A large copper and gold mining project in Baluchistan will be developed by the provincial government rather than Canada’s Barrick Gold and the Chilean miner Antofagasta, according to the provincial chief minister.
Nawab Muhammad Aslam Khan Raisani, chief minister of Baluchistan, told the Financial Times a new public sector company would take over extraction and processing of copper and gold at the remote Reko Diq site.
“We will not extend any further contracts either to the existing companies or to anyone else,” said Mr Raisani. “They [the two companies] only have an exploration licence which does not cover extraction.”
The current provincial government, backed by the national authorities, set aside the concession, arguing it was against the interests of Pakistanis.
Mr Raisani estimated total reserves at Reko Diq as worth $1,000bn. “Even if we get $1bn a year out of this project, our economic returns for Baluchistan will improve very rapidly. But we are looking at much larger returns.”
Development costs at Reko Diq are estimated at $3bn.
Provincial officials expressed confidence that the local government could secure bank loans to fin ance development.
The site holds up to 11 billion pounds of copper and 9 million ounces of gold, says the Baluchistan government.
Baluchistan, bordering Iran and Afghanistan, has been the scene of a separatist insurgency for almost four decades.
Rich in minerals, it is the most sparsely populated and poorest of Pakistan’s five provinces.
Nationalists and separatists have long demanded billions of dollars from the federal government in royalties for gas pumped to other parts of Pakistan.
Last month Shaukat Tareen, the finance minister, told the FT that raw copper extracted from Reko Diq would, under the terms of the concession held by Barrick and Antofagasta, earn between $40bn-$50bn over the next 25-30 years.
“This is a tenth of what we could earn for Pakistan if the investor was to put in a processing plant to smelt the copper and export it in a refined form.
Why should they [investors] take our raw material for processing to a third country and then make huge profits?” asked Mr Tareen.