Reko Diq to get an investment of $7b from Barrick Gold

• Barrick Gold seeks legal cover from Parliament and review from SC.
• Framework agreement to be finalised after settlement of pending issues.
• Company's visiting president says there will be 50:50 shares among Barrick Gold Corporation and Pakistani authorities.

ISLAMABAD: After resolving disputes with Pakistan amicably, Barrick Gold Corporation’s visiting Chief Executive Mark Bristow has said that they plan to invest approximately $7 billion in Reko Diq mines to develop gold and copper in two phases.

The company has sought legal cover from Parliament and a review from the Supreme Court of Pakistan and after the settlement of pending legal issues, the framework agreement will be finalised with Pakistani authorities.

“There will be 50:50 shares among the Barrick Gold Corporation and Pakistan’s state-owned enterprises (SOEs) and Balochistan government, respectively. There will be a total $4 billion investment in phase 1 and $3 billion in phase 2. The production will start from the fiscal year 2027-28. The International Finance Corporation (IFC) will provide risk insurance for execution of the multi-billion dollars projects in smooth manner,” Barrick Gold Corporation’s visiting President and CEO Mark Bristow said while addressing a news conference Monday.

He said that the long-term view of 40 years requires stability and in the wake of changing political realities, they require legal cover because they are dealing with the state and not with any specific political individual.

"We need [a] proper agreement to move ahead," he said.

Bristow said that security is a big challenge but they are familiar with work in other parts of the world. The people of the area and Balochistan will be our stakeholders at first stage because the company will provide them ample opportunities.

He said that feasibility studies were underway but there were estimates that around 200,000 billion of copper per year and 400,000 tons of gold could be found from Reko Diq. He said that they were expecting that pending legal requirements would be fulfilled soon, including a review from the Supreme Court of Pakistan. There has been no substantial disagreement on any issue between the two sides, he made it clear.

He said that the company would provide employment to Pakistanis and people belonging to Balochistan, as in construction phase they would employee 7,500 and in operation phase they would provide employment to 4,000 workforce. 

He said that there was difference this time as earlier the litigation occurred but when he took over the company he had asked the Pakistani authorities in 2019 to resolve this issue in a constructive manner where there should be a win-win for both sides. Now the share of Pakistani side stood at 50% whereby the Balochistan government would start getting royalty as in first they would get $5 million, second year $7.5 million and then until completion of project $10 million per year. He said that there would be co-financing from IFC and Export-Import Banks (EXIM) for execution of project.

'Committed to developing world-class mine'

According to statement issued by the Barrick Gold Corporation Monday, Finance Minister Miftah Ismail and Bristow said after their meeting that they shared a clear vision of the national strategic importance of the Reko Diq copper-gold project and were committed to developing it as a world-class mine that would create value for the country and its people through multiple generations.

Reko Diq is one of the world’s largest undeveloped copper-gold deposits. An agreement in principle reached between the government of Pakistan, the provincial government of Balochistan and Barrick earlier this year provides for the reconstitution and restart of the project, which has been on hold since 2011. It will be operated by Barrick and owned 50% by Barrick, 25% by the Balochistan Provincial Government and 25% by Pakistani state-owned enterprises.

The definitive agreements underlying the framework agreement are currently being finalised by teams from Barrick and Pakistan. Once this has been completed and the necessary legalisation steps have been taken, Barrick will update the original feasibility study, a process expected to take two years. Construction of the first phase will follow that with first production of copper and gold expected in 2027/2028.

“During the negotiations the federal government and Barrick confirmed that Balochistan and its people should receive their fair share of the benefits as part of the Pakistan ownership group,” Bristow said.

“At Barrick we know that our long-term success depends on sharing the benefits we create equitably with our host governments and communities. At Reko Diq, Balochistan’s shareholding will be fully funded by the project and the federal government, allowing the province to reap the dividends, royalties and other benefits of its 25% ownership without having to contribute financially to the project’s construction or operation. It’s equally important that Balochistan and its people should see these benefits from day one. Even before construction starts, when the legalisation process has been completed we will implement a range of social development programs, supported by an upfront commitment to the improvement of healthcare, education, food security and the provision of potable water in a region where the groundwater has a high saline content.”

Reko Diq development represents largest direct foreign investment in Balochistan: Miftah

The finance minister said the development of Reko Diq represented the largest direct foreign investment in Balochistan and one of the largest in Pakistan.

“Like Barrick, we believe that the future of mining lies in mutually beneficial partnerships between host countries and world-class mining companies. The Reko Diq agreement exemplifies this philosophy, and also signals to the international community that Pakistan is open to business,” he said.

Subject to the updated feasibility study, Reko Diq is envisaged as a conventional open pit and milling operation, producing a high-quality copper-gold concentrate. 

It will be constructed in two phases, starting with a plant that will be able to process approximately 40 million tons of ore per annum which could be doubled in five years. With its unique combination of large scale, low strip and good grade, Reko Diq will be a multi-generational mine with a life of at least 40 years. 

During peak construction the project is expected to employ 7,500 people and once in production it will create 4,000 long-term jobs. Barrick’s policy of prioritising local employment and suppliers will have a positive impact on the downstream economy, the statement concluded.

Originally published in The News