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Reko Diq contains no strategic mineral other than gold and copper, SC told

Reko Diq contains no strategic mineral other than gold and copper, SC told

ISLAMABAD: The Reko Diq mining site in Balochistan’s Chagai district didn’t contain rare-earth elements or strategic minerals other than copper and gold, although the government would still benefit from them if they were ever found out, the Supreme Court was informed on Wednesday.

In-depth studies conducted at the cost of $240 million and spanning over 10 years suggest that the exploration site had no precious minerals other than gold and copper, the counsel for the Canadian company working on the mining project told the top court.

However, the proposed agreement on the reconstitution of the mining project still contained detailed provisions suggesting how to sell and distribute those minerals, explained senior counsel Makhdoom Ali Khan, who represents Barrick Gold Corporation, during a hearing of a presidential reference on the Reko Diq issue before a five-judge bench.

Barrick Gold ended a long-running dispute with Pakistan earlier this year and would now start to develop one of the world’s biggest gold and copper mining projects. The project was suspended in 2011 after Pakistan denied Barrick Gold and Chile’s Antofagasta a licence to develop it.

If such elements are discovered, govt can get hold of them free of cost, says Barrick Gold counsel

The counsel told the court that if elements other than copper and gold were found, the government would have the option to buy it from the smelter at the market price. However, in case any strategic mineral was excavated, Pakistan would be entitled to acquire such metal free of cost.

Elaborating on the expense details of the project, the counsel said the company would build a road from the project site to a nearby Nok Kundi town at its expense, whereas the government parties would maintain the existing roads and the new ones being built.

The company will take care of the property and the people working on the project, whereas the government will be responsible and pay for the security of the district, the province and the country.

All land acquired will be paid for by the project company, which will also finance the construction of a 680-kilometre-long slurry pipeline to move ores. On its part, the government will facilitate the process.

The counsel said the agreement with the government was a fair arm’s length transaction — a kind of deal in which all parties act independently and in their self-interest.

He added that the authority of the Balochistan cabinet to enter into negotiated agreements regarding mineral titles was constrained in several ways. Thus, any such negotiated agreement must pertain to an international obligation in the public interest and must be justified based on written reasons.

He said Barrick Gold had always been clear and had insisted that these negotiations should be conducted independently and impartially to avoid issues that arose previously.

The company had, therefore, insisted that the reasons for the decision of the Balochistan government be publicly made available and be placed on the record of the court, the counsel said, adding that Barrick Gold had requested the Supreme Court to issue a direction that these written reasons be presented to it before concluding these proceedings.

Need to strengthen legal system

Chief Justice of Pakistan (CJP) Umar Ata Bandial emphasised the need for retaining good legal advice by the government to carry out their international obligation “since our domestic jurisprudence is different from international jurisprudence”.

Justice Bandial also stressed the need to strengthen the legal system so that foreign investors have trust in the country’s legal system.

At this, the counsel recalled how Sri Lanka maintained 25 legal experts in their foreign office for international projects, and Mexican experts sat in the United States to advise their home country on foreign investments.

Later, Additional Attorney General Chaudhry Aamir Rehman tried to explain that the purpose and objective of a new proposed law — the Foreign Investment (Protection and Promotion) Bill 2022 — was to encourage and attract large-scale foreign investment to achieve sustainable economic activity and growth.

And that was why the president sought the top court’s opinion about whether the concessions or exemptions the government was giving to the investor for a long period met this objective.

The court, however, suggested that without a threshold for foreign investment, the Supreme Court could not endorse the legislation because it seemed to seek approval for an unbridled abuse of executive power.

Justice Ijazul Ahsan observed that unless the government put a general threshold highlighting specific areas and levels of investment for which the concessions could be given, the law would open Pandora’s box.

He said the court was concerned about the lack of control mechanisms, adding that the court understood why the concession was being given to Barrick Gold, but with respect to the others who might come in, the discretion of the government must be structured and controls well defined in the statute.

CJP Bandial observed that the lack of a mechanism in such matters has resulted in increased international borrowings without generating resources. Therefore, the legislators should ask for direction which promotes revenue collection.

He also wondered why the government had brought an investment dispute before the court when it could be resolved outside since the court answered only those questions that could not be resolved.

Mr Rehman, the additional attorney general, argued that there might be projects that did not require significant investment but were still essential in the national interest. He then referred to software and medical supplies like surgical masks.

Published in Dawn, November 24th, 2022

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