Remember the noise we kicked up when in 2009 US President Barack Obama signed into law a bill that tripled non-military aid to Pakistan to about $7.5 billion over the next five years, just because the entire aid, amounting to $15 billion, with half of it going to military equipment, was conditioned on the US Secretary of State certifying that democracy was not being threatened in Pakistan by undemocratic elements?
Accusing the-then Zardari government, especially the-then ambassador to the US, Hussain Haqqani, of inspiring the wordings of the Bill, both the national media and the state went to town opposing the Bill. A special meeting of corps commanders was held that denounced the bill, terming it as a move by the US to undermine Pakistan's sovereignty. Naturally, most of that aid had remained only a pledge during its life-time.
But there is not a squeak from anywhere, either the national media or from the so-called representatives of the state, on the latest US Foreign Operations Bill increasing restrictions on US civil and military assistance to Pakistan. The text of the bill includes provisions to make the civil and military aid to Pakistan conditional to Islamabad stopping its alleged support to the Haqqani network and other militant groups in the South Asia region. Some groups named in the text also operate in Indian occupied Kashmir. Do not these wordings impinge on our sovereignty? Who has inspired the wordings of this Bill this time? Was it the Nawaz government and/or the career diplomat posted as our ambassador currently in Washington? And there has been no special Corps Commanders' meeting held so far to denounce and reject the Bill.
And remember how the Supreme Court of Iftikhar Chaudhry killed the Steel Mills' privatisation deal with the help of an inspired media? There was such joyous response to the Supreme Court verdict in the national media as well as among the state institutions that one felt as if Pakistan has been saved from a national disaster of great proportions. Since then, the mill has accumulated a debt of billions of dollars and is almost shut down. And around this time the same Supreme Court also struck down the LNG deal with GDF Suez, to the cheerful welcome of our national media and the lobbies with vested interest. Nobody was seen lamenting this particular SC ruling that plunged the country into a seemingly never-ending power shortage phase which is continuing.
One can go on adding to this list of crucial national decisions that we made at the wrong time for the wrong reasons or made noises when there was no need to do so, and kept quiet when the need of the hour was to shout from the rooftops of every Pakistani house.
And what takes the cake is the complete silence with which our media and state authorities have welcomed the recent news that an arbitration tribunal of the World Bank's International Centre for Settlement of Investment Disputes (ICSID) hearing the Reko Diq arbitration case has ruled against Pakistan and endorsed the $11.5 billion claim made by the Tethyan Copper Company Pty Ltd (TCC). The ICSID tribunal confirmed that Pakistan had violated several provisions of its bilateral investment treaty.
The Supreme Court had in January 2013 declared the Reko Diq agreement void and in conflict with Pakistani laws. In its ruling, a three-judge bench of the apex court, headed by then-chief justice Iftikhar Muhammad Chaudhry, had stated that the Chagai Hills Exploration Joint Venture Agreement - signed between the Balochistan government and the Australian mining company BHP in 1993 - was in conflict with the laws of the country. The bench added that all amendments made to the agreement after its signing were unlawful and in contradiction with the agreement. It further stated that TCC no longer had any rights in relation to the Reko Diq agreement.
Since then, Barrick Gold, the company that was part of the Joint Venture that formed TCC and which carried out the feasibility study of Reko Diq, appears to have spent $21 million in litigation charges stemming from Reko Diq. From the amount being spent on litigation, it appears they are out to recover far more than the $120 million loss. As litigation continued, TCC approached the International Centre for Settlement of Investment Disputes (ICSID), initially citing breach of contract.
The Attorney General of Pakistan (AGP) has issued a statement stating that "the amount claimed in the international arbitration is being rejected by Pakistan as highly speculative and disproportionate, being hundreds of times larger than any amounts invested by the claimant." The AGP office has mentioned a number of lame excuses for rejecting the ICSID ruling. The exchequer is said to have spent more than Rs 1 billion to pursue Pakistan's cases before the international arbitrator but the legal strategy has been disastrous.On the face of it there seems to be no way Pakistan can escape paying the TCC compensation claim.
Reko Diq has estimated reserves of 5.9 billion tonnes of ore grading 0.41 percent copper. The mine also has gold reserves amounting to 41.5 million oz. The economically mineable portion of the deposit was calculated at 2.2 billion tons, with an average copper grade of 0.53 percent and gold grade of 0.30 g/ton, with an annual production estimated at 200,000 tons of copper and 250,000 ounces of gold contained in 600,000 tons of concentrate. TCC, in partnership with Government of Balochistan, had evaluated the development of a world-class copper-gold mine at Reko Diq. The company had invested over $220 million (excluding acquisition costs) into the project since 2006 on exploration and preparation of a bankable feasibility study.
The initial mine development plan envisages that in the processing plant about 110,000 tons of ore per day will be processed through flotation process and a 680-kilometre concentrate pipeline will transport the product from the mine site to the port of Gwadar to a dedicated marine terminal facility at the port for storage and transfer to shipping vessels for supply to smelters throughout the world. In order to secure optimal economies of scale efficiencies, lower mining and processing unit costs, a large-scale mining and processing project was to be built.
The proposed processing plant was to produce approximately 600,000 tons of copper concentrate a year, which would contain 28-31 percent copper and 7-22 g/ton gold which translates to about 200,000 tons copper and 250,000 ounces of gold per year. The commercial mining operations were anticipated to last for over 56 years with an estimated annual operating expense of about $400 million of which, 45-50 percent, was to be spent nationally.
TCC was committed to the development of a mining initiative that had the potential to cause the transformation of Balochistan's dormant mineral resources into profitable mineral reserves. The project offered the scale to significantly contribute to the uplift of the local people and strengthen the economy in general by generating long term revenues in the form of royalties, taxes, profit-sharing and employment opportunities. The project stakeholders including the Government of Balochistan and the Government of Pakistan, were to be able to add significantly to their provincial and federal treasuries in order to undertake wider development projects in the best interest of the general masses. As soon as the TCC Reko Diq project went into development, it was to have become a beacon for further investment into exploration and mining sectors in Balochistan and Pakistan in general.
The Reko Diq Mining Project was to build and operate a world class copper-gold open-pit mine at Reko Diq. Progress on the project came to a standstill in November 2011, when the Government of Balochistan summarily rejected the application by TCC's local operating subsidiary, Tethyan Copper Company Pakistan (Private) Limited (TCCP), for a mining lease in respect of Reko Diq. TCC believes that, under the Chagai Hills Joint Venture Agreement (CHEJVA) between TCC and the Government of Balochistan, as well as under the Balochistan Mineral Rules 2002, TCCP was legally entitled to the mining lease subject only to "routine" government requirements.
In order to protect its legal rights, in November 2011 TCC commenced international arbitration proceedings at two forums: one against the Government of Pakistan with the International Centre for Settlement of Investment Disputes, asserting breaches of the Bilateral Investment Treaty between Australia (where TCC is incorporated) and Pakistan, and another against the Government of Balochistan with the International Chamber of Commerce, asserting breaches of CHEJVA.
During the period when the project was being turned controversial through the media it was time and again reported that TCC was under-reporting the real worth of the Reko Diq reserves and they were actually $260 billion. According to world mining experts, there is not a single copper mine in the world that is worth that much. Altogether, reserves at the global top 10 copper mining projects are said to be worth around $360 billion.
The key fact was that the deal struck between the Pakistan government and the TCC involved the latter keeping 75pc of the output, while the government itself got only 25pc. But this was in keeping with international standards in mining leases, and it appeared to be a somewhat standard formula. After all, the company would be putting up all the upfront investment of $3.3 billion in this case. Since then, Barrick Gold, the company that was part of the Joint Venture that formed TCC and which carried out the feasibility study of Reko Diq, appears to have spent $21 million in litigation charges stemming from Reko Diq. From the amount being spent on litigation, it appears they are out to recover far more than the $120 million loss.
Copyright Business Recorder, 2017