Barrick JV wins $5.95 bn arbitration award against Pakistan
15 Jul 2019
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The Tethyan Copper Company (TCC) - a joint venture between Chilean mining company Antofagasta and Canada's Barrick Gold Corporation - has won a $5.95 billion award in an arbitration case against the Pakistan government over unlawful denial of a mining lease to the company in 2011.
World Bank's International Centre for Settlement of Investment Disputes (ICSID) imposed the huge fine on cash-strapped Pakistan in a case filed by the company after the Balochistan government unlawfully rejected a leasing request from the company for the Reko Diq project in 2011.
The ICSID awarded a $4.08 billion penalty and $1.87 billion in interests, totaling $5.95 billion, on Pakistan. Tethyan Copper Company had filed claims for international arbitration claiming $11.43 billion in damages.
The case between the Pakistan government and the company dragged on 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 and 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.
The then Supreme Court chief justice Iftikhar Muhammad Chaudhry had in January 2013 declared the Reko Diq agreement void and in conflict with the country's laws.
The ICSID ruling is a major setback for Pakistan, which is at a "critical juncture" where it needs an ambitious and bold set of reforms, according to the Washington-based International Monetary Fund (IMF) which agreed to give a $6 billion bailout package to the country.
Prime Minister Imran Khan on Sunday issued orders for the formation of a commission to investigate and fix responsibility for the massive loss borne by Pakistan in the Reko Diq case, the Express Tribune reported.
"The prime minister has directed formation of a commission to investigate into the reasons as to how Pakistan ended up in this predicament; who were responsible for making the country suffer such a loss and what are the lessons learnt, so that mistakes made are not repeated in the future," said a statement issued by the attorney general's office on Sunday.
A thorough internal review of this long-standing arbitration will also be conducted in the due course, it added.
"This (attorney general's) office and other stakeholders, particularly the provincial Government of Balochistan, are studying the Award and reflecting upon its financial and legal implications," the statement added.
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