Khaleeq Nazar Kiani
This week amid a no-confidence move Government of Pakistan struck a deal with Barrick Gold to resolve the 11 years old Riko Diq issue. In a hurried cabinet meeting, the Government of Balochistan endorsed the Federal Government’s initiative agreeing to the agreements and decisions taken in the Apex Committee specially constituted for this purpose.
Riko Diq a small village in District Chaghi has a long history starting from 1992 when BHP Minerals (an American Company) established its first base camp for survey over there. In July 1993, BHP Minerals and Balochistan Develop-ment Authority signed a Chaghi Hills Exploration Joint Venture Agreement (CHEVJA) in the Governor House Quetta in an urgent meeting like this week’s events. The share distribution was 75% for BHP and 25% carried shares for BDA as Balochistan has no money to invest in the project. CHEVJA was altered at least twice to allow more exemptions/incentives to benefit the BHP Minerals. In the year 2000, BHP in-volves Mincore Resources (an Australian mining firm) which has created the TCC (Tethyan Copper Compan-y) for mining purposes. Government of Balochistan and BHP Minerals signed an agreement in 2006 to substitute TCC with BHP. In the same year, Antof-agasta (Chile mining firm) and Barrick Gold (Canadi-an mining firm) bought 100 % shares of TCC through their subsidiary company the Atacama.
Few individuals having strong links with the establishment challenged the CHEVJA in the Balochistan High Court and after losing preferred app-eal in the Supreme Court of Pakistan which declared the CHEVJA null and void. Interestingly, the Governm-ent of Balochistan deviated from its earlier stance taken in the Balochistan High Court and argued against the agreement in the Su-preme Court of Balochis-tan. TCC approached ICSID (International Cen-tre for Settlement of Inv-estment Disputes) and the International Chamber of Commerce (ICC) for arbitration. After many hearings spanning over 7 years, the ICSID announced the award in 2019 with the direction to Pakistan to pay US$ 4087 million with pre and post Award interests. The post Award interest was almost US$ 0.7 million per day. Pakistan requested temporary relief of stay order which was granted by ICSID.
Important features of the new agreement revealed in the press conferences/press release by the Government of Pakistan and Barrick Gold Company
- Pakistan will pay US$ 900 million to Antofagasta as an out-of-court settlement which opted to stay out of the Riko Diq Project.
- Barrack Gold will resume the work with a 50% share in the Riko Diq project a substantive incre-ase from 37.5% to 50%.
- Balochistan will get 10% free carried shareholding while an extra 15% after payment by the Fede-ral Government to Anto-fagasta.
- Government of Pakistan will own 25% shares in the project through its State-owned enterprises OGDCL, PPL, GHPL each having equal shareholding.
- All tax holidays by declaring the project as an Export processing zone.
- The operation and management control will be with Barrick Gold.
A very pertinent question that who is responsible for the international humiliation of Pakistan resulting second-biggest Award in the history of ICSID. Where is accountability?
The Generals and Judges are immune to civilian accountability even in civilian matters. It is an apartheid type of accountability no matter how strong is their organizational accountability set up; there should be one accountability system without any discrimination. For a long, NAB is investigating the Riko Diq case but sadly it is still pending, might be evidence leading to some immune personality/personalities. Unless a transparent investigation across the board is not done and responsible persons have not been held accountable these types of mishaps may occur in the future.
Balochistan and the new agreement
Some details that came out from the new agreement are disturbing for the common Balochistani who was thinking himself the owner of its resources. The ownership of the Riko Diq was not with Balochistan but with someone else who generously donated 10% free carried shares and for the remaining 15% shares Government of Pakistan has made the payment wit-hout which that 15% was not possible. It shows that even though being the own-er of the land and mineral r-esources the decisions were taken by the other forces.
Barrick Gold Company issued the press release stating that Barrick will be the operator of the project which will be granted a mining lease, exploration license, surface rights, and mineral agreement. Balochistan will have no say in Riko Diq just like the Saindak project and learned nothing from the past.
Apparently, the Government of Balochistan has violated its Balochistan Mining Rules and mining policy 2019 which clearly requires international competitive bidding for exploration of the mining area by the international company.
Some unanswered questions
- From whom and at what price Government of Pakistan has purchased the 15% shares for Balochist-an?
- How much Government Pakistan has paid for its 25% shares?
- US$ 900 million paid to Antofagasta as an out-of-court settlement is a lump sum amount of its 37.5% shareholding in the old agreement or more additional amount will be paid to clear all its liability.?
- On what conditions the shareholding of Barrick Gold Company has been increased from 37.5% to 50%?
The effective period of the new agreement will be December 2022 after that Antofagasta and Barrick Gold will be free to terminate the agreement. New legislation will be required to execute the new agreements.
The new agreements are not made public but Pakistan’s track record about the international agreements is very bad and it has lost almost all oversea litigation. Pakistan can not bear the burden of any new misadventure in the new international agreement.