Pakistan asked to pay $5.9 billion to mining firm
Islamabad: In a jolt to cash-strapped Pakistan, an international arbitration court has imposed a whopping USD 5.976 billion penalty one of the biggest in its history on Islamabad for the unlawful denial of a mining lease to a company for the Reko Diq project in 2011.
The Tethyan Copper Company (TCC) a joint venture between Chilean mining company Antofagasta and Canada’s Barrick Gold Corporation had filed claims for international arbitration before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in 2012 after the Balochistan government rejected a leasing request from the company.
In its 700-page ruling against Pakistan, the tribunal on Friday awarded a USD 4.08 billion penalty and USD 1.87 billion in interests, Dawn reported. The company had claimed USD 11.43 billion in damages. The case between the Pakistan government and the company continued for seven years.
Reko Diq, which means sandy peak in the Balochi language, is a small town in Chagai district in Balochistan, close to the border with Iran and Afghanistan. The Reko Diq mine is famous for its vast gold and copper reserves and is believed to have the world’s fifth largest gold deposit.
The TCC completed an extensive and detailed bankable feasibility study establishing the basis for mine development at Reko Diq during August 2010.
Then they submitted a mining lease application in February 2011, along with an environmental and social impact assessment report, the paper said.
The project stopped in November 2011, when the Balochistan government summarily rejected the application by the TCC’s local operating subsidiary for a mining lease in respect of Reko Diq.