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Pakistan voids gold, copper lease held by Barrick consortium

A man walks past the Supreme Court building in Islamabad on July 12, 2012.

FAISAL MAHMOOD/REUTERS

Pakistan's top court on Monday declared invalid a lease for one of the world's richest deposits of gold and copper held by a Canadian-Chilean consortium that includes Vancouver-based giant Barrick Gold Corp.

Barrick, the world's largest gold producer, and Chile's Antofagasta Minerals, each own a 37.5-per-cent share, as the Tethyan Copper Company, in the largest Foreign Direct Investment mining project in Pakistan.

Their plan was to build and operate a copper and gold open-pit mine at Reko Diq in the Chagai district of the southwestern province Baluchistan, the most deprived part of Pakistan, rife with Taliban, sectarian and separatist violence.

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Barrick and Antofagasta say the proposed plant could produce 600,000 tons of copper and 250,000 ounces of gold a year, but in 2011 work came to a standstill after the local government refused to renew the consortium's mining lease.

The provincial government in Baluchistan is also the sleeping partner in the Reko Diq project with a 25-per-cent stake.

Reasons for the dispute are murky, but some analysts suggest that China, a close Pakistan ally, is also interested in the deposits.

Pakistan's Supreme Court on Monday declared "not valid" the initial 1993 exploration agreement between the Baluchistan government and Australian mining group BHP, since BHP Billiton Ltd.

It said the agreement ran counter to Pakistan's mineral development act and mining concession rules, and therefore to transfer it to the Canadian-Chilean consortium is also "illegal, void and non est".

Experts say mining in Baluchistan is dominated by small companies focused primarily on marble and granite, which waste up to 80 per cent of mined minerals because of poor blasting techniques.

They also call for more transparent polices to allow business to flourish.

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