Baluchistan objects to Antofagasta/Barrick venturePublished by MAC on 2011-10-18
Source: Reuters, Wall Street Journal
Pakistan's Balochistan provincial government has re-iterated its opposition to a major copper-gold project, being touted by UK-listed Antofagasta and Canada's Barrick Gold.
Among its objections are a claim that the two companies have failed to reveal the presence of economic resources of other minerals (including silver and molybdenum).
The government also says the companies cannot guarantee that value will be added by processing the metals within Balochistan.
Previous posting on MAC: Balochistan halts $3.5bn copper project
Baluchistan objects to Antofagasta/Barrick venture
By Zeeshan Haider
22 September 2011
ISLAMABAD - Pakistan's Baluchistan province has objected to a mining lease being sought by a joint venture between Antofagasta and Barrick Gold, further delaying a major planned copper and gold project in the country's southwest.
London-listed Antofagasta and Canadian group Barrick Gold are partners in the Tethyan Copper Co (TCC) joint venture which has a 75 percent interest in the Reko Diq project and submitted an application for a licence in February.
Samia Ali Shah, a spokeswoman for TCC, which has been meeting Pakistani officials in recent months in the hope a decision would be reached in September, said Baluchistan had raised "observations" to its application for a mining licence.
"We have been asked to reply to the observations raised by the government of Baluchistan within 30 days," she said.
A Baluchistan official who asked not to be named confirmed provincial chief minister Nawab Mohammad Aslam Raisani had raised "objections" to the granting of a licence.
"The TCC was served the notice of objections yesterday (Wednesday)," he said.
Antofagasta and Barrick spent $200 million in 2006 buying the exploration licence from rival BHP.
Second Major Project
Reko Diq -- which will be only the second significant project in the mineral-rich region, along with smaller, Chinese-operated Saindak -- 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 per tonne.
The $3.3 billion project has faced difficulties since last year when Baluchistan said it would cancel the project amid growing anger over outsiders exploiting natural resources in Pakistan's biggest and poorest province.
Baluchistan was initially barred by Pakistan's supreme court from giving approval until a separate investigation over the awarding of the concession to TCC was over. In May, the court said the provincial government could decide on the lease.
If approved, the Reko Diq will mark the largest foreign direct investment into Pakistan mining and a major investment in Baluchistan, which TCC said could transform the region. At its peak, it is likely to employ 11,000 people.
Separatist guerrillas in Baluchistan, on the border with Afghanistan and Iran, have for decades been fighting a low-level insurgency for control of provincial gas and mineral resources, which they say are unfairly exploited by the country's richer and more powerful provinces.
The project is expected to produce 200,000 tonnes of copper and 250,000 ounces of gold per year. The start of production has been pushed back one or two years from the original 2015 date. (Additional reporting by Gul Yusufzai; Editing by Augustine Anthony and David Cowell)
Pakistan Province Questions Tethyan Mine Project
By Owais Tohid and Alex MacDonald
Wall Street Journal
22 September 2011
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 relate to the Reko Diq copper and gold project, which is 75% owned by Tethyan Copper Co. Pakistan Ltd., a joint venture that is equally owned by U.K.-listed Chilean copper miner Antofagasta PLC and Canada-based Barrick Gold Corp. The remaining 25% is owned by the government of Baluchistan, a southwest province of Pakistan that borders Iran and Afghanistan.
A senior official in the government of Baluchistan, who has been dealing directly with the project but declined to be named, said the government had sent its observations on the Reko Diq mining-license application and feasibility study to Tethyan, in accordance with the province's mining rules. He termed the feasibility study as "incomplete."
The official said Tethyan's study focuses on copper and gold "but we believe that there are other precious minerals like silver and molybdenum at Reko Diq as well." Large gold and copper deposits frequently contain other metals and minerals.
The chief minister of Baluchistan, Nawab Aslam Raisani, voiced similar concerns in an exclusive interview with The Wall Street Journal almost a fortnight ago. "There are other rare minerals" in the deposit, he said.
He said his government will only grant a mining license to Tethyan if Tethyan agrees that concentrate produced from the project will be sold to and refined by the province. Tethyan is willing to sell its concentrate to a third party at commercial rates since its owners aren't in the business of smelting, a person familiar with the matter said.
Mr. Raisani said he also wants to tweak Reko Diq's equity and royalty components to boost Baluchistan's profits and reduce its risks, although he didn't provide details during the interview. The senior Baluchistan government official also didn't provide any details.
Tim Livesey, the chief executive of Tethyan, confirmed receipt of the Baluchistan government's response. "The government of Baluchistan has raised some points that they want us to clarify and Tethyan will seek to respond to those points," he said.
The Reko Diq project could take about three years to construct and will be able to produce 200,000 metric tons (220,000 short tons) of copper and 250,000 troy ounces of gold from 600,000 tons of concentrate over a mine life span of 56 years.
The project is expected to start production sometime between 2016 and 2018, depending on when it gets its mining license approved and then secures the needed financing.