Reko Diq project: Firm open to foreign audit, court told
ISLAMABAD: The Tethyan Copper Company (TCC), which is exploring gold and copper deposits in Balochistan, has welcomed the idea of inviting international auditors to scrutinise the project’s cost estimated by it.
“Being in business for years we cannot understate or overstate on the actual projections because by doing so we run the risk of finding it soon by international lending banks and eventually withdrawal of the entire funding,” TCC’s acting CEO Gerhard van Borries said in a presentation on the Reko Diq copper and gold porphyry project before a special bench of the Supreme Court here on Tuesday.
The bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Mohammad Sair Ali, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday is hearing a number of petitions challenging the award of the contract to the TCC – a Canadian consortium of Barrick Gold and Antofagasta Minerals – for exploring gold and copper in Reko Diq, a small desert town in Chagai district of Balochistan.
Mr Borries did not agree with the idea of establishing a full-fledged smelting process in Pakistan to refine raw ores, saying the specialised business would attract foreign investors only if the project was either expanded or more mining prospects in the vicinity of Reko Diq emerged.
“Countries like Chile and Brazil with large gold and copper reserves doing mining business for the past 50 years have not established such plants because it is much feasible to send the entire raw material to China, Japan, Korea or Germany than to set up a full-fledged cost intensive refining process,” he explained.
In response to the petitions, the federal government had recently suggested to the TCC to smelt the extracted ores inside the country, instead of sending it to China.
“Smelting of raw ores is possible for which the Balochistan government will have to commission the feasibility study, but the cost of smelting in China is much less than processing ores in Pakistan,” Mr Borries claimed.
He said the TCC had nothing to do with the smelting business. He explained that the TCC’s expertise was only in finding out what kind of process and technology was required to explore precious minerals or metals from a particular mine.
“The Reko Diq site in no way can be called exploring high quality mineral deposits because its value is only 80 per cent copper. The rest of 20 per cent (that is) gold is a by-product,” he said, adding that the total estimated operating profit over a period of time would be $25 billion, of which 52 per cent ($13 billion) would go to the Balochistan and federal governments in the shape of royalty, taxes and sharing of profit and 48 per cent ($12 billion) to the TCC.
Mr Borries said his company was ready to share with the Supreme Court its feasibility study on the project, but only in-camera. He said the Balochistan government had restrained the company from sharing the information even with the federal government.
He claimed that a huge amount had been spent on the study which dealt with the kind of cutting-edge technology and the processes needed to extract copper and gold through highly-skilled workers. It fell under the intellectual property right because sharing of the information could benefit competitors hugely.
“Our predecessors BHP Billiton, along with other foreign companies, ran away from the project site,” Mr Borries recalled. He said the TCC was staying because it had explored the opportunity through its experience.
He said that an initial investment of $3.3 billion was required to build a full-fledged infrastructure for the project, of which $220 million had been spent on exploration.
The amount for infrastructure, he added, was much higher than similar projects in other countries because it meant developing a whole lot of infrastructure like employing and training 11,500 local people, establishing a village for them, setting up a 160MW power plant, constructing a landing strip for shipment of sophisticated electronic equipment, building a 680km road to the Gwadar Port, establishing a water supply system, etc.
Raza Kazim, counsel for a petitioner from Balochistan, said the agreement with the TCC was void ab initio and shared with the court a similar agreement the Afghan government had signed with a company on Jan 11 this year for a gold project in Bagram province with a 26 per cent royalty rate. —Staff Reporter