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Wednesday, February 28, 2024

Reko Diq agreement: President Alvi files reference in Supreme Court

The reference has been filed in the SC on the advice of Prime Minister Shehbaz Sharif after the president approved the summary under Article 186 of the Constitution.

In a major development, President Dr. Arif Alvi, on the advice of Prime Minister Shehbaz Sharif, filed a reference in the Supreme Court in the Reko Diq case

According to the details, the reference has been filed in the SC on the advice of Prime Minister Shehbaz Sharif after the president approved the summary under Article 186 of the Constitution.

An opinion is sought from the apex court on the settlement agreement signed by the Government of Pakistan with an international mining company to dig out copper and gold reserves in the area.

Read the full story: Reko Diq alliance between Pakistan and Barrick: Evolving it as “world-class mine”

Earlier, the federal cabinet approved sending a presidential reference on Reko Diq case to the Supreme Court of Pakistan.

The Reko Diq agreement

To clarify, Reko Diq is an area in Balochistan famous for natural resource deposits such as copper and gold. In 1993, Australian mining company BHP Billiton and the Balochistan government signed an agreement known as “Chagai Hills Exploration Joint Venture Agreement (CHEJVA)” for the exploration and mining of copper and gold at the Reko Diq Mine.

As per the agreement, BHP would hold a 75 percent interest in the project while the government held the remaining 25 percent share on a joint-investment basis with a 2 percent royalty payment. In April 2000, BHP handed over its obligations to a little-known Australian company Mincor Resources, which was acquired by Tethyan Copper Company (TCC) in 2006.

However, the Balochistan government terminated the lease since it claimed that the company secured the lease in a non-transparent manner. By then, TCC already invested $220 million in Reko Diq by 2011 when Pakistan terminated its mining lease.

Read more: The Reko Diq Mine project and its importance for Pakistan

TCC then took the case to the International Centre for Settlement of Investment Disputes (ICSID) as the company claimed $8.5 billion from the government in the form of foregone profit. In a 700-page ruling, ICSID awarded a US$4.08 billion penalty and $1.87 bn in interest to Pakistan.

The company also sought help from the World Bank arbitration tribunal in 2012. In July 2019, the World Bank slapped a whopping fine of $6 billion on Pakistan for denying the mining lease to TCC. However, Pakistan received a provisional stay after initiating annulment proceedings.

In March 2022, the then finance minister Shaukat Tarin announced that an agreement for the development of Reko Diq mine had been reached with a foreign company Barrick Gold, according to which Balochistan will have a 25% share.

Pakistan and TCC have agreed to divide shares with each side getting 50 percent of them, contrary to 25 percent shares for Pakistan in the previous deal.