October 24, 2020

Reko Diq Gold Mine- A Billion-Dollar Secret: All You Need To Know About Reko Diq Case

Charcha for Pakistani Gold Mines

Reko Diq is a Balochi word which means sandy mountains. It is a desert town in the remote Chagai Hills, in the Chagai district of Balochistan and squeezed within 100 miles of Pakistan’s western borders with Iran and Afghanistan.

It is present in the Tethyan belt, which is known as a source of rare metals. The tethyan belt extending from Turkey to Romania and then by moving through Iran, it reaches Pakistan, Afghanistan. In the end, it connects to Papua New Guinea. To cut the long story short, it connects Europe to Pakistan. It is extremely famous for its mineral wealth. It has huge deposits of copper and gold as it lies at the top fifth position in the world with respect to these reservoirs.

History of the agreement

In 1993, Balochistan Development Authority has signed an agreement with the US-based mining company named BHP Minerals (Broken Hill Propriety Company Ltd). This agreement is known as The Chaghai Hills Joint Venture Agreement (CHEJVA). The features of the agreement included 75% of the stake held by BHP and 25% of the stake and a 2% royalty will be of BDA in the venture.

Relaxations and assurances in the agreement

The Government of Balochistan has granted several relaxations to BHP including the exclusive rights to certain areas for mineral exploration. The provincial government has provided assurances on receiving the mining lease after the submission of its feasibility study. Most importantly, this agreement was approved by an interim government and headed by Brig (Retd) S.A. Rahim Durrani.

Different partners of CHEJVA

In 2000, BHP sold its stake in the Reko Diq mine to an Australian firm known as Mincor. It again sold its stakes, in 2006, to an Australian based firm Tethyan Copper Company (TCC). And TCC is owned by the British mining company of Antofagasta and Canadian mining company Barrick Gold. Both the companies have 50-50% stakes in this venture.

Maulana Abdul Haq Baloch filed a petition

In the same year, former MNA of Jamaat-e-Islami, Maulana Abdul Haq Baloch filed a petition against the agreement saying that the agreement was illegal and corrupt. Resultantly, the Balochistan High Court dismissed the petition. The public got to know about the CHEJVA agreement after this decision, which was only known to bureaucrats from Provincial and Federal governments.  

TCC submit its feasibility report and the application for getting a license of mining in 2010, but the Government of Balochistan rejected the support for the project. And rejected the application as well in 2011.

Mining Committee of Pakistan

The federal government with the support of the Balochistan government created its own mining committee headed by Dr. Samar Mubarakmand. A prominent nuclear scientist gave testimony in the court. He said that the mines of Reko Dik have reservoirs of worth hundreds of millions of dollars. Furthermore, he added that, with his expertise, he could carry out the extraction of copper and gold. On the 7th of January 2013, Supreme Court which was headed by Chief Justice Chaudhary Iftikhar gave its verdict against the TCC and declared the agreement invalid on the basis of corruption. But, the Supreme Court did not have the authority to make the final decision.

ICSID Decision

As per the Section 15.4.1 of CHEJVA, the authority belongs to the International Centre for Settlement of Investment Disputes (ICSID). TCC took the case to ICSID on the charges of damages and losses. Eventually, after the span of six years, ICSID ruled in support of TCC. After two years it declared that Pakistan has to pay the cost of $5.97 billion, in which $4.08 billion for penalty and $1.87 billion for denying a mining lease to a foreign country.

World Bank’s decision of 2020: A stay with condition

The stay has been granted by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). But, the stay comes with the bank guarantee condition that Pakistan would have to provide 25% of the $4.08bn penalty as a guarantee.

What Politicians and Media persons have to say about this decision?

In fact, the politicians and media personalities found this stay of six months a great success for Pakistan. However, the final decision will be announced in 2021.

Reko Diq Stay: A Way Forward

Furthermore, Asim Saleem Bajwa, Chairman CPEC and SAPM on Information and Broadcasting have also said that with this decision of World Bank is helping Pakistan in moving forward:

Importance of Reko Diq for Pakistan

Specifically, the PTI government considers it as a strategic national asset. Firstly, it has Pakistan’s largest gold reserves. Secondly, it can help our ever declining economy to get up again. According to the TCC website, the total mineable part is 2.2 billion tons, with approximately 10 million tons of copper and 13 million ounces of gold are available to be mined. But, the TCC geologists in the Society of Geologists report declared more reservoirs than this. So, there is a ray of hope that Pakistan will be able to extract gold and copper and this exploration will eventually, help in paying the debt of our beloved country.

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