Pakistan is threatening to cancel a $3 billion copper and gold exploration project by Canada’s Barrick Gold and Chilean miner Antofagasta in the country’s resource-rich south-western Balochistan province, citing the pressing need to “protect the country’s national interests”.
Speaking to the Financial Times, Shaukat Tareen, finance minister, said, “We can’t continue with this project in its present form. We have to protect our key national interests.” The provincial government of Baluchistan last month recommended the cancellation of the Reko Diq contract – a move that needs the federal government’s backing before it can be formalised.
The province of Balochistan has a 25 percent stake in the project, expected to cost $ 3 billion to develop, with the rest owned by the two mining companies since 2006.
Mr Tareen’s comments is likely to upset the few foreign investors still prepared to venture into the strife-ridden south Asian country but the government wants to avoid selling valuable assets at a throwaway price.
The minister said raw copper extracted from the Reko Diq site in Balochistan would earn between $40 billion to $50 billion in the next 25 to 30 years. He argued that Pakistan would earn ten times the amount if the copper was processed and sold in a refined form. “Why should they (the investors) take our raw material for processing to a third country and then make huge profits?”
A senior official in the provincial government of Baluchistan said that sales from the site could jump to $1,000 billion in the next 25-30 years if earnings from gold and other precious minerals were included. The Reko Diq site holds up to 11 billion pounds of copper and 9 million ounces of gold reserves, according to the government.
The government of Pakistan’s president Asif Ali Zardari has been trying to pacify armed militants in Balochistan, by offering incentives such as more money for social services and larger representation for people from the province to high-level government positions. A key contentious issue remains a deep sea port developed with China’s financial assistance at Gwadar – once a dusty fishing town on Balochistan’s Arabian sea coast. Nationalists from Balochistan have repeatedly demanded the revenues from Gwadar to be given to the province rather than shared with the federal government.
This follows a long-standing demand by Baloch nationalists for billions of dollars in payments from the federal government for outstanding royalties for the gas pumped from the province to other parts of Pakistan. courtesy financial times
