Govt may go for deal rather than wait for verdict on Reko Diq

Published October 13, 2014
Reko Diq hills.—File photo by Reuters
Reko Diq hills.—File photo by Reuters

ISLAMABAD: Arbitration proceedings between Pakistan and the Tethyan Copper Company (TCC) over Balochistan’s multi-billion dollar Reko Diq Copper and Gold reserves before the International Centre for Settlement of Investment Disputes (ICSID) — now in their final stages — are expected to conclude this weekend.

Sources told Dawn that the TCC has indicated its willingness to reach a negotiated settlement before the ICSID issues its verdict. Normally, the ICSID panel takes four to six weeks after the conclusion of the proceedings to issue a decision, which is then binding on both sides. In the interim, however, both sides have the option of reaching a mutually-negotiated settlement.

Also read: No compromise on Reko Diq project, says Malik

Pakistan’s legal team completed its cross-examination of TCC witnesses last week. The witnesses from both sides had already submitted written statements before the panel in London.


TCC and govt have four to six weeks to reach a settlement before binding judgment is issued


The TCC’s legal team will start questioning five key Pakistani witnesses on Monday and are expected to conclude their examination in four days. The witnesses include two former Balochistan chief secretaries; Fateh Mohammad Yaqoob Babar and Ahmed Bakhsh Lehri, Dr Samar Mubarakmand, Federal Director General Minerals Irshad Khokhar and former Balochistan advocate general Amanullah. Balochistan Chief Minister Dr Abdul Malik Baloch is leading the delegation.

Petroleum Minister Shahid Khaqan Abbasi and Attorney General Salman Aslam Butt are also expected to appear before the ICSID panel when proceedings are concluded on October 16 or 17 and attempt to negotiate a settlement of the case with TCC that exposes Pakistan to at least $400 million payments on account of investment cost and potential profits to TCC -- a joint venture of Antofagasta of Canada and Barrick Gold of Chile.

Pakistan has been advised by its international lawyers to remain open to a negotiated settlement, not only to save on arbitration costs at the next level but also as an opportunity cost to open up the huge natural deposit for investment with fresh investors.

There are indications that arbitration costs would be transferred to a future investor as part of a fresh agreement that should be better negotiated on the basis of certified mineral data produced by the TCC. Moreover, the award or negotiated settlement would enable the provincial government to invite fresh investment in the area, blocked for more than six years now.

Sources close to the project said given the fact that the investment agreement between the Balochistan government and TTC was not terminated on the basis of any proven corruption, Pakistan, at the very least, would be required to bear the cost of TCC’s expenditures for Reko Diq exploration and infrastructure development, along with value of the certified data, to be determined by the ICSID. Along with this, the TCC would also be entitled to a potential profit of the impugned Reko Diq Lease, although the main case for ownership of the deposit has no future, as was confirmed by the TCC.

The Supreme Court of Pakistan, under former Chief Justice Iftikhar Mohammad Chaudhry, had declared all agreements with TCC as illegal ab initio, on the basis of which, the company had also lost a couple of cases in the international court of arbitration. The apex court had also declared invalid the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), the initial 1993 exploration agreement between the Balochistan government and Australian mining group BHP from whom TCC had purchased Reko Diq exploration rights.

“The CHEJVA, dated 23.07.1993, is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1882, etc., and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est,” the court had ruled.

Under an agreement signed during the leadership of former President General Pervez Musharraf, TCC was granted exploration and development rights over H14 block of Reko Diq in the Chagai Hills for about 60 years at less than a billion dollar return to Balochistan. Mineral Reserves in the block are roughly and widely estimated to be between $150 billion and $3 trillion. Certified data produced on the completion of TCC’s exploration for professional estimation are still a secret.

Published in Dawn, October 13th, 2014

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