Pakistan's Activist Judges Hurting Business and Investment

Organization of Pakistani-American Entrepreneurs (OPEN) Silicon Valley has just announced a panel discussion featuring Pakistan's former Chief Justice Iftikhar Chaudhry and former attorney general Munir Malik.

Pakistan's Ex-Chief Justice Iftikhar Chaudhry
This discussion is titled "The Pakistani Legal Code And How It Impacts Investors And Entrepreneurs". It is scheduled  for 10:15 AM at "OPEN Forum 2014", the organization's annual conference on Saturday, May 10, 2014, at the Santa Clara Marriott in Silicon Valley

If I were asked to moderate this panel, I would not treat it as an abstract discussion of how rule of law impacts investors and entrepreneurs anywhere in general. Instead, I would focus on how Justice Iftikhar Mohammad Chaudhry conducted himself and how his conduct affected the investment climate and the economy in Pakistan during his tenure as Chief Justice of Pakistan.

Foreign Direct Investment in Pakistan:

World Bank's data shows that foreign direct investment (FDI) in Pakistan reached a peak of over $5 billion (3.6% of GDP) in 2007 and then fell sharply in the wake of Justice Chaudhry's reversal of the privatization of Pakistan Steel Mills. FDI has essentially dried up and the Pakistan Steel Mills Corporation has accumulated losses over Rs. 100 billion in spite of multiple bailouts at taxpayers expense. It is currently operating at just 3% of capacity and its monthly payroll adds up to Rs. 500 million, according to Dawn.

FDI as % of GDP in Pakistan Source: World Bank

Canceled Privatization Deals:

Huge subsidies are being given at taxpayers' expense to Pakistan Steel Mills and several other state-owned enterprises which take resources away from more pressing needs for spending on education, health care and infrastructure. In fact, Pakistan Education Task Force Report 2011 reported that "under 1.5% of GDP [is] going to public schools that are on the front line of Pakistan's education emergency, or less than the subsidy for PIA, Pakistan Steel, and Pepco."

Speaking at a recent international judicial conference in Islamabad, Dr. Ishrat Hussain, current dean of the Institute of Business Administration and former governor of The State Bank of Pakistan, said there has not been a single privatization deal in Pakistan since the Supreme Court's 2006 decision voiding the steel mill transaction.

Dr Hussain said that despite fulfilling the legal requirements, the fear that the country’s courts may take suo motu notice of the transaction, and subsequently issue a stay order, deters businesses from investing in Pakistan, according to a report in The Express Tribune. “A large number of frivolous petitions are filed every year that have dire economic consequences. While the cost of such filings is insignificant the economy suffers enormously,” he added.

Crucial Projects Delayed:

Among other projects, Dr. Hussain particularly cited Reko Diq and LNG projects which could not proceed because of judicial activism of Pakistan Supreme Court judges.

The lack of progress on liquefied natural gas (LNG) deal has exacerbated Pakistan's energy crisis. It would have brought in 400 million cubic feet of gas per day to bridge the growing supply-demand gap now crippling Pakistan's economy.

The invalidation of Reko Diq license to  Tethyan, joint venture of Canada's Barrick and Chile's Antofagasta, has turned away Pakistan's single largest foreign investment deal to date. The deposit in Balochistan was expected to produce about 200,000 tons of copper and 250,000 ounces of gold annually. Under the deal Baluchistan province would hold a 25 percent stake in the project, with Tethyan holding the remaining 75 percent.

Militants Released:

In addition to activist judges intervention in economic matters, there have also been many instance in which known militants have been released by Pakistani courts. Those released have then committed acts of terror which have also scared away investors, both foreign and local.

Summary:

Dr. Hussain closed his speech by pleading with Pakistan's judges "with all the humility and without sounding arrogant or offending anyone’s sensibilities, that economic decision are highly complex and its repercussions are interlinked both in time as well as space.”

I hope that this opportunity to question the former chief justice is not wasted by an adoring crowd asking him soft-ball questions at the OPEN conference on  May 10, 2014. It's important that we, including the honorable judge, do an honest assessment of our past mistakes to learn from them.

Related Links:

Haq's Musings

Shaukat Aziz's Economic Legacy in Pakistan

Saving Pakistan's Education, Steel Mill, Railway and PIA

Politics of Patronage Trumps Public Policy 

Iftikhar Chaudhry is no Angel

Musharraf Earned Legitimacy by Good Governance

Vindictive Judges Pursue Musharraf

Rare Earths at Reko Diq?

Comments

Riaz Haq said…
Here's an FT story on Pakistan plans to raise $2 billion through privatization:


Pakistan expects to raise at least $2bn by March next year through the international sale of shares in Pakistani energy and banking companies, according to the man spearheading the privatisation drive.
Muhammad Zubair, chairman of the privatisation commission, signalled the country’s return to global equity markets following what the government says is the end of a political crisis marked by weeks of demonstrations in the capital, Islamabad.


“There was uncertainty that the prime minister will be forced to resign, the parliament will be packed up,” he said, referring to the protests led by Imran Khan, the cricketer-turned-politician, and Tahirul Qadri, a moderate Islamic leader. “By mid-September, it was clear that the prime minister was staying and the parliament will remain intact.”
Demonstrators remain camped outside the parliament, but other political parties, including some opponents of Prime Minister Nawaz Sharif, have backed the government’s right to run the country until its five-year mandate expires in 2018.
Mr Zubair will share his message of returning political stability on Thursday when he meets potential investors at the start of a roadshow beginning in London to sell a 7.5 per cent stake in Oil and Gas Development Co. Analysts say the offer through global depositary receipts should raise more than $800m.
This will be followed by the offer of government shares in the privately run Habib Bank, which analysts said could fetch up to $1.2bn in the first quarter of next year. HBL was privatised in 2003 when 51 per cent was sold to the Aga Khan Fund for Economic Development.
Mr Zubair said a successful outcome of the two deals would build investor confidence and help pave the way for privatising other public sector companies. He said at least nine electricity distribution companies and six generating companies would be privatised.
Pakistan International Airlines, the lossmaking state-owned carrier would also be offered for sale. In the past week, Pakistani officials have said the government was planning to split PIA into two, offering its international operations to a Middle Eastern airline while selling ageing aircraft and domestic routes to a local investor.
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Mr Zubair said the privatisation programme had the support of every mainstream political party. “We have met with 60 international equity funds. At least 90 per cent are convinced that political stability will remain in Pakistan . . . We now have to demonstrate we are back at work.”
Mr Sharif was elected prime minister for the third time in May 2013 and is seeking to revive confidence in an economy ravaged by corruption, poor management and attacks on official and civilian targets by Taliban Islamist extremists.
As the scion of a prominent business family in the populous Punjab province, Mr Sharif has advertised himself as a business-friendly leader eager to privatise lossmaking state groups.
But some analysts are sceptical about the likely extent of privatisation, warning that even a successful sale of OGDCL and HBL shares will not necessarily lead to the sale of struggling electricity groups.
“Getting credible foreign investors has historically proven difficult, especially when it comes to taking charge of public sector companies,” said Sakib Sherani, a former adviser to the finance ministry.
“These assets include those that are heavily overstaffed and have run in loss for a long time. The real test will come when these assets are put up for strategic sales along with transfer of management.”
Nor is political stability guaranteed, with Mr Khan and Mr Qadri repeating their demands for Mr Sharif to resign and trade unions likely to flex their muscles.

http://www.ft.com/intl/cms/s/0/029b3250-487a-11e4-ad19-00144feab7de.html
Riaz Haq said…
Next Up for Bid: This Shuttered Pakistan Firm, Pakistan Steel Mills Corp, Is Hard to Sell "Nightmare" http://bloom.bg/1TPJJse via @business

Investors see about two-thirds of the company’s 16,000 workers as unnecessary and most others as incompetent, Zubair, who heads Pakistan’s privatization program, said in an interview. Losses are running at roughly $20 million a month after the firm stopped operating in June because it couldn’t pay its gas bill.
“Finding a potential buyer for Pakistan Steel will be a nightmare because the company is a nightmare," said Zubair, 59, a former IBM executive. “I’ve always sold IBM products which is the easiest -- you’re always going with the best products or services. Now you’re going with one of the worst."
Time is running out for Pakistan to sell stakes in about 40 state-run companies to meet conditions for a $6.6 billion loan package it received from the International Monetary Fund in 2013. Progress is crucial for Prime Minister Nawaz Sharif to show the world that Pakistan is changing as it seeks to attract foreign capital to its financial markets.
Behind Schedule
Asked about Zubair’s “nightmare" comment, Pakistan Steel spokesman Syed Abdul Hafiz Shah said the losses began piling up after the 2008 financial crisis.
“Production is zero and liabilities can’t be paid, so obviously it’s difficult to run," Shah said. “It’s up to the government what it decides. We will have to follow it."
The privatization program is already behind schedule and facing resistance among unions and opposition political parties. Five transactions yielding $1.7 billion have been completed so far, and deadlines are being pushed back.
Zubair emphasized that the privatization push is still on track. He said that legal and political hurdles have delayed the timeline for asset sales by only about three months.
“This is a very critical stage," Zubair said at his office on Dec. 4. “This is just the stage where the next momentum will be seen by the people of Pakistan."
Strategic sales are more complicated and time consuming than capital market transactions, according to Mohammed Sohail, chief executive Topline Securities Ltd.
“The challenge is not the opposition parties or people opposing privatization," Sohail said by phone from Karachi. “The situation of these companies is so bad that it will be difficult to find a buyer."
Airline Bids
The three companies seen as benchmarks for success are Pakistan Steel, national carrier Pakistan International Airlines Co. and Faisalabad Electricity Supply Co., known as Fesco. All have been earmarked for privatization for more than two decades.
A presidential decree issued last week repealed the 1956 law setting up Pakistan Airlines, removing a hurdle to selling a 26 percent stake in the national carrier by August. China’s Hainan Airlines Co. is among companies that have expressed interest, Zubair said, adding that he’ll also seek bids from Emirates, Etihad Airways PJSC and Qatar Airways Ltd.
Fesco is profitable and will be the easiest of the three to sell despite having 9,000 outstanding legal cases and spotty financial documentation, Zubair said. He plans to unload a 74 percent stake by May, a sale he hopes will generate momentum for other power producers that are in much worse shape.
Political Decisions
Pakistan Steel is more complicated. Established in 1973 to supply a nascent manufacturing sector, the company stopped operating in June after gas supplies were cut off due to mounting debts, according to Shah, the company’s spokesman. Its workforce has shrunk to 14,000 as those who hit retirement age aren’t replaced, he said.
The cabinet decided to allow the government of Sindh province -- where Pakistan Steel is based -- to have the first shot at the 74 percent stake up for sale. If Sindh doesn’t express interest by Dec. 15, Zubair said he would write to the cabinet and look for other buyers.
Riaz Haq said…
#Pakistan Steel Privatization Stalled. No production. $3.5 billion debt. $5 million weekly loss http://reut.rs/1Q0axpZ via @Reuters

Once the producer of almost half the country's steel needs, state-owned Pakistan Steel Mills' (PSM) cavernous factory buildings on the outskirts of Karachi stand eerily still.

A 4.5 km-long (2.8 mile) conveyor belt that once carried coal from the nearby port is idle and blast furnaces rest silent. Birds build nests in Soviet-era equipment and stray dogs nap outside abandoned plants.

The company is for sale, but the government cannot find a buyer as it struggles to get privatizations back on track after a series of setbacks. A glance at PSM's finances may explain why.

The company has $3.5 billion in debt and accumulated losses, loses $5 million a week and has not produced steel at its 19,000-acre facility since June last year. That was when the national gas company cut power supplies, demanding payment of bills of over $340 million.

Like many Pakistani industrial firms, political meddling and competition from cheaper Chinese imports left PSM vulnerable.

They also undermine Prime Minister Nawaz Sharif's promise to the International Monetary Fund to privatize PSM by March, in return for a $6.7 billion national bailout loan agreed in 2013.

More than 14,000 jobs are at risk, while the Pakistani economy needs industrial growth to provide employment for a growing population.

"Nine billion rupees ($86 million) are immediately needed to see the company through to June," company CEO Zaheer Ahmed Khan told Reuters at its sprawling premises.

"It's really sad, it's a national asset. We are a nuclear power but what does it say that we can't operate a small steel mill?"

PRIVATIZATION PAINS

The government has injected $2 billion into PSM since a failed selloff in 2006, but cannot invest more capital, Privatization Commission Chairman Mohammad Zubair said.

"The best option is to privatize so that private sector buyers inject capital to upgrade the plant and machinery, buy raw material and so on," he said.

PSM is one of several firms Pakistan wants to sell to revive loss-making entities that cost the government $5 billion a year.

But it has struggled to restructure bleeding companies, including PSM and Pakistan International Airlines (PIA), and get them in shape for potential buyers.

This month, Pakistan shelved plans to privatize power supply companies, and officials said Islamabad told the IMF it would not meet deadlines to sell PIA or PSM.

While the loss-making firms are a drain on Pakistan's resources - around an eighth of the government's fiscal revenues last year - few fear Pakistan will slide into economic crisis.

The IMF has continued to release installments of its 2013 bailout package despite missed targets, and Pakistan is exploring other sources of support, like ally China which plans to invest $46 billion in a new economic corridor.

BACK IN THE USSR

Designed and funded by the Soviet Union in the 1970s, PSM was once the pride of the nation, showcasing a rapidly industrializing Pakistan with the means to produce a basic building block for the future.

Across the site, signs implore workers to believe steel will make Pakistan stronger. The firm's motto is "Yes, I can."

The facility has the capacity to expand to produce 3 million tonnes of cold and hot-rolled steel annually, against today's 1.1 million tonnes, CEO Khan said. At 3 million tonnes, PSM would become "very profitable".
Riaz Haq said…
Barrick #Gold, partner win dispute over $3 billion cancelled #Pakistan mining project at Reko Diq https://www.thestar.com/business/2017/03/21/barrick-gold-partner-win-dispute-over-cancelled-pakistan-mining-project.html … via @torontostar


https://www.thestar.com/business/2017/03/21/barrick-gold-partner-win-dispute-over-cancelled-pakistan-mining-project.html

The Reko Diq project sits in the restive province of Balochistan, which shares a border with Afghanistan and Iran, and was estimated to have cost more than $3 billion to develop.

Barrick Gold Corp. says an international trade tribunal has ruled in its favour on a dispute over a multibillion-dollar mining project in Pakistan.

The company, along with joint venture partner Antofagasta plc, took the Pakistani government to the World Bank’s International Center for Settlement of Investment Disputes after the country denied a mining lease for the Reko Diq copper-gold project in 2011.

Barrick says the tribunal rejected Pakistan’s final defence against liability on Monday and ruled the country violated terms of an investment treaty with Australia, where the Tethyan Copper Co. joint venture is based.

The tribunal will start proceedings to determine the size of the damages on March 22 with a ruling expected in 2018, Barrick said.

The Reko Diq project sits in the restive province of Balochistan, which shares a border with Afghanistan and Iran.

Barrick said the Reko Diq project was estimated to have cost more than $3 billion (U.S.) to develop and is one of the world’s largest undeveloped copper and gold deposits.

Riaz Haq said…
World Bank ruling against Pakistan shows global economic governance is broken


http://theconversation.com/world-bank-ruling-against-pakistan-shows-global-economic-governance-is-broken-120414


The International Centre for the Settlement of Investment Disputes was established in 1966 as part of the World Bank Group. The centre oversees arbitrations between foreign companies and states in a process known as the investor-state dispute settlement (ISDS).

ISDS is hugely controversial for a variety of reasons ranging from the secrecy of the hearings to the substantial costs associated with defending a claim and the ability of corporations to challenge health and environmental measures.

The case that cost Pakistan $5.8 billion did not revolve around such measures but rather the decision of a provincial government to backtrack on a sweetheart deal that had been offered to a mining firm, allegedly the result of corruption. Leaving the merits of the case to one side — it is difficult to assess the tribunal’s reasoning when the award isn’t public, after all — let’s take a closer look at the payout.

According to the mining company — Tethyan Copper, partially owned by Canada’s Barrick Gold — it spent US$220 million on exploration activities before things went south. One might argue that a fair outcome, if the government was solely to blame, would be for the award to cover these sunk costs. Instead it was more than 25 times that amount. That is because the tribunal chose to award the company “lost future profits” from the project.

Arbitrators don’t have crystal balls. They don’t know what the value of a mineral will be in a year, let alone 30 years. And they are lawyers, not market analysts. So how do they decide how much profit a firm would have made in a hypothetical alternative future?

The answer is, partially, that they rely on “experts” brought in by each of the parties to the dispute. These experts provide a best guess for what they think a project is worth. International law scholar Robert Howse calls this “junk science.”

Unsurprisingly, the state’s expert often provides a low-ball estimate for the value of a project and the investor’s expert gives an inflated value. Faced with this discrepancy, arbitrators will often choose to go down the middle and pick an arbitrary value. Tethyan Copper had originally sought more than US$11 billion in damages, suggesting that the tribunal in this case may have taken this approach.

Riaz Haq said…
#Pakistan's Golden Opportunity in #Balochistan. It has large deposits of #gold, #copper, #chromite, #bauxite (aluminum), iron ore, rubies, emeralds, topaz, mineral salt and coal located in Balochistan whose land area is the same as Germany's https://stratforshare.page.link/9EMa via @Stratfor

Highlights
Until Pakistan and the Tethyan Copper Co. settle their dispute, development of the country's Reko Diq gold and copper mine will languish, leaving a potentially abundant revenue stream dry.
Growing foreign investment in the sector will heighten the need for an effective dispute resolution mechanism.
Unless Pakistan implements the necessary reforms to attract foreign investment, the country's mining sector will not grow beyond its current 3 percent contribution to Pakistan's gross domestic product.

In a remote and arid corner of southwestern Pakistan, Islamabad has found itself embroiled in a difficult battle: a multibillion-dollar dispute with a global mining company over one of the world's richest untapped deposits of copper and gold. In July, the World Bank's International Centre for Settlement of Investment Disputes (ICSID) ordered Pakistan to pay $5.9 billion in damages to the Tethyan Copper Co., a joint venture between Canada's Barrick Gold Corp. and Chile's Antofagasta PLC. The ruling stems from a 2012 case that Tethyan lodged at the ICSID against Islamabad for failing to issue a license to mine gold and copper at the Reko Diq site.

The case draws attention to the rich resources of Balochistan, Pakistan's rugged southwestern frontier in which Reko Diq is located, as well as the tug of war between domestic Pakistani law and international arbitration in resolving investor disputes. But above all, the Reko Diq affair shines a light on Pakistan's numerous underground resources and its broader failure to exploit them — something that will continue to haunt the country if it is to fulfill Prime Minister Imran Khan's goal of rapidly ramping up foreign investment.

The Big Picture
Pakistan's Balochistan province plays a vital role in the China-Pakistan Economic Corridor because of its location on the Arabian Sea. It's also known for its resource riches that include an abundance of gold and copper deposits. But a longstanding dispute between the government and a mining company point to the need for reforms, without which mining's contribution to Pakistan's economy won't exceed 3 percent.


.....Its strategically located coastline faces vital shipping lanes in the Arabian Sea, including traffic destined for the Strait of Hormuz. As a result, Balochistan is the site of a variety of projects as part of the multibillion-dollar China-Pakistan Economic Corridor, which aims to create a direct overland route linking western China and the Arabian Sea through Balochistan's port of Gwadar. At the same time, however, Balochistan is also home to an insurgent movement that seeks independence from Pakistan on cultural and economic grounds; indeed, Chinese investment in Balochistan has exacerbated long-standing separatist grievances of foreign exploitation in the province.

The mine itself is located in Chagai, Pakistan's largest and westernmost district. According to Tethyan, Reko Diq contains 2.2 billion metric tons of mineable ore that could yield 200,000 metric tons of copper and 250,000 troy ounces of gold annually for over half a century. To extract the precious metals, the company must shovel, crush and grind the ore into a fine powder before converting it into a slurry concentrate for transport through a 682-kilometer underground pipeline to Gwadar. At the port, the company plans to dry the concentrate before loading it onto ships for smelting abroad.

But for all of its lucrative potential — $353 million annually at current gold and copper rates — the development of Reko Diq has stagnated because of the long-running legal battle that culminated in last month's $5.9 billion fine.

Riaz Haq said…
How #WorldBank Arbitrators Mugged #Pakistan . The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global #mining companies for an illegal #copper-#gold project that was never approved or carried out. Project Syndicate

by Jefferey Sachs

https://www.project-syndicate.org/commentary/world-bank-corrupt-arbitration-ruling-against-pakistan-by-jeffrey-d-sachs-2019-11


Thanks to the World Bank’s flawed and corrupt investment arbitration process, the rich are making a fortune at the expense of poor countries. The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global mining companies for an illegal project that was never approved or carried out.

NEW YORK – Wall Street hedge funds and lawyers have turned an arcane procedure of international treaties into a money machine, at the cost of the world’s poorest people. The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global mining companies – Antofagasta PLC of Chile and Barrick Gold Corporation of Canada – for a project that was never approved by Pakistan and never carried out.


Here are the facts.

In 1993, a US-incorporated mining company, BHP, entered into a joint venture (JV) with the Balochistan Development Authority (BDA), a public corporation in Pakistan’s impoverished Balochistan province. The JV was set up to prospect for gold and copper, and in the event of favorable discoveries, to seek a mining license. BHP was not optimistic about the project’s profitability and dragged its feet on exploration. In the early 2000s, it assigned the prospecting rights to an Australian company, which created Tethyan Copper Company (TCC) for the project.

In 2006, Antofagasta acquired TCC for $167 million, and sold half to Barrick Gold. Soon after the purchase, however, the original JV agreement with BHP was challenged in Pakistan’s courts. In 2013, the Pakistan Supreme Court found that the JV’s terms violated Pakistan’s mining and contract laws in several ways and declared the agreement – and thus the rights claimed by TCC – to be null and void.

Specifically, the Court ruled that the BDA did not have authority to bind Balochistan to the terms of the JV agreement; that it awarded the contract without competition or transparency; and that it had greatly exceeded its authority and violated the law by promising extensive deviations from the rules normally applicable to mining projects. Moreover, the JV failed to obtain, and even to pursue, many mandatory approvals from the state and federal governments, and BHP failed to undertake prospecting in a timely manner required under the mining law.

The Supreme Court’s decision came after years of public-interest litigation challenging the deal for violations of domestic law and the rights of the public. In the meantime, the BDA’s chairman was found to have conflicts of interest and to be living beyond the means afforded by his official salary, which in the Court’s words was tantamount to corruption.
Riaz Haq said…
How #WorldBank Arbitrators Mugged #Pakistan . The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global #mining companies for an illegal #copper-#gold project that was never approved or carried out. Project Syndicate

by Jefferey Sachs

https://www.project-syndicate.org/commentary/world-bank-corrupt-arbitration-ruling-against-pakistan-by-jeffrey-d-sachs-2019-11

In a normal world, the Court’s judgment would be respected absent proven evidence of corruption or other wrongdoing against the justices. But in the world we actually inhabit, the so-called international rule of law enables rich companies to exploit poor countries with impunity and disregard their laws and courts.

When TCC lost its case in Pakistan’s Supreme Court, it simply turned to the World Bank’s International Center for the Settlement of Investment Disputes (ICSID), in complete disregard of Pakistan’s laws and institutions. A panel of three arbitrators with no expertise in or respect for Pakistan’s legal system ruled that TCC deserved compensation for all future profits that it allegedly would have earned if the non-existent project, based on a voided agreement, had gone forward!1

Because there was no actual project, and no agreement for one, the arbitrators had no basis to say what terms – royalties, corporate taxes, environmental standards, land area, and other basic provisions – the governments of Balochistan and Pakistan would have set. In fact, disagreement on many of those terms had stalled negotiations for years.

Nonetheless, the ICSID panel arbitrarily decided that TCC would have had the right to mine 1,000 square kilometers, though the mining law forbade licensing such a vast area. The arbitrators ruled that TCC would have received a tax holiday for 15 years, even though there is no evidence that such a tax holiday was in the offing – or even legal. The arbitrators decided that TCC would have benefited from a royalty rate several percentage points below the mandatory statutory rate, though there is no reason why Pakistan would have set such a low rate.

The arbitrators also ruled that TCC would have met all environmental standards, or that the government would have exempted TCC from relevant requirements, though the mining area is in a desert region subject to extreme water stress, and the mining project would have demanded vast amounts of water. And the arbitrators ruled that to obtain the land needed for TCC’s pipeline, the government would have taken it from its owners and inhabitants.

The arbitration ruling is utterly capricious. An illegal project, declared null and void by Pakistan’s Supreme Court and never pursued, was found by the World Bank’s arbitration panel to be worth more than $4 billion to TCC’s owners, who had paid $167 million for it in 2006. Moreover, the tribunal declared that Pakistan must compensate TCC in full, with back interest, and cover its legal fees, raising the bill to $5.9 billion, or roughly 2% of Pakistan’s GDP. It is more than twice Pakistan’s entire public spending on health care for 200 million people, in a country where 7% of children die before their fifth birthday. For many Pakistanis, the World Bank’s arbitration ruling is a death sentence.

The ICSID is not an honest broker. One of the tribunal members in the TCC case is using the same expert put forward by TCC for another case in which the arbitrator is acting as counsel! When challenged about this obvious conflict of interest, the arbitrator refused to step down and the ICSID proceeded as if all were normal.

Thanks to the World Bank’s arbitrators, the rich are making a fortune at the expense of poor countries. Multinational companies are feasting on unapproved, non-existent projects. Fixing the broken arbitration system should start with a reversal of the outrageous ruling against Pakistan and a thorough investigation of the flawed and corrupt process that made it possible.
Riaz Haq said…
#Pakistan's #copper #exports to #China jump 400% to $550 million last year from $106 three years ago. https://swarajyamag.com/news-brief/pakistan-gains-from-sterlite-plant-closure-in-tns-thoothukudi-its-copper-exports-to-china-surge-400-per-cent via @swarajyamag

The Sterlite copper plant was ordered shut by the Tamil Nadu government on 28 May 2018 after protests demanding its closure turned violent.

In the violence that occurred on 22 May 2018, at least 13 persons were killed when police fired at protesters who turned violent and began damaging vehicles and properties.

The protests demanding the closure of Sterlite began in February 2018 after Vedanta launched works for further expansion of the Thoothukudi plant.

The Sterlite Copper plant contributed 40 per cent of the country’s total copper production when it was forced to shut down.

The Union government told Parliament earlier this year that the plant’s closure had led to a domino effect with imports rising and exports slipping.

In view of the Thoothukudi plant’s closure, India became a net importer of copper after 18 years. Imports more than doubled to 92,990 tonnes during the 2018-19 financial year, while exports dropped to a meagre 47,917 tonnes from 3.78 lakh tonnes.

A total of $605.20 million of precious foreign exchange was spent on imports during the 2018-19 financial year, while $684.02 million was spent during the April-September period of 2019-20 financial year.

According to Trading Economics, Pakistani exports of copper and articles increased over 66 per cent to $353.87 million in 2019 from around $210 million the previous year.

The News said that Pakistan increased its exports to China through one of its largest copper reserves, the ‘Reko Diq project’.

Reko Diq is a small desert area town in Balochistan province bordering Afghanistan and Iran. The “Reko Diq project” is under dispute since Anglo-Australian mining firm BHP discovered large deposits of gold and copper ores.

BHP sold its stakes to Tethyan Copper Company (TCC) but the Balochistan government failed to acknowledge it.

TCC went to the World Bank’s International Centre for Settlement of Investment Disputes and got $5.95 billion order in its favour.

However, the dispute is yet to be resolved.

China’s biggest copper industry player, Metallurgical Corporation of China, is looking forward to increasing Pakistan copper exports to $10 billion a year if the “Reko Diq project” dispute is resolved.

The Metallurgical Corporation is executing the Saindak gold-copper project in Balochistan since 1995.

The Saindak project produces 4.5 million tonnes of copper ores a year that helps smelt 13,000 tonnes of copper blister annually.

Since the resources are fast depleting at Saindak, the Chinese company is keen on taking over the operations at the ‘Reko Diq project’.

Beijing has asked Pakistan to call for international tenders for this and another project called H4, even as Islamabad sounds confident of increasing its copper exports to China.
Riaz Haq said…
#Pakistan government has wasted Rs58 billion in subsidies to #Karachi-based Pakistan #steelmill (PSM) since 2008 when ex Chief Justice Iftikhar Chaudhry blocked its #privatization by #Musharraf. The Express Tribune

The federal government has so far disbursed Rs58 billion to the Pakistan Steel Mills (PSM) through five bailout packages since 2008-09 to ensure survival of the country’s largest industrial unit, said a report compiled by the Ministry of Industries and Production.

The report was submitted to the Supreme Court on Saturday – days after the Economic Coordination Committee (ECC) of the Cabinet – the country’s top forum for economic decision making – decided to terminate all employees of the PSM which is not functioning since 2015.

A three-judge apex court bench, headed by Chief Justice of Pakistan Gulzar Ahmed is also going to take up on June 9 a slew of petitions filed against the ECC decision.

The ministry compiled the report to respond to a query of CJ Gulzar who while heading a three-judge bench on March 12 wondered why the PSM had employed thousands of people and how it was giving salaries to them when the mills was not operating for years.

The bench had also asked the federal government to attend to all PSM affairs immediately.

According to the report, the PSM owes Rs22 billion to the Sui Southern Gas Company –a state owned gas supply company – as principal amount. The National Bank of Pakistan (NBP) – a state owned bank – also extended a loan of Rs36.42 billion to the PSM and the loan is yet to be paid.

The report said the PSM stopped commercial function in 2015 without formulating any human resource plan of its 14,753 employees. The number of PSM employees declined to 8,884 in 2019 wherein 2,233 are officers and 6,651 are workers.

The government of Pakistan pays Rs355 million for monthly net salaries of the PSM employees and it doesn’t include the component of leave encashment, provident fund and gratuity.

So far the government has released Rs34.01 billion as net salaries to the PSM employees. The government has also made a payment of Rs1. 266 billion to deceased employees on compassionate grounds to mitigate suffering of families.

It said the government constituted Expert Group in 2018 with an object to invite professional recommendations for the revival of PSM.

The group primarily recommended that the government should establish a Public Private Partnership (PPP) to raising the necessary capital investment and obtaining technical expertise for revival of PSM.

It recommended that government should appoint a technical advisory consortium (TAC) to design an appropriate public-private partnership structure after ensuring a transparent international competitive bidding process to select a preferred bidder and propose and implement liability settlement plan.

The report revealed that a financial adviser has been appointed and working in collaboration with the Privatization Commission. The PSM board of directors on April 16 approved a Human Resource Retrenchment Plan that was presented before the ECC of the Cabinet.

The ECC directed the PSM to resubmit the proposal after reformulating it with consultation of the PSM management so that its scope could be extended to the maximum number of the PSM employees along with disbursement and payment plan.

Later, the PSM with the approval of its board of directors shared revised Human Resource Rationalization Plan to retrench 100 per cent workforce. The ECC on June 3 approved this plan with direction that payment to the PSM employees shall be contingent upon the decision of the apex court.

“The payment calculated by the PSM shall be final once and for all and shall not accrue any further liability against the government of Pakistan and the PSM in this regard,” said the report.
Riaz Haq said…
#Pakistan $6 Billion Reko Diq (copper-gold mine) Penalty Might Get Annulled After Arbitrator Found Guilty. #ICSID has also annulled penalty imposed on #Spain by the same arbitrator after finding him guilty of partiality

https://propakistani.pk/2020/06/16/pakistans-6-billion-reko-diq-penalty-might-get-annulled-after-arbitrator-found-guilty/


The prospects of Pakistan’s $6 billion penalty in the Reko Diq case to be waived off have received a significant boost.

Recently, the International Centre for Settlement of Investment Disputes (ICSID) nixed a €128 million penalty imposed on Spain after an arbitrator Stanimir Alexandrov, who had represented the claimants in the case against Pakistan as well, was found guilty of conflict of interest.

It is pertinent to note that ICSID has annulled an award for the first time due to the arbitrator’s lack of impartiality and independence.

Following the development, Pakistan has once again knocked on ICSID’s door for the annulment of the $6 billion penalty in the Reko Diq case.

Legal experts have suggested Pakistan should raise objection over the inclusion of Stanimir Alexandrov of Bulgaria in the tribunal.

Pakistan’s legal team Allen & Overy LLP had also previously applied for the disqualification of the Bulgarian arbitrator from the tribunal but failed to convince the ICSID.

In July 2019, the ICSID had imposed a $6 billion penalty on Pakistan following the Supreme Court’s decision in 2011 which revoked the mining lease of Tethyan Copper Company (TCC), a consortium of Chilean and Canadian companies, for the Reko Diq project.

ICSID had concluded that Pakistan unlawfully annulled the lease of TCC and violated the Australia-Pakistan bilateral investment treaty.

Reko Diq, a small town in Chagai, Balochistan, has the biggest gold and copper deposits in Pakistan. Once fully developed, 250,000 ounces of gold and 200,000 tons of copper can be extracted from the mines each year for the next 50 years.
Riaz Haq said…
#Pakistan seeks relief from $5.8 Billion fine over Reko Diq #copper/#gold mining lease in #Balochistan. Economist Jeffrey Sachs calls it “mugging” of Pakistan. Others question reasoning behind huge award, over 2X biggest prior awards. .https://finance.yahoo.com/news/pakistan-seeking-relief-5-8b-055830333.html?soc_src=social-sh&soc_trk=tw via @YahooFinance


Pakistan is seeking the reversal of a $5.8 billion penalty imposed by an international tribunal for denying a mining lease to an Australian company, saying that paying the fine would hinder its handling of the coronavirus pandemic.

The Reko Diq district in southwestern Pakistan’s Baluchistan province is famed for its mineral wealth, including gold and copper. Prime Minister Imran Khan’s government considers it a strategic national asset, though instead of yielding a bonanza the Reko Diq mining project may cost the country dearly.

The World Bank’s International Center for Settlement of Investment Disputes is considering Pakistan's appeal against enforcing the penalty over its cancellation of the Reko Diq mining lease for Tethyan Copper Corp., a 50-50 joint venture of Barrick Gold Corp. of Australia and Antofagasto PLC of Chile.

In the meantime, the Baluchistan government has set up its own company to develop the mine: As prices for commodities surge, with gold recently at more than $2,000 an ounce, turning fiasco to fortune is all the more appealing.

Pakistan and Tethyan both have signaled a willingness to discuss alternative solutions, such as a settlement, but the status of any talks on a deal is unclear. Officials on the Pakistan side said they have not been in direct contact and no specific settlement has been proposed.


--------------

By then, Tethyan had invested $220 million in Reko Diq. The Australian mining company sought help from the World Bank arbitration tribunal in 2012, and it ruled against Pakistan in 2017, rejecting an earlier decision against Tethyan by the Pakistan Supreme Court.

The miner originally sought $8.5 billion. The tribunal opted to use a formula for calculating damages for the cancelled lease based on the assumed profits Tethyan might have earned from the mine over 56 years, said an official at the Justice Ministry who spoke on condition he not be named because he was not authorized to speak to media about the case.

The resulting fine, of nearly $6 billion including the damages award and interest, is equal to about 2% of Pakistan’s GDP and is on a par with a recently agreed upon bailout package for Pakistan from the International Monetary Fund.

Economist Jeffrey Sachs described it as a “mugging” of Pakistan. Other experts also have questioned the reasoning behind huge award, which is more than double the size of the largest similar arbitration award, in the case between Dow Chemical and Kuwait Petrochemical Corp.

Documents explaining the award suggest one intention was to penalize Pakistan for having violated its investment treaty with Australia.
Riaz Haq said…
The average annual copper price is forecast to drop by 6% y-o-y to $8,800 per tonne this year. Boosting supply in the global copper ore market is to push prices down while the worldwide demand languishes with slowed construction activity in China.

https://finance.yahoo.com/news/copper-prices-drop-6-2022-092200072.html

In 2020, approx. 1.7M tonnes of copper were exported worldwide, growing by 16% compared with 2019 figures. In value terms, supplies surged to $11.1B.

Zambia represented the major exporter of copper globally, with the volume of exports amounting to 675K tonnes, which was nearly 40% of total supplies. Chile (283K tonnes) ranks second with a 17% share, followed by Bulgaria (7.1%) and the Democratic Republic of the Congo (5%). Belgium (76K tonnes), Namibia (61K tonnes), Spain (56K tonnes), Slovakia (55K tonnes), South Africa (52K tonnes), Pakistan (38K tonnes), the Philippines (34K tonnes) and South Korea (31K tonnes) were a long way behind the leaders.

In value terms, Zambia ($4.2B) remains the largest copper supplier, comprising 38% of global exports. The second position in the ranking was occupied by Chile ($1.7B), with a 16% share of total supplies. It was followed by Bulgaria, with a 9.4% share.
Riaz Haq said…
Ovais
@Sabbandkardo
One more record for CY 2021 was Pakistan copper exports which touched 717m$ in CY 2021.
Pakistan Copper exports increased more than 3 times since 2018 from 233m$ to 717m$ .


https://twitter.com/Sabbandkardo/status/1490256306611298305?s=20&t=xtlSwyMEBsk0HxwKAFJxcQ
Riaz Haq said…
Barrick Gold Corporation (GOLD) Q4 2021 Earnings Call Transcript


https://www.fool.com/earnings/call-transcripts/2022/02/16/barrick-gold-corporation-gold-q4-2021-earnings-cal/


Tanya Jakusconek -- Scotiabank -- Analyst

OK. And just my last question, if I could, just on your copper strategy. Just wanted to understand a little bit how Reko Diq fits into that strategy and just where we are on this asset?

Mark Bristow -- Chief Executive Officer

So right now, the asset that we have is the arbitration award of which we share with Antofagasta and ourselves, Barrick. We are working and have been in its general knowledge in the spirit of Barrick philosophy of how we can convert that into something that's more meaningful. And that's something that doesn't end up with the Pakistan government having to write out a big check without any benefits. And Reko Diq is an opportunity that we've been working on whereby everyone will benefit.

Our shareholders, of course, and same with the Balochistan government and the Pakistan government. And that's really where I would want to stop it because there's still a lot of work and water to flow under the bridge, but that's the tactic. And as I said, and I think I told Greg at this conference that it's a real asset. And we would like as miners to convert that into our mining asset.

It's one of the better ones around. Otherwise, we end up in conflict and that's not a good thing to do with your host country or potential host country.

Tanya Jakusconek -- Scotiabank -- Analyst

OK. So is it fair to say that this is a ways out in terms of fitting into your 10-year pipeline?

Mark Bristow -- Chief Executive Officer

It would be fantastic in our 10-year pipeline. It's a real deal.

Graham Shuttleworth -- Senior Executive Vice-President, Chief Financial Officer

But it's not in our 10-year pipeline.

Mark Bristow -- Chief Executive Officer

But it's not in -- yes, sorry, it's not in our 10-year pipeline right now.

Tanya Jakusconek -- Scotiabank -- Analyst

I understand that. But in terms of resolving everything and then probably having a feasibility study and other stuff in country, would you be able to even fit it into your 10-year pipeline?

Mark Bristow -- Chief Executive Officer

Sure. Absolutely.

Tanya Jakusconek -- Scotiabank -- Analyst

OK. Great. Thank you.

Mark Bristow -- Chief Executive Officer

Thanks, Tanya.

Operator

Our next question is from Mike Parkin with National Bank Financial. Please go ahead.

Mike Parkin -- National Bank Financial -- Analyst

Hey, guys. Congrats on the good quarter. Just a question with respect to the performance dividend. Does that indicate kind of a comfort level with carrying debt on the balance sheet? Or are you agnostic to where the debt is given that performance dividend is linked to the net cash position?

Mark Bristow -- Chief Executive Officer

So I think you've just answered your own question, Mark. Net cash means there's no net debt. And so the way it's designed is that if we have -- because what we've done initially is our debt to pay it all up is expensive. Hopefully, it gets cheaper and cheaper with the growing interest rates.

But we've offset it. We've got cash balancing the debt. And what we've said is anything above 0. So from zero to $500 million net cash payout of $0.05 dividend and then $500 million to $1 billion and $1 billion to $1.5 billion.

And so that's -- and what it does is it's -- it really is -- it's a nonnegotiable process because if we're investing heavily in a big project, for example, and we drive -- we increased the net debt to fund that. Then we are investing our shareholders' money into that project. And given our return criteria, we think most -- in fact, more than most of our shareholders would support that. If we don't and we build cash on the balance sheet, we make sure that we don't create an easy balance sheet and that on a formulaic basis money goes back to shareholders.
Riaz Haq said…
Details about Reko Diq to be disclosed soon: CM Bizenjo

https://www.dawn.com/news/1668769

CHAGAI: Balochistan Chief Minister Mir Abdul Qudoos Bizenjo said on Monday that details with facts and figures about Reko Diq copper and gold mining project would be disclosed soon.

Talking to local journalists outside Dalbandin airport along with Balochistan Governor Zahoor Ahmed Agha and Rakhshan Division Commissioner Saifullah Khetran, Mr Bizenjo said that for the first time a detailed briefing about Reko Diq project was conducted for the elected representatives of Balochistan at the provincial assembly.

He was referring to a Balochistan Assembly session held last month in which lawmakers from the opposition and treasury benches were given an in-camera briefing on the Reko Diq copper and gold mining project.

In 2019, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ordered Pakistan to pay damages of $5.84 billion to Tethyan Copper — a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold — for blocking Tethyan from developing the asset after it had already sunk more than $220 million into the project.

“As we know that we have lost the Reko Diq case in the international court. Therefore, striking a bargain is not easy, but we are trying our best to gain maximum share for Balochistan in this regard,” the chief minister said.

The share of Balochistan in the previous agreement was 25 per cent despite investment by the provincial government, Mr Bizenjo said, adding that the province would get a good share in the upcoming proposed agreement and without having to make an investment.

The chief minister said it had been proposed that the companies involved in Reko Diq project would spend Rs30 to 40 billion during three years for the development of Chagai district besides billions of rupees that would come under the head of corporate social responsibility.

Answering a question, Mr Bizenjo said his government had removed several unnecessary check-posts on highways and more would be removed soon. He also asked the commissioner to remove speed breakers and rooms made for security check-posts constructed on and alongside the main highway.

He also warned that the commissioner, deputy inspector general of police, deputy commissioner, assistant commissioner and tehsildar would be suspended if a security man is found taking bribes at a check-post.

On a lack of healthcare facilities in the district headquarters hospital, he said that all district health officials were directed to purchase medicines and appoint doctors on a contract basis to facilitate the masses.

Riaz Haq said…
#Pakistan's top court endorses #Canadian mining giant Barrick Gold's $10 billion #investment at Reko Diq in #Balochistan. It is one of the world's largest underdeveloped sites of #copper and #gold deposits.

https://www.reuters.com/markets/asia/pakistans-court-endorses-settlement-with-barrick-gold-over-mining-project-2022-12-09/


Pakistan's Supreme Court endorsed on Friday a settlement for Barrick Gold (ABX.TO) to resume mining at the Reko Diq project, one of the world's largest underdeveloped sites of copper and gold deposits, it said in an order.

The endorsement was a condition of the settlement for Barrick to resume work on the project in the southwestern province of Balochistan, bordering Afghanistan and Iran, in which it will invest $10 billion.


Chief Justice Umar Ata Bandial, the head of a five-judge panel, read out the operative part of the brief order in court.

"The agreements ... have not been found by us to be unconstitutional or illegal on the parameters and grounds spelt out," read the order seen by Reuters.

President Arif Alvi had asked the court to review the deal.

In an out of court agreement this year, Barrick Gold ended a long-running dispute with Pakistan, and agreed to restart development.

Under the deal, the company withdrew its case in an international arbitration court, which had slapped a penalty of $11 billion on Pakistan for suspending the contracts of the company and its partners in 2011.

The company's licence to mine the untapped deposits was cancelled after the Supreme Court ruled illegal the award granted to it and its partner, Chile's Antofagasta (ANTO.L).

Antofagasta had agreed to exit the project, saying its growth strategy was focused on production of copper and by-products in the Americas.

Pakistan's mineral-rich province of Balochistan is home to both Islamist militants and separatist Baloch insurgents, who have engaged in insurgency against the government for decades, demanding a greater share of the region's resources.

Riaz Haq said…
Barrick will invest $4 billion in the first phase of construction at Riko Deq that will create 7,500 jobs (mostly locals). In the second phase, $3-4 billion will be invested and that will generate 4,800 long term employment.

https://www.barrick.com/English/operations/reko-diq/default.aspx


A world class copper-gold mine in the making
One of the largest undeveloped copper-gold projects in the world, Reko Diq is owned 50% by Barrick, 25% by three federal state-owned enterprises, 15% by the Province of Balochistan on a fully funded basis and 10% by the Province of Balochistan on a free carried basis.

The reconstitution of the Reko Diq project was completed in December 2022 — a key step in progressing the development of Reko Diq into a world-class, long-life mine which would substantially expand Barrick’s strategically significant copper portfolio and benefit its Pakistani stakeholders for generations to come.

Barrick is now updating the project’s 2010 feasibility and 2011 feasibility expansion studies. This should be completed by 2024, with 2028 targeted for first production.

Project scope
Reko Diq is expected to have a life of at least 40 years as a truck-and-shovel open pit operation with processing facilities producing a high-quality copper-gold concentrate. Construction is expected in two phases with a combined process capacity of 80 million tonnes per annum.

Significant and lasting economic and social benefits to Balochistan and Pakistan
Reko Diq will be a major contributor to Pakistan’s economy which is expected to have a transformative impact on the underdeveloped Balochistan province where, in addition to the economic benefits it will generate, the mine will also create jobs, promote the growth of a regional economy and invest in development programs. The province’s interest in the mine will be fully funded, which means that Balochistan will reap the dividends, royalties and other benefits of its 25% shareholding without having to contribute financially to its construction and operation.

Employment
During peak construction the project is expected to employ 7,500 people, and once in production, it will create around 4,000 long-term jobs. Barrick prioritizes the employment of local people and host country nationals at our operations worldwide.
Riaz Haq said…
Barrick Gold strikes final deal with Pakistan for Reko Diq project
Published by Joe Toft, Editorial Assistant
Global Mining Review

https://www.globalminingreview.com/mining/30122022/barrick-gold-strikes-final-deal-with-pakistan-for-reko-diq-project/

Barrick Gold Corporationhas announced that it has completed the reconstitution of the Reko Diq project, having received a favourable opinion from the Supreme Court of Pakistan and the required legislation having been passed into law.
One of the largest undeveloped copper-gold projects in the world, Reko Diq is owned 50% by Barrick, 25% by three federal state-owned enterprises, 15% by the Province of Balochistan on a fully funded basis and 10% by the Province of Balochistan on a free carried basis.

Barrick president and chief executive Mark Bristow said the completion of the legal processes was a key step in progressing the development of Reko Diq into a world-class, long-life mine which would substantially expand the company’s strategically significant copper portfolio and benefit its Pakistani stakeholders for generations to come.

“We are currently updating the project’s 2010 feasibility and 2011 feasibility expansion studies. This should be completed by 2024, with 2028 targeted for first production,” Bristow said.

“With its unique combination of large scale, low strip and good grade, Reko Diq is expected to have a life of at least 40 years. We envisage a truck-and-shovel open cast operation with processing facilities producing a high-quality copper-gold concentrate. We expect it to be constructed in two phases with a combined process capacity of 80 million tpy.

Reko Diq will be a major contributor to Pakistan’s economy which is expected to have a transformative impact on the underdeveloped Balochistan province where, in addition to the economic benefits it will generate, the mine will also create jobs, promote the growth of a regional economy and invest in development programs. The province’s interest in the mine will be fully funded, which means that Balochistan will reap the dividends, royalties and other benefits of its 25% shareholding without having to contribute financially to its construction and operation.

“Reko Diq’s ownership structure is a further manifestation of Barrick’s commitment to partnership with its host countries and communities and to sharing the value our operations create fairly with all our stakeholders,” Bristow said.

“We’re making sure that Balochistan and its people will see these benefits quickly. Starting early next year, Barrick will implement a range of social development programs prioritising the improvement of healthcare, education, vocational training, food security and the provision of potable water. Our investment in these is expected to amount to around US$70 million over the feasibility and construction period. In addition, Reko Diq will advance royalties to the government of Balochistan of up to US$50 million until commercial production starts.”

During peak construction the project is expected to employ 7500 people and once in production it will create around 4000 long-term jobs. As elsewhere in the group, Barrick prioritises the employment of local people and host country nationals.

Bristow said Barrick already had the industry's best gold assets and the addition of Reko Diq would promote its copper portfolio into the world-class league, accelerating the company towards its goal of creating the world's most valued gold and copper mining business.
Riaz Haq said…
Surging demand for copper means its price is rising too

https://www.marketplace.org/2023/01/24/surging-demand-for-copper-means-its-price-is-rising-too/

The world cannot seem to get enough copper. This metal is mined in places as disparate as China, the Democratic Republic of Congo and Utah.

Copper prices have risen around 10% since the start of this year, in part because the metal is crucial to renewable energy technology and the transition away from fossil fuels.

Copper is often referred to as “Dr. Copper,” because it’s considered a barometer for the health of the global economy.

Traders like to play off that saying, according to Bobby Iaccino, co-founder of Path Trading Partners.

“They say copper has a Ph.D. in economics,” he said. “That still doesn’t really explain it, OK? So anywhere where there’s electricity, there’s copper usage.”

Demand for copper is especially high now as the market for renewable energy expands, said Michael Klare, a professor emeritus at Hampshire College.

“You’re going to need a lot more copper for wiring to connect various sources of renewable energy — wind farms and solar farms — to wherever you’re going to use the renewable energy,” Klare said.

And in electric vehicles, the amount of copper needed can be more than double what’s used to make traditional gas-powered vehicles.

This year’s surge in copper prices is in part due to China and its emergence from pandemic-related shutdowns, said Rohan Reddy, director of research at Global X ETFs.

“China makes up about half of all global copper demand. So typically, there’s a saying, ‘As China goes, so does copper,'” Reddy said.

That’s the other copper adage you’ll hear a lot — and one that seems to be holding true. The question now is what happens next in China, said Bart Melek, global head of commodity strategy for TD Securities.

“We continue to see a very significant amount of infections in that country,” Melek said. “And that is something that will take time to work its way through.”

That’s why Melek’s call on copper for the coming months is relatively cautious. Rising interest rates, a potential global economic slowdown — all of it, he said, could take the shine off copper demand.

Riaz Haq said…
Pakistan is sitting on a gold mine


https://english.almayadeen.net/articles/analysis/pakistan-is-sitting-on-a-gold-mine


The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world.


Reko Diq is a small desert village in the Balochistan district of Chagai, 70 kilometers northwest of Naukundi and close to Pakistan's border with Iran and Afghanistan. This region is situated within the Tethyan belt, which extends from Turkey and Iran to Pakistan. Reko Diq, which in Balochi means "sandy mountain," is also the name of an extinct volcano.

The Reko Diq mine, renowned for its massive gold and copper deposits, is thought to contain the fifth-largest gold deposit in the world. The mine is in a small desert area in the northeast of Balochistan, near the border with Iran and Afghanistan.

600,000 tons of concentrate produce an estimated 200,000 tons of copper and 250,000 ounces of gold on a yearly basis. The annual profit from the mines is estimated by the TCC to be approximately $1.14 billion for copper and $2.50 billion for gold, totaling $3.64 billion annually. Independent estimates suggest the number is as high as $500 billion, which is significantly higher than the TCC's estimation of $200 billion.
Riaz Haq said…
Reko Diq #Copper Mine in #Pakistan's #Balochistan has potential to be one of world’s biggest suppliers of metal needed for transition to clean #energy. #Canada's Barrick is investing in it. #SaudiArabia's #investment fund has also expressed interest. https://www.ft.com/content/7a1db3cf-a61b-4ef5-b90d-ea98fe530295


“Reko Diq is one of the bigger copper-gold undeveloped projects in the world,” said Mark Bristow, chief executive of Barrick, which aims to start mining in 2028 subject to an ongoing feasibility study. “It’s a very big deal. Any copper mine right now is a big deal.”

The project highlights how the copper shortfall is pushing miners into ever trickier markets in search of supply. Pakistan’s repeated political and economic crises have scared away all but the most determined foreign investors, and local authorities had blocked an earlier attempt involving Barrick to mine Reko Diq.


---
Bristow argues that the project, in which Barrick has a 50 per cent stake alongside the Pakistan and Balochistan governments, will bring much-needed development to the region.

“Mining, when it goes into emerging markets, is obsessed with getting its money back,” he said. “We’ve learned that you start paying benefits and dividends early on.”

As countries transition to clean energy sources, copper — whose conductive properties make it crucial to transporting electricity — is only expected to become more important to the global economy.

But with supply from incumbent mines in countries such as Chile and Peru stalling, an estimated $118bn of investment by 2030 is needed to plug a supply gap that will by next decade be equivalent to 35 Reko Diq-sized projects, according to analysts at CRU Group.


Th a record of operating in riskier markets such as Mali and the Democratic Republic of Congo.

While Reko Diq adds “a lot of uncertainty” for Barrick investors, “Barrick is no stranger to frontier jurisdictions”, said Canaccord Genuity analyst Carey MacRury.

Another factor that could help steer the Reko Diq project is the presence of a new investor. Saudi Arabia’s Public Investment Fund and state mining company Ma’aden have expressed interest in a stake. Analysts said the involvement of one of Pakistan’s most important allies would help shield the project from future political U-turns.

If successful, the mine could turn the company into one of the world’s largest copper producers. Diversifying its portfolio into copper is particularly important for gold miners such as Barrick to stay relevant with investors focused on environmental, social and governance issues, since the company’s core product plays no role in the energy transition.

Reko Diq sits along the largely untapped south Asian leg of a rock formation from Europe to south-east Asia that is believed to hold rich copper deposits. Analysts believe there is the potential for more mines.

Ahsan Iqbal, who recently stepped down as Pakistan’s planning minister and worked on the project, argued that Reko Diq would “put Balochistan on the mining map of the world”.

----------


Reko Diq “is 50 miles from Afghanistan and 40 miles from Iran”, one person involved with the project said. “So it will be a target.”

For support, Barrick has turned to Pakistan’s powerful army, which helps control the country’s politics and helped negotiate last year’s deal to revive the project, according to a person involved.

Pakistan’s army chief also this month attended a local mining conference alongside Bristow. “The military are a steadying hand,” Bristow said. “They are absolutely essential on the security side.”

Yet rights groups have repeatedly accused the army of abuses in Balochistan, including extrajudicial executions, allegations it denies.

Bristow has welcomed the potential Saudi interest in Reko Diq and dismissed hand-wringing over whether he can see through the project.

“When you look at the world, it is more complex than when I started,” he said. “Gone are the days that you can control a mining company from a multistorey, cushy building in the developed world.”

Riaz Haq said…
Barrick CEO says big miners showing interest in Pakistan’s Reko Diq project


https://www.arabnews.com/node/2377731/pakistan


ISLAMABAD: Barrick Gold Corp. CEO Mark Bristow has said there is newfound “interest” from multinational mining firms to develop the $7 billion Reko Diq gold and copper mine in southwestern Pakistan, Bloomberg reported on Thursday.

Barrick Gold owns a 50 percent stake in Pakistan’s Reko Diq mine, with the remaining 50 percent owned by the governments of Pakistan and the province of Balochistan. Barrick considers the mine one of the world’s largest underdeveloped copper-gold areas.

“They have an interest,” Bristow said in an interview to Bloomberg, declining to name the mining companies interested in Reko Diq or what he meant by “interest.”

“Of course, they’re a lot more conservative than I am, but as we open up these areas, whatever way you look at copper, there’s not enough of it.”

Last month Barrick said it was open to bringing in Saudi Arabia’s wealth fund as one of its partners in the Reko Diq project but has dismissed reports it was in talks with fellow Canadian miner First Quantum Minerals on a possible acquisition.

Barrick won’t be diluting its equity in the project but “will not mind” if Saudi Arabia’s Public Investment Fund (PIF) wants to buy out the equity of the Pakistan government, Bristow had said in a Reuters interview.

“There is a strong relationship between Saudi and Pakistan and since we control the project we have the first right of refusal,” the CEO added, saying Barrick would support PIF coming into the mine through Pakistan’s 25 percent equity stake.

In an out of court agreement last year, Barrick Gold ended a long-running dispute with Pakistan, and agreed to restart development on the mine. Under the deal, the company withdrew its case in an international arbitration court, which had slapped a penalty of $11 billion on Pakistan for suspending the contracts of the company and its partners in 2011.

The company’s license to mine the untapped deposits was canceled after the Supreme Court ruled illegal the award granted to it and its partner, Chile’s Antofagasta. Antofagasta had agreed to exit the project, saying its growth strategy was focused on production of copper and by-products in the Americas.

Pakistan’s mineral-rich province of Balochistan is home to separatist militants who have engaged in insurgency against the government for decades, demanding a greater share of the region’s resources.

-------

Pakistan's PM invites Rio Tinto to explore investment opportunities - MINING.COM

https://www.mining.com/web/pakistans-pm-invites-rio-tinto-to-explore-investment-opportunities/

Pakistan’s Prime Minister extended an invitation to Rio Tinto’s CEO to visit the country to explore investment opportunities further in a meeting in New York on Thursday.


The CEO of Rio Tinto Group said his team would liaise with the concerned authorities to explore investment opportunities in Pakistan’s mineral and mining sector, according to a post by the PM’s office on X, formerly known as Twitter.
Riaz Haq said…
Gold Billionaire Sawiris Eyes Stake in $7 Billion Reko Diq Mine


https://finance.yahoo.com/news/gold-billionaire-sawiris-eyes-stake-041314342.html

(Bloomberg) -- Egyptian billionaire Naguib Sawiris, who has forged a fortune in telecom and gold, is eyeing an investment in Barrick Gold Corp.’s $7 billion Reko Diq copper-gold project as he looks to expand his business in Pakistan.

Reko Diq, in the Balochistan region that borders Afghanistan and Iran, is one the world’s largest undeveloped copper and gold deposits, capable of producing 200,000 tons of copper and 250,000 ounces of gold a year for more than half a century. The project is jointly owned by Barrick and Pakistan.

Asked whether he was interested in investing, Sawiris, a major investor in gold miners including Endeavour Mining Plc through his La Mancha Resources Inc., said “yes.”

“I have an advantage compared to other investors. I know the country, I have friends here,” Sawiris said in an interview in Islamabad. “We want to be on the Pakistani side, because I have been here for 25 years.”

He did not elaborate on the potential scale of the investment, but added there were few other options, in part due to the lack of geological data: “We tried here to look but unfortunately there is only this one big project.”

Last month, Barrick Chief Executive Officer Mark Bristow said he was seeing newfound “interest” in Reko Diq from multinational mining firms that have to date been hesitant to venture into tricky regions of the world. The mine has also attracted interest from Saudi Arabia, whose presence could serve to stabilize the project in a contentious part of the world.

Pakistan’s state-owned energy exploration companies, which have a stake in the project, said last month they were looking into “potential engagement” with sovereign foreign investors, without giving details.

Sawiris’ Ora Developers is separately working on a luxury housing project, Eighteen, and he earlier set up one of Pakistan’s first mobile phone companies, Mobilink, now owned by Veon Ltd., and the nation’s largest cellular firm by subscriber numbers.

Pakistan’s lengthy, difficult official procedures, an unstable currency and capital restrictions are hurdles for investment, but Sawiris said he remained optimistic.

“If there is concrete in my way, I’ll drill through it and I’ll go,” he said. “I have never let anybody in my life hold me back from what I wanted to achieve.”

Riaz Haq said…
Saudis In Talks With Pakistan on Reko Diq, Barrick CEO Says


https://www.arabnews.com/node/2402616/press-review


Bloomberg reported Saudi Arabia is in ongoing talks with Pakistan to buy part of the government’s stake in a $7 billion copper project jointly owned with Barrick Gold Corp., according to the head of the mining company.

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GOLDSaudi Arabia wants to buy major untapped copper-gold deposit in Pakistan, says Barrick Gold CEO
Barrick says the project will rank among the world’s top 10 copper producers when it reaches full production

https://mugglehead.com/saudi-arabia-wants-to-buy-major-untapped-copper-gold-deposit-in-pakistan-says-barrick-gold-ceo/

The Kingdom of Saudi Arabia is in talks with Pakistan to buy one of the largest underdeveloped copper-gold projects in Pakistan which is partially owned by the gold giant Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX).

“Saudi wants to buy some stake (in Reko Diq). We don’t know how much. So, those conversations are ongoing, and we are supportive of them, but we’re not there to get into the middle of it,” said Barrick’s CEO Mark Bristow in a Reuters interview following the release of Barrick’s Q3 2023 results.

As part of the proposed agreement, Saudi Arabia would purchase a stake in Reko Diq in collaboration with the Pakistani government. Barrick owns 50 per cent of the project, while the government and the province of Balochistan own the remainder.

“That’s something that is in the hands of the Pakistan government to come to a decision on,” Bristow told Reuters. “We would support any decision that’s made by the Pakistan government with the Saudis.”

The Reko Diq $7 billion project is located in the province of Balochistan, Pakistan and is set to be constructed in 2025 and targets production by 2028. Barrick says the project will rank among the world’s top 10 copper producers when it reaches full production.

Naguib Sawaris, an Egyptian gold billionaire, said in September he wanted to buy a piece of Reko Diq but Bristow dismissed his intention.


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