Saindak Copper and Gold Project Quettta Balochistan

[Pak_Army]

Saindak Copper and Gold Project

QUETTA: The Balochistan government had chalked out a comprehensive plan to secure its financial resources by making investments in major oil, gas and mineral exploration companies operating the province.
An official here said that Chief Minister Balochistan, Nawab Muhammad Aslam Khan Raisani had taken all his cabinet colleagues on board and necessary directives had been issued to finance and law departments for suggesting legislation in order to ensure safe utilization of such assetsThe Balochistan government would make best use of its financial resources which it was going to receive as arrears out of the Gas Development Surcharge and the allocations from the 6th NFC Award. Chief Minister Balochistan had desired that after earmarking necessary funds for development and non-development expenditures efforts would also be made to apportion a sizeable amount of money to buy major shares in PPL, OGDCL and Gwadar Port and Gwadar Free Trade Zone. This strategy envisioned by Chief Minister Balochistan was aimed at investing the funds in financially sound and secure corporate units for a long-term and sustainable income.
In addition to that, the handout said, the foremost objective of the provincial government would be to take full control of Reko-Diq Copper and Gold Project from its present operators i.e. M/s. Tethyan Copper Company (TCC) and thereafter the provincial government would run the project itself. The provincial government had also decided to take control of the Saindak Copper and Gold Project once the agreement with Metallurgical Construction Company China (MCCC) expires in October 2011.

“The Balochistan Cabinet in its meeting on December 24, 2009 had unanimously decided not to go ahead with the proposed Mineral and Shareholder Agreement with TCCP after the expiry of the Exploration Licence issued to BHP,” the handout said
The government had already constituted a Board of Governors (BoG) to oversee the project, headed by Dr. Samar Mubarak Mand, renowned nuclear scientist and of member science and technology, Planning Commission of Pakistan as its chairman. The other members of BoG from the government of Balochistan include additional chief secretary (development); secretaries of finance; mines & mineral; and industries & commerce departments. Besides, the project director, Reko-Diq would serve as member/secretary and the president, Balochistan Mines Owner Association would represent from private sector. Chief Minister Balochistan had been requested to chair the inaugural meeting of the first BoG scheduled to take place during the next week.
The first BoG meeting would, inter alia, discuss the role of TCC in the project, if any; the source of funding for the Reko-Diq project, and linking the Government of Balochistan (GOB) share to the income from Saindak for the development of the project.
It may be mentioned that the Exploration Licence (EL-5) was granted to an Australian Company – BHP Billiton – during 1991 for an area of 33,47,226 acres (13.5 SqKm) containing copper, gold and associated mineral reserves in Reko Diq area in District Chagai. After preliminary reconnaissance studies, BHP entered into the Chagai Hills Exploration Joint Venture Agreement (CHEJVA) with the Government of Balochistan (GOB) through Balochistan Development Authority (BDA) on July 29, 1993 for exploration of copper, gold and associated minerals and if a suitable discovery made the area was to be converted into a Mining Lease. BHP was holder of a 75% interest in EL-5 with the GOB having 25%. The BHP later on inducted Mincore, an Australian company, to look-after the exploration activities. Mincore had completed registration of TCC, also an Australian company, during 2000 to wholly own subsidiary, which will have to manage and operate the Reko-Diq Project.
The Government of Balochistan had decided to take over the Reko-Diq Copper and Gold Project and cancel the agreement with the TCCP on these grounds:
The TCCP violated the provision of Clause 14(1) of Joint Venture Agreement (JVA) by transferring its share to other companies such as Antofagasta and Barrick Gold at the exploration stage and without the consent of the second party i.e., the Government of Balochistan (GOB). The GOB from the outset was insisting to setup refinery plant in Balochistan but the Company was reluctant to establish refinery plant and the CEO of the Company had confirmed the same in a meeting with Board of Investment in September 2009.
The GOB wanted to get exemption from investment at development stage of the project in proportion to 25% equity whereas the TCCP declined to do so.
The TCCP sought exemption in certain provisions in the BMR 2002 i.e., payment of all federal and provincial taxes like import duties, procurement on goods, sales tax, stamp duties, registration fees, and other applicable taxes for the period of Mineral Agreement, which was not possible.
The TCCP was required to establish a Mining Academy for imparting training in the mining field to produce skilled human resource but the company was not willing to make investment for such academy.
The TCCP was planning to lay pipelines from Reko-Diq to Gwadar and dispatch concentrate through this pipeline to Gwadar and then transport to Chile/Canada for final refining purposes. This arrangement by the Company was not acceptable to the GOB at all for the provincial government will not be having any approach and access to the produce of refinery plant proposed to be established outside Pakistan.
Besides, the TCC presently was working on exploration license issued to BHP and the Company BHP/Mincore had submitted draft Share Holder & Mineral Agreements for consideration and approval of the provincial government. Both the agreements were yet to be finalized due to certain reservations of the provincial government on share / equity and other issues.
The handout further stated that the people of Balochistan had given mandate to the present democratically elected government and as the Chief Executive of the Province it was the moral and constitutional responsibility of Nawab Aslam Raisani to safeguard the interests of the people of Balochistan.
The agreement between the Government of Pakistan and the Metallurgical Construction Company of China (MCCC) on Saindak Copper and Gold Project was going to expire in October 2011 and the Federal Government had agreed to handover the Saindak Project to Balochistan after expiry of the said agreement. The Government of Balochistan was planning to run the Reko-Diq Copper and Gold Project and for this purpose a PC-I scheme for setting up a processing /refinery plant at the site at an estimated cost of Rs.8698.57 million to process 15000m/ton ore per day in three shifts had been prepared and submitted to CDWP, which had approved the same.
After taking over the Saindak Project by GOB the concentrate/blister copper produced in the project would also be used in the refinery plant at Reko Diq Project.
“According to the cash flow analysis, the Reko Diq Copper and Gold Project would make annual profit of Rs.15375million by processing 15000m/ton ore per day in three shifts. The Mines and Mineral Development Department Balochistan having sufficient technical staff would indigenously run the project,” the handout said.