MAC: Mines and Communities

Baluchistan says "No" to Antofagasta/Barrick

Published by MAC on 2011-11-21
Source: Globe and Mail, Reuters, Pakistan Tribune

Indian and Chinese miners "eyeing" Afghanistan

Resistance by Pakistan's Baluchistan provincial government to a mine proposal, submitted by UK-listed Antofagasta and Canada's Barrick, seems to have succeeded. See previous article : Baluchistan objects to Antofagasta/Barrick venture

Balochistan halts $3.5bn copper project

But this decision may open the way for Chinese companies to successfuly bid for what could be one of the region's biggest-ever mineral projects.

Meanwhile, Chinese and Indian outfits are reported to be among those "eyeing" billions of dollars of potential mineral wealth, across the border in Afghanistan.

See: US claims to have identified vast mineral riches in Afghanistan


Pakistan rejects Barrick-led group's bid for gold mine

By Graeme Smith

Globe and Mail

18 November 2011

Istanbul - Local authorities in the Pakistani province of Baluchistan refused to meet a Canadian-Chilean mining consortium for talks before rejecting a bid for one of the world's richest deposits of gold and copper, the company says.

The consortium, Tethyan Copper Co. Pakistan Ltd., (TCC) expressed its disappointment on Friday after the provincial government shot down an application for a mining licence at a remote site in the dry hills near the Afghan-Pakistan border, known as Reko Diq. Trouble with the application erupted earlier this year, when Chinese competitors pushed an alternate plan for what could become the biggest mine in Pakistan.

The latest statement from the consortium, which represents Toronto-based Barrick Gold Corp. and its Chilean partner Antofagasta, suggests that the problems ran deeper than previously understood. Communication apparently broke down between the mining group and the provincial authorities - not a good sign, because Pakistan's Supreme Court made clear this year that "this matter falls exclusively within the domain of the government of Baluchistan."

No matter how much influence the mining companies may exert in the capital, in other words, responsibility for the licence falls into the domain of a border province that is notorious for its poverty and lawlessness.

"The GOB [government of Baluchistan] has not responded to requests for meetings to resolve the issue, and the rejection notice compromises TCC's preferred route of resolution by negotiation," the company statement says.

If the rejection proves final, Chinese companies will become the front-runners to replace TCC. Metallurgical Corp. of China is already leading development of a smaller mine nearby at Saindak, and provincial authorities have previously said the Chinese are offering something they eagerly want: a processing facility that would handle some of the raw material inside Baluchistan.

Some local officials have long pushed for China's involvement for the promise of broad investment in infrastructure in the province, such as ore processing and exporting of finished copper products, which would provide a major boost to the area's economy.

The Canadian-Chilean group claims that the rejection of the mining licence application is a breach of Pakistani laws and a 1993 joint-venture agreement with the provincial government. TCC says it remains open to talking about the deal, however, and continued touting the potential benefits of the mine: "TCC strongly believes that the Reko Diq project can contribute significantly to the development of a modern, transparent mining industry in Baluchistan," the statement said.

The exploration licence for Reko Diq expired in February and the consortium had been waiting anxiously for a mining licence since submitting a feasibility study - reportedly prepared by SNC-Lavalin Group Inc., of Montreal, at a cost of $220-million.

Estimated annual production in the first five years from Reko Diq could have amounted to 100,000 ounces of gold and 150 million pounds to 160 million pounds of copper. None of the assets were counted among Barrick's proven reserves.

Pakistan says no to Antofagasta-Barrick Gold mine


16 November 2011

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.

Reko Diq: Balochistan government refuses to grant license to Tethyan Copper

Pakistan Tribune

16 November 2011

Quetta - The Balochistan Mining Committee (BMC) has refused to grant a mining license to Tethyan Copper Company (TCC) for the Reko Diq project under Balochistan Mines Rule 2002.

The BMC, headed by director general Mines and Mineral Department Balochistan, was formed to examine the feasibility report of TCC on the Reko Diq project.

A senior official told Ou Sources that the Advocate General of Balochistan Amanullah Kanrani will submit a report provided by the BMC to the Supreme Court today (Wednesday). The report says that the feasibility report provided by TCC was incomplete.

When the AG was approached by Ou Sources, he confirmed that he had received the Balochistan government decision and will submit it to the supreme court. The court had earlier sought an explanation on details of the agreements between the Balochistan government and TCC.

TCC maintained that the feasibility report was completed and submitted to the Balochistan government earlier in August 2010 under an existing agreement between TCC and the government, the Chagai Hills Exploration Joint Venture Agreement (CHEJVA).

When TCC submitted the report, Balochistan was entitled as a 25% equity partner in the project, enabling it to profit additionally from the mine development and operations over and above the regular royalty and taxation payments. But later, on November 24 2010, the government of Balochistan had decided not to become a participant in the project.

Earlier, TCC had filed a notice of dispute (NoD) to seek more time to address the Balochistan government's concern over granting the mining license.

According to a Balochistan government official, TTC can appeal in the court against the decision; however, the Balochistan government reserved the right to refuse to grant mining license and had decided that we would not grant it.

TCC, a joint venture between Canadian mining giant Barrick Gold and the Chilean mining company Antofagasta, had earlier applied for a mining licence in February 2011 after finding that a substantial amount of minerals is present at Reko Diq.

Foreign powers eyeing $3 trillion Afghan resource spoils

By Andrew Topf

11 November 2011

While peace in Afghanistan still looks to be a utopian dream, AFP reports that developing nations like China and India are eager to make resource deals in the troubled country even before the guns fall silent:

While an end to the fighting seems remote for now, mining lots are being quickly parcelled out among Afghanistan's resource-hungry neighbours, potentially sparking a new "Great Game" for control of its battle-worn ground.

According to mining ministry documents seen by AFP, Afghanistan is planning to sell extraction rights for up to five mines every year until the departure of the last foreign combat troops in 2014 - a rattling pace, say experts.

According to AFP, future deals could include the huge Anyak copper mine south of Kabul, to which China won extraction rights four years ago; the 2-billion tonne Hajigak iron ore mine being bid on by India and Iran; and rail links that would open up Afghan trade with its neighbours.

By some calculations Afghanistan's resource sector could be worth $3 trillion.

The National Post reported in September that Indian firms are bidding billions for a contract to mine iron ore in a central district of Afghanistan:

"A consortium led by the state-run Steel Authority of India (SAIL) could invest up to US$6 billion (Dh22bn) in the mine, railroads and a steel plant in a race with China to lock in raw materials for two of the world's fastest-growing economies."

Also that month, China National Petroleum Corp. (CNPC) won a bid for an oil field in northern Afghanistan in the first contract for international oil production signed by the Afghan government for several decades, Reuters reported.

While concerns over security and the strong possibility that minesites could become a terrorism target have dissuaded mega-miners like Rio Tinto and BHP Billiton from investing in Afghanistan, Indian and Chinese companies have shown strong interest in the war-ravaged country.

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