The proceedings and recent remarks of the Supreme Court (SC) of Pakistan in the Reko Diq case have not inspired confidence in investors. They are hoping for more informed proceedings and a meritorious decision that serves development goals and projects Pakistan as a viable business destination.

Some former bureaucrats and economists advised the court to be mindful of the interests and aspirations of people in restive Balochistan. “No business can flourish in a hostile environment. It is critical for both investors and all tiers of the government to earn the goodwill of locals before initiating a mega project,” said a former federal secretary who served in Balochistan.

The apex court’s five-member bench, headed by Chief Justice Umar Ata Bandial, is currently hearing the presidential reference on the Reko Diq case to validate the proposed deal with the mining giant Barrick Gold.

“Not only the fate of multi-billion-dollar investment in resource-rich remote Chagi district of Balochistan depends on the SC decision but also the out-of-court settlement with the two partners of the joint venture Tethyan Copper Company-Barrick Gold and Antofagasta Minerals.

It is critical for investors and all tiers of the government to earn the goodwill of locals before initiating Reko Diq

“The deal gave a reprieve against the $11 billion penalty slapped on Pakistan by the International Centre for Settlement of Investment Disputes (ICSID). A ruling to annul the agreement would revive the penalty that Pakistan managed to avoid after painstakingly long and complicated negotiations,” a former government functionary in the know of Reko Diq affairs confided.

Sharing his input, a top gun in the former prime minister Imran Khan government warned: “The settlement calls for approvals of all clauses of the new agreement from Balochistan government, the federal cabinet and a nod from the Supreme Court of Pakistan by 15 December 2022. In case this fails to materialise, the ICSID award against Pakistan will be revived. We only paid Antofagasta Minerals; Barrick Gold claim was to be settled through the new agreement.”

Acknowledging the capacity gaps, the CJP has appointed three counsels Dr Farogh Naseem, Salman Akram Raja and Zahid Ebrahim, amicus curiae (an impartial adviser to the court in the case). Reluctant to comment on the merit of appointments, some commercial law practitioners pointed out several past court decisions in commercial disputes that leave much to be desired.

“It is embarrassing to read the judgments that the SC judges write in commercial matters,” a top lawyer commented, mocking the courts’ track record in such cases. “Often to hide their embarrassment, judges make silly comments in courts. The Pakistani Supreme Court is very good at signing on the dotted line. At the end of the day, they are likely to sign the draft of the judgment prepared by Barrick.” Sighting the sensitivity of the case, none of the relevant sources agreed to own their remarks.

Local mining companies are frustrated over being completely excluded from the mega mining project involving a leading mining company and the government but have yet to give up hope. They are using whatever little leverage they have for a stake, even if tiny.

According to information gathered from dependable sources, a local mining company National Resources Ltd (NRL), worked for over three years with former prime minister Imran Khan’s government to help them negotiate a deal with Barrick and Antofagasta. NRL lobbied for the local private sector to be made part of the deal instead of just the government and state-owned enterprises (SOEs) to keep a check on foreign investors through a proper and transparent process.

The government did not pay heed to NRL, and the project was divided with 50 per cent shares for Barrick Gold, 25pc for the Government of Balochistan and 25ps for SOEs, though they have no mining expertise to keep a check on foreign investors who will be the sole operator of the mine. Pakistani mining companies interested in the project include Engro, Lucky, Fatima, Mari Petroleum, NRL, etc.

When asked whether local mining firms see any scope of induction if the deal is to be finalised next month, a top executive of a local mining company said, “It’s a fictitious deadline to pressurise courts”.

“It is absolutely critical to have Pakistani private parties oversee the project. Else it would become another Saindak,” commented a mining expert hinting at possible exploitation of valuable resources.

Attempts to solicit the views of Kathy du Plessis, investor and media relations executive of Barrick Gold, did not yield results till the filing of this report. The relevant government ministers were approached, but they were probably too preoccupied to respond.

In March this year, a committee headed by former finance minister Shaukat Tarin that included Tethyan Copper Company Pakistan (Private) Limited shareholders, among others, had agreed to a framework for the settlement and revival of the Reko Diq project.

In 2013, the SC annulled the Chagi Hills Exploration Joint Venture Agreement to explore gold and copper in the Reko Diq region.

Published in Dawn, The Business and Finance Weekly, November 7th, 2022