Islands), ZHEN (China), and others and 4) Oil and Gas Development Company (OGDC) of Pakistan is set to begin exploratory drilling in the area soon.

The report has also talked about Gwadar port. In terms of infrastructure, China has been the chief architect, and investor. China has already invested around $300 million in the deepwater Gwadar Port close to Gulf of Oman.

Construction began in 2002 and the goal was to make this port a transit hub for landlocked countries (Afghanistan and Central Asia) and to boost transit from the Persian Gulf to East Africa. China plans to invest a total of $1.6 billion in the port—so far it’s cost $200 million to build the first three berths, which can handle $2 billion in cargo annually.

Despite its capacity, cargo has been slow to move through this port, largely because it’s not connected to the rest of the country.


http://www.eurasiareview.com/19012013-tapping-into-pakistans-massive-oil-and-gas-reserves-oped/

Riaz Haq said...

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.

Riaz Haq said...

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.


http://newswatch.nationalgeographic.com/2013/11/25/chile-and-pakistan-a-missed-opportunity-for-mineral-relations-at-reko-diq/

Riaz Haq said...

Balochis 40% of #Balochistan's population. #BLA, #BLF, #BRA, #UBA 3-4K fighters fighting #Pakistan are deeply divided http://shar.es/FdNz1