Pakistan Revives Reko Diq: One of The World's Largest Undeveloped Copper-Gold Deposits
Canadian mining giant Barrick Gold Corporation and the governments of Pakistan and Balochistan have reached a deal to restart the Reko Diq mining project. Reko Diq is the world's 4th largest undeveloped copper-gold porphyry deposit with over 14 million tons of copper and 21 million ounces of gold. The project was abandoned in 2011 after a Pakistan Supreme Court bench headed by former Chief Justice Iftikhar Chaudhry canceled the mining license granted to Tethyan Copper Company (TCC), a joint venture between Canada's Barrick Gold and Antofagasta Minerals of Chile. TCC challenged the cancellation in the International Centre for Settlement of Investment Dispute (ICSID). On July 12, 2019, the ICSID Tribunal awarded TCC $5.894 billion plus interest of $700,000 per day in damages against Pakistan. As of 1 March 2022, the award stood at $6.5 billion. The new agreement between Barrick Gold Corporation and the governments of Pakistan and Balochistan does away with this award. It also increases the share of the project owned by Pakistan from 25% to 50%, brings in $10 billion investment, the largest single investment in the country, and creates 8,000 jobs. Reko Diq is part of the Tethyan metallogenic belt (TMB) that extends from the Balkans in Europe to Pakistan including Serbo-Macedonian, Anatolian, Takab, Kerman and Chagai metallogenic belts. It is believed to be rich in copper and gold deposits.
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| Reko Diq Copper-Gold Mine |
New Reko Diq Deal:
The new agreement to start Reko Diq waives the ICISD award. In the reconstituted project, Barrick will have 50% ownership and Pakistan 50%, comprising a 10% free-carried, non-contributing share held by the government of Balochistan, an additional 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises. The federal government’s shares of 25% will be divided equally amongst three state-owned entities (SOE): Oil & Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan Limited (GHPL). This is a huge improvement over the prior deal that gave the Balochistan government 25% stake in the project, with Tethyan holding the remaining 75%.
A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties, according to a statement released by Barrick Gold Corporation. Pakistan will buy out Antofagasta’s interest in the mine for $900 million, according to the two companies and the government.
Production Targets/Social Infrastructure Projects:
When the project goes into production in 5 or 6 years time of development, it will produce 200,000 tons of copper and 250,000 ounces of gold a year for more than half a century. At current prices, the annual copper output will be $2 billion and gold output $500 million.
The project’s development will bring in investment of approximately $10 billion in Balochistan, including $1 billion which would be invested in social uplift projects such as roads, schools, hospitals, and the creation of a technical training institute for mining. The investment is also said to result in the creation of over 8,000 jobs, according to a report in The Express Tribune newspaper.
Future Potential:
Reko Diq is part of the Tethyan metallogenic belt (TMB) that extends from the Balkans in Europe to Pakistan including Serbo-Macedonian, Anatolian, Takab, Kerman and Chagai metallogenic belts. It is believed to be rich in copper and gold deposits.
“Reko Diq could also be the springboard for further exploration and other mineral discoveries along the highly prospective Tethyan Metallogenic Belt,” said Barrick Gold CEO Mark Bristow.
Foreign Direct Investment:
After reaching a peak of over $5 billion in 2007, foreign direct investment (FDI) in Pakistan has plummeted. It is at least in part attributable to bad decisions by the Pakistan Supreme Court headed by Chief Justice Iftikhar Chaudhry. Cancellation of the Pakistan Steel Mills privatization by the Chaudhry court in 2006. That decision alone has cost Pakistani taxpayers $100 million a year. Then came the Chaudhry court's decision cancelling the Reko Diq license and the $6.5 billion award against Pakistan. These decisions had a chilling effect on foreign investment in Pakistan. Let us hope the revival of the Reko Diq project helps restore confidence of foreign investors in the country. Let us also hope that this history of unwise court decisions serves as a reminder to the Pakistani judiciary to be more careful in deciding such cases in future.
Related Links:
Haq's Musings
South Asia Investor Review
Shaukat Aziz's Economic Legacy in Pakistan
Saving Pakistan's Education, Steel Mill, Railway and PIA
Politics of Patronage Trumps Public Policy
Iftikhar Chaudhry Scared Away Foreign Investors
Musharraf Earned Legitimacy by Good Governance
Vindictive Judges Pursue Musharraf
Rare Earths at Reko Diq?
Comments
Reko Diq is one of the world’s largest undeveloped copper and gold deposits
https://financialpost.com/commodities/mining/coppers-contribution-to-barricks-bottom-line-is-increasing-as-pakistan-project-revived
A 2010 feasibility study of Reko Diq estimated the site could contain as much 54 billion pounds of copper and 42 million ounces of gold. In its 2010 annual report, Barrick said it envisioned building a mine in Pakistan that would produce 100,000 ounces of gold and between 150 to 160 million pounds of copper on average each year over the first five years. A lot has changed since then, and Barrick said it would need to update its projections based on current market conditions.
Barrick, which has long derived its profits from gold, is increasingly looking at copper.
“Copper’s contribution to the bottom line is increasing,” chief executive Mark Bristow said repeatedly during the company’s fourth-quarter earnings call on Feb. 16.
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Reko Diq, which many investors and analysts forgot about after a contentious legal dispute halted the project in 2011, would require billions of dollars of investment to build and take many years to complete. But it could potentially give Barrick a shot in the arm: past studies indicated the site contains billions of pounds of copper and millions of ounces of gold, and could produce for multiple decades.
“It’s still really early, so it’s hard for us to say what this all looks like,” said Jackie Przybylowski, an analyst at BMO Capital Markets, who covers Barrick. “But I think it’s just an example of how mining companies are having to move more into different jurisdictions, and less obvious ones, or less common ones.”
After more than a decade of scouring the United States, Canada, Latin America and Australia, many mining companies are increasingly looking in countries and jurisdictions that are less connected to the Western economies.
Barrick has long had a diversified geographic portfolio; it now has projects in various states of development in Japan, Egypt, Saudi Arabia, Papua New Guinea and Pakistan.
Przybylowski also noted that increasingly, the largest gold miners are looking at copper. This is in part because copper demand is expected to grow as a result of increased electrification and the energy transition, but also because geologically, recent discoveries have shown that copper often occurs alongside gold in large scale deposits.
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“We have every intention of growing our business, both in copper and in gold — or in gold and then in copper,” said Bristow. “And the principle behind Barrick’s business philosophy is high-quality assets. That’s our focus. And so that’s what we’re hunting, whether it’s gold or copper.”
But he also said the company has invested to embed copper expertise in its exploration teams because the copper business had not always been so profitable in the past.
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Josh Wolfson, an analyst at RBC Capital Markets, wrote that the project could add at least two per cent to Barrick’s net asset value — based on the payout to Antofogasta, which was paid a reported US$900 million for its 37.5 per cent stake in the project.
The revival of Reko Diq marks a sharp reversal for a project that had been dropped from most of Barrick’s investor presentations years ago, only to resurface in 2019 when the World Bank’s International Centre for the Settlement of Investment Disputes ordered the Islamic Republic of Pakistan to pay US$5.83 billion to a Barrick Gold Corp. joint venture subsidiary for blocking the mining project.
The award included US$4.087 billion in damages, which the arbitrators calculated was the fair value of the Reko Diq project at the time of the arbitration and US$1.75 billion in ongoing interest, plus US$62 million in legal costs.
https://www.dawn.com/news/1682029
Balochistan Chief Minister Mir Abdul Qudoos Bizenjo, while defending a recently signed agreement on the Reko Diq copper and gold mining project with a Canadian company, has disclosed that a Saudi Arabian firm would set up a refinery in Gwadar to assess the quantity of minerals extracted from the site.
“I have taken all political leaders, parties and public representatives into confidence before signing the Reko Diq project, which will prove a gateway for foreign investment in Balochistan as [Canadian firm] Barrick Gold Corporation will invest $10 billion,” he said during an interaction with senior journalists and newspapers editors at Chief Minister House on Friday night.
He said the agreement clearly mentioned it “would be cancelled if the [Canadian] company failed to start work within three years at the site allotted for exploration and mining.”
Mr Bizenjo said that despite various hurdles and difficulties, it was the best possible agreement. “Five months were crucial and very difficult in which there has been a fear of the governor’s rule in the province,” he said, adding that all political leaders have appreciated our efforts and said that we had made a big contribution to the province.
He said that under the new agreement, Balochistan’s share in the project would be 25 per cent without any investment by the province. Other financial benefits, including royalty taxes, were also part of the agreement.
He said that Barrick Gold would pay a royalty to Balochistan immediately while the company would spend Rs40 billion to develop the area under social responsibility.
He claimed that former chief minister Jamal Kamal Khan was dealing alone with the authorities concerned to restart the Reko Diq project without taking anyone on board, including even the chief secretary, finance secretary and other officials.
Read more: https://www.al-monitor.com/originals/2022/04/saudi-arabia-pakistan-work-long-term-business-strategy#ixzz7PVFlPNsl
Meeting on the sidelines of the Tashkent International Investment Forum last week, the chairman of Pakistan’s Board of Investment (BOI) and minister of state, Azfar Ahsan, and the Saudi Minister for Investment, Khalid Al-Falih, discussed options for promoting bilateral investment.
According to the official statement issued by Pakistan’s investment board, “It was agreed that shovel-ready projects, including the expansion project of Pakistan Refinery, will be evaluated by the Saudi government.”
In 2019, the kingdom had announced plans for a $10 billion oil refinery at Gwadar port, but logistics issues hampered the project. A 600-km oil pipeline connecting Gwadar to the main oil hub, Karachi, would be needed to make the Saudi investment worthwhile, and — according to the feasibility report prepared by Aramco — the transportation of processed oil from Gwadar would be too expensive even then.
This time, Saudi Aramco will be kicking off “preferred projects” in Pakistan’s oil refinery sector, and the expansion of a decades-old refinery in Karachi is most likely. Next, Saudi investors will receive some exceptional incentives in special economic zones in Pakistan. According to the BOI chairman, several proactive measures have been taken to facilitate investment.
“Saudi Arabia and Pakistan are historically close allies," Mohammed Alhamed, president of the Saudi Elite Group, told Al-Monitor, "and Riyadh’s investment comes to make Pakistan’s economic development stable and strong.”
Agriculture, mining, renewable energy, food processing, refineries, petrochemicals and information technology have been identified as potential areas of investment. Proposing a joint BOI-NCPP team for finalizing projects in Pakistan, Falih also suggested that the Pakistani side visit the kingdom and market investment projects both from the public and private sectors.
Alhamed said, “The Saudi investments in Pakistan today are an example of a power, security and economic partnership which will lead to shared prosperity, regional stability and mutual respect based on long term-investment, strategic and social ties.”
Despite a gradual increase to around $2.181 billion in 2020, low bilateral trade volume still remains a major shortcoming in Saudi-Pakistan relations. However, nearly 2.5 million Pakistani expats live in the kingdom, which is still Islamabad’s largest source of remittances.
Without strong bilateral economic connections, the Saudi-Pakistan relationship is incomplete. Even though it was once described as “probably one of the closest relationships between any two countries” by the former head of Saudi intelligence, Prince Turki bin Faisal, it has been affected by regional issues in recent years.
Pakistan adopted a neutral stance in the Yemen war and refused to send any troops in response to the kingdom’s request in 2015, as it was trying to balance Saudi Arabia and Iran.
Then in August 2019, India abrogated Article 370 and ended the special status of the disputed part of Kashmir valley in its control. As one of the three claimants in the Kashmir issue, Pakistan felt that the cause was not highlighted by the Saudi-led Organization of Islamic Cooperation (OIC), of which it is a founding member since 1969.
Next, in November 2019, Qatar, Turkey, Iran, Pakistan and Malaysia organized an Islamic summit in Kuala Lumpur without Saudi Arabia, which feared a rival bloc of Muslim countries outside the OIC, which it heads. Pakistan’s Prime Minister Imran Khan had planned to attend the event but backed out at the last minute due to Riyadh’s insistence.
https://www.mining-technology.com/news/barrick-construction-reko-diq/
The project will begin with a nearly 40Mtpa plant, with the capacity expected to double in five years.
First production is expected within five to six years, if everything goes according to plan, Barrick Gold president and CEO Mark Bristow said in an investor call.
The two-phased construction of the mine is said to optimise returns, reduce execution risks, manage upfront capital, as well as offer cash flows in the long run.
The Canadian miner would update the 2010 feasibility study after finalising the underlying agreements, legalisation and closing.
Bristow said: “Offering a 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.
“The contemplated mine plan is based on four porphyry deposits within our land package and our exploration licence area holds additional deposits with future upside potential.”
Barrick Gold have a 50% holding in the project and will serve as the operator. The remaining stake will be held by Pakistani state-owned enterprises (25%) and the Balochistan government (25%).
Bristow added: “At Barrick, we know that our long-term success depends on sharing the benefits we create equitably with our host governments and communities. That’s why we wanted Balochistan’s share of the venture to be fully funded, 10% by the project and 15% by the Government of Pakistan.
The project is anticipated to create 7,500 job opportunities during the peak construction phase and nearly 4,000 long-term jobs once operational.
Besides, Barrick was also evaluating solar, wind and battery configurations to enhance the renewable power generation for the mine.
The project was stalled since 2011 due to a long-running spat with Pakistan over its licensing process. However, last month, Barrick Gold agreed to resume work on the project, after reaching an out-of-court settlement, under which the $11bn penalty against Pakistan was waived off
https://www.barrick.com/English/news/news-details/2022/reko-diq-alliance-between-pakistan-and-barrick-set-to-create-long-term-value/default.aspx
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 tonnes 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 prioritizing local employment and suppliers will have a positive impact on the downstream economy.
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ISLAMABAD, PAKISTAN – Finance Minister Miftah Ismail and Barrick president and chief executive Mark Bristow said after their meeting here today 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 finalized by teams from Barrick and Pakistan. Once this has been completed and the necessary legalization 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 legalization 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.”
Finance Minister Ismail 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 for business,” he said.
Barrick Gold Corporation said that they plan to invest approximately $7 billion in Riko Diq mines for developing gold and copper in two phases
https://www.thenews.com.pk/print/974728-barrick-gold-to-invest-7bn-in-reko-diq
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 Riko Diq mines for developing gold and copper in two phases.
The company has sought legal cover from parliament and 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 percent 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 state not with any specific political individual. We need proper agreement for moving ahead.
He said security is big challenge but they are familiar with work in other parts of the world. The people of area and Balochistan will be our stakeholders at first stage because the company will provide them ample opportunities.
He said that the feasibility studies were underway but there were estimates that around 200,000 billion 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 percent 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.
According to statement issued by the Barrick Gold Corporation Monday, Finance Minister Miftah Ismail and Barrick President and Chief Executive Mark 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.
Barrick Gold Corporation said that they plan to invest approximately $7 billion in Riko Diq mines for developing gold and copper in two phases
https://www.thenews.com.pk/print/974728-barrick-gold-to-invest-7bn-in-reko-diq
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.”
Finance Minister Ismail 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.
https://www.dawn.com/news/1708861
A team of Barrick Gold Corporation, headed by Michael Peter Nelson, arrived in Gwadar on Tuesday and indicated that it was interested in making investment in import and export of different minerals in the port city.
The delegation, which flew to Gwadar in a special plane, attended an important meeting about Gwadar free zone, functionality, connectivity of the port and the future of Reko-Diq.
The team informed the meeting about their interest in investment in various sectors in Gwadar.
The chairman of Gwadar Port Authority (GPA), Mr Naseer Khan Kashani, briefed the delegation on Gwadar port, Gwadar free zone and other development projects initiated under the China-Pakistan Economic Corridor (CPEC).
The GPA chairman urged the foreign investors to take advantage of the ample development opportunities in the port city as the foreign investment was safe and secured here in every way and all necessary facilities were available in the area.
The team was further informed that Gwadar International Airport would be completed next year after which tourists and investors from all over the world would start flocking the port city.
Stjepan Kalinic
https://simplywall.st/stocks/us/materials/nyse-gold/barrick-gold/news/persistent-inflation-and-market-woes-could-put-barrick-gold
Summary:
Barrick Gold remains on track to deliver the guided results for 2022
The company keeps up healthy margins despite expanding the operations
Given the positive copper outlook, its latest expansion in Pakistan might strike gold
A little over two years ago, while the world was grappling with the COVID-19 Pandemic, Warren Buffett disclosed a US$565 million investment in Barrick Gold Corporation (NYSE: GOLD). Yet, by the end of the same year, he was out of it altogether.
For Mr.Buffet, that was barely 0.28% of his portfolio, likely representing a hedge against the high uncertainty at the time. Once he identified that the risk had passed, he sold the position. However, his pick is interesting as it points out that the company might be one of the best in its sector – prompting us to look into the current state of affairs before the next potential commodity super cycle.
See our latest analysis of Barrick Gold
Barrick Gold Company Profile
Founded in 1983 with headquarters in Toronto, Canada – Barrick Gold Corporation operates in the mining industry, engaging in exploration, mine development, and production and sale of gold and copper.
The company operates 16 sites in 13 countries with over 21,000 employees and is regarded as the second-largest gold mining company in the world. It boasts a particularly good position in Nevada, US, with majority ownership of 3 tier one gold mines that classify as stated life in excess of 10 years, annual production of at least 500,000 ounces, and total cash costs per ounce are below the industry average.
In the latest annual report, Barrick declared proven and probable gold reserves at 69 million ounces at an average grade of 1.71g /t. Meanwhile, copper proven and probable mineral reserves were 12 billion pounds at an average grade of 0.38%.
Barrick Gold's Latest Developments
The Q2 earnings report saw a nearly 19% rise in Q2 profit due to growing copper output. Yet, the cost of production is up as well, as all-in-sustaining costs per ounce of gold increased 13% in the first half of the year (15% for copper).
According to the Q3 preliminary results, the company produced 0.99 million ounces of gold and 123 million pounds of copper. The 2022 guidance production remains on track even with the access to high-grade ore at Nevada Gold Mines postponed for Q4. The company will report full earnings before the market opens on November 3, 2022.
Despite being one of the largest gold producers, the company is engaged in connected diversification, investing US$7b in a Reko Diq project in Pakistan. The project should create 4,000 jobs and provide Barrick with 50% ownership in one of the world's largest undeveloped copper-gold deposits. The other 50% will be split between the Balochistan Provincial Government and Pakistani state-owned enterprises.
Barrick Gold's Fundamental Look
Barrick Gold is currently trading at a reasonable valuation of 12.9x P/E, which seems good value compared to the peer average.
Even the forward-looking P/E still classifies it among the lower end of the sector.
https://www.barrick.com/English/news/news-details/2022/barrick-and-pakistan-review-progress-on-reko-diq-project/default.aspx
Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) president and chief executive Mark Bristow says the process of completing the final agreements and legal steps that would enable the development of the Reko Diq project is making steady progress. Once the transaction is completed, Reko Diq, one of the largest undeveloped copper-gold deposits in the world, will be owned 50% by Barrick, 25% by Balochistan province and 25% by major Pakistani state-owned enterprises (SOEs).
He was speaking after a four-day visit to Pakistan during which he and the project team held discussions with prime minister Shehbaz Sharif and Balochistan chief minister Abdul Quddus Bizenjo and their teams, as well as Barrick’s SOE partners. With the approval of Pakistan president Dr Arif Alvi, the necessary documents for the Presidential Reference were filed on Saturday with the country’s supreme court, a significant process milestone.
During the course of the trip, the Barrick team also visited Balochistan’s Chagai District, which hosts Reko Diq, to brief local leaders and community stakeholders on the project, which will bring enormous benefits to the region in the form of employment, skills and economic development, as well as community initiatives focused on food security, environmental management and access to healthcare, education and potable water.
Bristow says Barrick is setting up community development committees (CDCs) to identify priority projects and supervise their implementation.
“Barrick has been built on successful partnerships with our host countries, and these encompass the full range of stakeholders, from governments through suppliers to the communities around our mines. Our CDC model provides a transparent and accountable mechanism for tailoring development programmes to the needs of these communities with their full participation,” he says.
Once the current legal processes have been finalised, Barrick will complete its update of the feasibility study, which currently envisages an open-pit operation with a life of more than 40 years. It is envisaged that the project will be built in two phases at an initial estimated capital cost1 of approximately $7 billion and is expected to go into production between 2027 and 2028.
While in Pakistan Bristow announced that Barrick was donating an additional $150,000 to the Balochistan flood relief fund, bringing the company’s total contribution to $300,000.
Pakistan should hire experts, finance rare earth metal projects through budget
https://tribune.com.pk/story/2207557/rems-precious-commodities
REMs constitute a group of 17 elements that occur together in the periodic table, including yttrium and 15 lanthanides. The use of REMs within industrial sectors is both high stakes and high wager.
These sectors include defence, electronics, medicinal, industrial, automotive, etc and they are used in specialised applications such as aircraft engines, nuclear batteries, lasers, magnets, optic fibres, high-strength alloys, superconductors, storage disks, signal amplifiers, to name a few.
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REMs deposits in Pakistan have been discovered in Khyber-Pakhtunkhwa (Koga, Tarbela, Jawar), Gilgit-Baltistan (Gilgit, Skardu), and Balochistan (Reko Diq, Chagai, Saindak).
Initial geochemical analysis showed that 12 out of 17 REMs had been found with varying potential. Still, the exact size is yet to be determined and required an in-depth exploration study. REMs are the most precious commodities today and Pakistan needs to place maximum bets on it to cash in on the opportunities. Realistically, Pakistan is not a manufacturing or a processing country, hence, it should earmark the commerce potential with both revenue from sales and barter trade.
Due to REMs strategic importance, an organisational setup should be put in place, under the prime minister, and in close collaboration with supporting arms of armed forces and Pakistan Atomic Energy Commission.
The entire exercise can be done in stages with exploration, extraction, ramp-up production and global marketing with mass production over a five-year timeline.
Experts should be freshly hired or may be brought from different government departments (Geological Survey of Pakistan, Survey of Pakistan, Khan Laboratories, etc), including geologists, radiometric surveyors, drilling/smelting specialists, and security experts.
The project financing should come from the national budget under the ambit of “special strategic projects”. The global REMs market is valued at $10 billion with an 8-10% CAGR and production of 170,000 tons per annum by 2022. If Pakistan secures 2-5% of this market share – with annual output of 3,500-8,500 tons, it can inject $1-2 billion per year into the national pocket over the next five to seven years.
This could change Pakistan’s international status as a high-value player at a high stakes table in the global arena.
The writer is a PhD in Engineering from the University of Cambridge, United Kingdom. He currently serves as Vice President of Core Group in Pakistan
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.
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.
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.
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.
By Yasir Masood | Gwadar ProDec 12, 2022
https://gwadarpro.pk/1602212868140138497/lithium-fresh-silver-lining-on-economic-horizon-of-pakistan
Pakistan possesses substantial lithium reserves. According to the Metal Mining Agency of Japan, these reserves may fulfil global demand for nearly 500 years. With China and India, two of Pakistan's major trading partners, investing extensively in electric vehicles (EVs), Pakistan has a significant chance of becoming a bigsupplier and a major consumer of this essential commodity.
“Given the existence of favorable geological environments in Pakistan which are found elsewhere for the occurrence of Lithium on a global level, Balochistan, KPK, and GB Provinces have been identified as target areas for finding this commodity in substantial quantities”, said Mr. Muhammad Yaqoob Shah, ex-General Manager (Geology) Pakistan Mineral Development Corporation Islamabad.
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.