MAC: Mines and Communities

Pakistan: Tethyan won't take "no" for an answer

Published by MAC on 2011-12-05
Source: The Tribune, Dow Jones

Barrick-Antofagasta file for arbritration over Reko Diq

Canadian mining company, Tethyan - co-owned by Barrick Gold and London-listed Antofagasat plc - has filed a case against Pakistan, after advice received from the Canadian High Commission.

Tethyan accuses the Pakistan authorities of breaching an existing agreement, by cancelling its permit to proceed with the  controversial Reko Diq gold-copper project in Baluchistan.

If the case proceeds it would be heard at the International Center for Settlement of Investment Disputes in Washington, or at the International Chamber of Commerce in Paris.

However, the company still hopes that "negotiations" will prevail.

See also: Baluchistan says "No" to Antofagasta/Barrick



TCC moves international court on Reko Diq

The Tribune (Pakistan)

30 November 2011

ISLAMABAD: The Canadian gold mining giant Tethyan Copper Company, ousted from Reko Diq by the Balochistan government, on Tuesday filed a case against Pakistan in an international court of arbitration "to protect its rights", a TCC spokesperson said.

Samia Ali Shah, Manager, Corp Communications for TCC in a written reply confirmed that TCC filed for international arbitration on Tuesday.

"We firmly believe that our feasibility study and MLA submission are in accordance with the Balochistan Mineral Rules 2002, and that there should be no regulatory or legal obstacle to the granting of the MLA. We have to initiate arbitral proceedings in order to protect our legal rights, but we remain open to meeting with the Government of Balochistan and its regulatory body to work towards an amicable, negotiated resolution to the dispute," she stated.

"We are disappointed we have not yet been given the opportunity to resolve this by negotiation," said Tethyan Chief Executive Tim Livesey in a brief statement to Reuters on Tuesday.

To push these negotiations, however, TCC is using diplomatic leverage. The Canadian mission in Pakistan is going to invoke the Pak-Australia Bilateral Investment Treaty (BIT) after rejection of the TCC application for grant of mining lease licence in Reko Diq, The News (a local newspaper) learnt reliably.

Saleem H Mandviwalla, Chairman Board of Investment (BOI), when contacted through telephone in Karachi, said, "Yes, the Canadian High Commission has conveyed us of using the option of Pak-Australia BIT to get resolve TCC dispute with GoB for leasing of mining licence."

When asked about the invoking of Pak-Australia BIT, Mandviwalla elaborated that Pakistan has 48 BIT agreements and TCC opted for it and they have the choice to use. The Canadian High Commission could not be reached for comments even after sending SMS to the media officer in Islamabad, Fariha, on her cell number.

The Canadians apprehend that the company will be deprived of its investment in exploration and this will constitute an expropriation of article 7 of Pak-Australia BIT," an official of the BoI familiar with the development told this correspondent but requested not to be named.

The Canadian High Commissioner in Islamabad can pursue under Pak-Australia BIT because the TCC is currently a joint venture of world's leading mining companies; Barrick Gold Corporation of Canada and Chile-based Antofagasta PLC and company's head office is situated in Australia, the same official maintained.

The TCC, previously owned by BHP of Australia, and the Government of Balochistan are partners under the Chagai Hills Exploration Joint Venture Agreement (CHEJVA) and it was originally signed between BHP and the Government of Balochistan in 1993.

Another official of the Petroleum Ministry told this correspondent, "The ministry only deals with the mineral policy while the leasing and other policy regimes are regulated by the provincial mineral departments."

However, he expressed ignorance about the meeting of Federal Minister for Petroleum Dr Asim Hussain with Canadian High Commissioner in Islamabad for resolving the issue amicably.

Tethyan Files Arbitration In US, France Over Pakistan Project

By Alex MacDonald

Dow Jones Newswires

30 November 2011

LONDON - Tethyan Copper Co. hopes to reach an amicable agreement in a dispute over rights to Pakistan's massive Reko Diq gold and copper project in the province of Baluchistan, its chief executive said Wednesday, but the company has also filed for international arbitration in two jurisdictions in order to protect its legal rights.

The government of Baluchistan rejected Tethyan's mining lease application last week after the company submitted a notice of dispute in response to failed attempts to meet with government officials to resolve outstanding objections over the application.

Tethyan, which is equally owned by Chilean copper miner Antofagasta plc and Canada's Barrick Gold Corp., Monday filed arbitration proceedings in Washington and Paris in order to protect its legal rights should it fail to reach an amicable accord and need to seek compensation for lost revenues and investment in the project, CEO Tim Livesey told Dow Jones Newswires.

"We would like to talk with the government of Baluchistan and its regulatory body to resolve any outstanding issues regarding our mining lease application, but should we be forced to go down that road [arbitration], we would be prepared to seek compensation for investment in the project to date and loss of future profits," he said.

Tethyan, which owns 75% of Reko Diq, has invested more than $220 million in the project since 2006. According to the company's feasibility study, submitted in August 2010, the project is expected to generate $25 billion in profit after tax during the 56-year mine life of the project. About 52% of that profit is destined for the Baluchistan government, which owns 25% in the project, and the Pakistan federal government, in the form of dividends and royalties. The remaining 48%, or $12 billion, would be destined to the two partners of the joint venture.

Livesey declined to say how much the company would seek in terms of compensation but noted that an arbitration proceeding could take at least six months to initiate due to the lengthy process of selecting judges. An arbitration process also automatically freezes the transfer of any assets from one owner to another.

Meanwhile Tethyan decided to temporarily shutdown its exploration camp as it kick-starts the arbitration process. "We are mothballing the exploration camp because the arbitration process could take years," Livesey said. He added that voluntary layoff packages were offered to Tethyan's employees, many of whom already accepted. He noted that the company wasn't closing down the project but rather giving its employees the opportunity to seek other employment.

Tethyan filed for arbitration proceedings with the Pakistan federal government and the government of Baluchistan in the International Center for Settlement of Investment Disputes in Washington and at the International Chamber of Commerce in Paris.

Tethyan is pursuing arbitration with the Pakistani federal government on grounds that the rejection of the mining lease application constitutes a breach of an investment treaty signed between Pakistan and Australia, the country where Tethyan is incorporated.

In the case of the Baluchistan government, Tethyan is pursuing arbitration on grounds that the rejection constitutes a breach of Baluchistan's 2002 mineral rules. The government, for instance, said Tethyan failed to provide details about processing and smelting concentrate even though Tethyan's feasibility study dedicated about 1,000 pages to processing and the mineral rules make no mention of a requirement to smelt the concentrate.

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