Pakistan’s Economic Coordination Committee (ECC) on Sunday approved the depositing of $900 million in an escrow account to buyout—over six years—Chilean firm Antofagasta from the Reko Diq project.
The ECC also greenlit about $1.91 billion shareholder financing by state-owned enterprises (SOEs) to take the gold and copper mining project forward after the Supreme Court endorsed the settlement deal. The meeting took the matter up on an urgent basis to meet deadlines for an out-of-court settlement with the Tethyan Copper Company to avoid a potential $10 billion international arbitration award, with agreements set to be signed by Dec. 15.
“The ECC considered and approved two important agenda items related to the Reko Diq project, thus paving the way for early start of the Reko Diq Project,” read a statement issued by the Finance Division after the meeting. It said the concerned divisions of the government and the SOEs had been enabled to act in such a manner to ensure that the deposited amount along with interest deposited by the SOEs in the escrow account would be a part of share purchase of the Reko Diq Mining Company Limited.
The government entities are also required to arrange about $4.3 billion in funds as an equity investment in the restructured project, now named Barrick Reko Diq Holdings Limited (BRDHL), to be operated by Canada’s Barrick Gold Corporation mining company.
Under the settlement arrangement, the joint venture would see 50% ownership by Barrick Gold Corporation; 25% by the federal government through a single special purpose vehicle—the Pakistan Minerals (Private) Limited—and 25 percent by the Balochistan government as 10% direct free carried plus 15% through Balochistan Mineral Resources Limited, to be paid by the Pakistan government along with capital and operating expenses on the project. In light of this, GHPL, OGDCL and PPL would deposit $22.7 million as aggregate amount of interest in the escrow account from March 31 to Dec. 15, 2022.
The ECC further allowed the Finance Division to arrange the interest payable for the Government of Balochistan’s share, $8.5 million, from the loan of Rs. 65 billion already raised by the GHPL with the Government of Pakistan’s guarantee.
Economic windfall
Addressing the 10th National Security Workshop, Balochistan Chief Minister Balochistan Abdul Qudoos Bizenjo said the provincial government would receive over 38 percent share from the revenue earned from the Reko Diq mining project. The province, he said, would get an estimated Rs. 200 billion from the project, adding this would strengthen the economy currently facing a crisis.
He said an in-camera briefing had been organized for the provincial lawmakers to allay their concerns about the project and approvals for it had been granted after it. He said the government had ensured all taxes would be paid while the province would benefit in the form of royalties, CSR, and the creation of 8,000 new jobs.