Reko Diq fiasco: Govt must go for settlement with TCC
“It is right time and better option is to go for a settlement with TCC. At present, the country is facing a financial damage and has got support packages from friendly countries. It has also opted for a $6-billion bailout from IMF. In this situation,
Pakistan cannot afford to pay almost $6 billion damages.”
It was September 2009 when Pakistan government and Tethyan Copper Company (TCC), a Canadian and Chilean joint venture, got locked in a row over the multibillion-dollar Reko Diq copper and gold mining project
Tethyan Copper Company (TCC) has said that it was willing to discuss the potential for a negotiated settlement with Pakistan over an almost $6 billion damages case after winning a legal battle against Pakistan at an international arbitration tribunal.
It is right time and better option is to go for a settlement with TCC. At present, the country is facing a financial damage and has got support packages from friendly countries. It has also opted for a $6-billion bailout from IMF. In this situation, Pakistan cannot afford to pay almost $6 billion damages.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) has awarded about $5.9 billion in damages to TCC in arbitration claims it filed against Pakistan following the denial of a mining lease for the Reko Diq project in Pakistan in 2011. “We remain willing to discuss the potential for a negotiated settlement with Pakistan and will continue to protect our commercial interests and legal rights until the conclusion of this dispute,” said William Hayes, TCC’s chairman.
It was September 2009 when Pakistan government and Tethyan Copper Company (TCC), a Canadian and Chilean joint venture, got locked in a row over the multibillion-dollar Reko Diq copper and gold mining project. The Reko Diq project would have a turnover of over $60 billion over a period of 56 years.
Pakistan has a 15km belt of gold and copper deposits and with the help of these it can turn around the economy. The government should abandon the policy of litigation and frame a policy that can attract top companies of the world for capital injection into copper and gold mining projects.
The Attorney General for Pakistan (AGP) Office has issued PM Khan’s statement, making it the first official response to the $5.976 billion penalty imposed on Pakistan by the ICSID.
“The government takes note of the press release made by Antofagasta Plc, one of the parent companies of TCC, and of the statement by William Hayes, the Chairman of the Board of Directors of TCC, in which he expressed a willingness to work towards a negotiated settlement. The government welcomes this approach to work towards a mutually beneficial solution that works for both sides,” the AGP Office statement read.
Reiterating Islamabad’s commitment to its international obligations, the statement said: “Pakistan welcomes all foreign investors and assures them that their lawful rights, interests and assets shall always be protected. “The mineral resources in Reko Diq are the collective resource of the people of Balochistan and Pakistan. Pakistan is keen for development of this resource to ensure that the development needs of some of the poorest people on the planet are addressed.
“International tribunals are also urged to consider the implications of their decisions and the impact on development and poverty alleviation,” it added.
The TCC which Canadian gold firm Barrick and Chile’s Antofagasta Minerals control 37.5 percent each — is the largest foreign direct investment mining project in the country. The provincial government is also a sleeping partner in the Reko Diq project with a 25 percent stake.
Barrick and Antofagasta say the proposed plant in Chagai district could produce 600,000 tonnes of copper and 250,000 ounces of gold a year.
More than a decade ago, the group found vast gold and copper deposits at Reko Diq in Balochistan and had planned a hugely lucrative open-pit mine. But the project came to a standstill in 2011 after the local government refused to renew the consortium’s lease, and in 2013 Pakistan’s top court declared it.
Prime Minister Imran Khan has directed to form a judicial commission on a penalty of six billion dollars in the Reko Diq case.
The commission will investigate into how situation resulted in the penalty and why Pakistan was fined of the huge amount of money while the commission will also determine who incurred a loss to the national exchequer.
Attorney general office has issued a press release in this regard according to which the international court announced the verdict containing several hundred pages while attorney general office and the government of Balochistan analyzing the legal and financial effects of the international court and the government of Pakistan considering all aspects of the matter and decide the future course with consultation.
The press release read that the government of Pakistan has right to use all legal options according to the international laws while the government welcomed the TTC company offer to resolve the issue through negotiation and also welcome all the international investors in the country.
According to the press release has an interest in the development of Reko Diq resources and sees the international agreements with seriousness being as a responsible state while legal rights, protection of interests will be ensured. The International Center for Settlement of Investment Disputes (ICSID) imposed a penalty of 5.8bn on Pakistan in the Reko Diq case.
In a 700-page ruling, ICSID awarded $4.08 billion penalty and $1.87bn in interest to Pakistan. The amount will be paid to Tethyan Copper Company (TCC). Tethyan Copper Company (TCC) had been granted license for god and copper mining at RekoDiq, area of Balochistan but the former chief justice Iftikhar Muhammad Chaudhry had cancelled the agreement with the company.
The company had filed a lawsuit against Pakistan at ICSID, claiming S11.43bn in damages in 2012. Sources privy to the matter said that Pakistan will soon challenge the verdict.
In 2013, a three-member bench of the Supreme Court, headed by then Chief Justice Iftikhar Muhammad Chaudhry had declared Reko Diq lease agreement null and void. The bench had given its verdict in favor of Balochistan government.
The short verdict had stated that the agreement under which Tethyan Copper Company (TCCP) had been given contract, had been cancelled.