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Beyond wishful thinking in national interest
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January 07, 2011
The Balochistan Mines & Mineral Development Department has granted at least 13 exploration licenses. If I were to assume that each of the 13 mineral prospects were valued at US$ 200 billion, then the Government of Balochistan has over US$ 2600 billion worth of mining projects at stake!! The important question is that after witnessing the treatment being meted out to the operator of the Reko Diq project, which is Tethyan Copper Company, whether potential investors are at all going to come to Pakistan or not?! I am sure our scientists would not come out and state that they can run all the projects together with limited local financial, technological and technical resources.
Ever since this saga of a copper-gold mine at Reko Diq started, it got me thinking whether only one mine alone, no matter of what scale, can prosper a country; change the fate of a nation! If we take on the same line that this project alone can change the fate of this nation, then we can also assume that if handled poorly, this wishful adventurism can land us in even greater financial crunch.

The Balochistan Mines & Mineral Development Department has granted at least 13 exploration licenses. If I were to assume that each of the 13 mineral prospects were valued at US$ 200 billion, then the Government of Balochistan has over US$ 2600 billion worth of mining projects at stake!! The important question is that after witnessing the treatment being meted out to the operator of the Reko Diq project, which is Tethyan Copper Company, whether potential investors are at all going to come to Pakistan or not?! I am sure our scientists would not come out and state that they can run all the projects together with limited local financial, technological and technical resources.

Recently individuals from the government have frequently appeared on national and satellite TV. Even though Pakistan has not demonstrated metal mining project even comparable to the scale of Reko Diq, I tend to respect our experts’ ‘gut feeling’ for developing the Reko Diq project on our own. This very difficult considering the current security and economic shambles our country is in. These individuals have consistently acknowledged the contract between the Government of Balochistan and Tethyan Copper Company to allot a mining license on the successful submission of the feasibility report after the exploration process.

However what’s disturbing is their intent: they are very casually advocating utilization of clauses in the exploration contract to enable the Balochistan Government to legally revert on their commitment to allot the mining license to the foreign investors. Application of this principle of ‘national interest’ being floated by some individuals would mean that if in future any exploration investor is ready to reap the benefits of its risk investment and by that time our economic planners only ‘think’ that they can run the project on their own, that too based on the investor’s ground work, we will very conveniently shoo away the foreign investor? I am not sure how this approach will help Pakistan attract more foreign investment with such messages being transmitted on satellite TV to a global audience. Is going against a legal contract by exploiting a technical loophole by the regulator itself in national interest?

The manner in which the pricing of the project is being handled by some responsible functionaries of the government is questionable. Whereas the exploration company, Tethyan Copper, has declared a production of 13.5 million ounces of Gold and 2.2 billion pounds of Copper in its feasibility study prepared by one of the world’s top three mining engineering firms over 1 year of technical studies. However, our experts are adamant that the volume of copper and gold is much bigger. This is of course with no proven field surveys. The people responsible to manage our economy have even declared the total market value of these reserves at US$ 270 billion at current dollar rates. Self-contradicting, they also state that these reserves will take nearly a hundred years to extract.


There is no doubt that this project will generate a reliable stream of revenues for federal and provincial government for at least half a century and also encourage other investors to invest in resource development to create more wealth for the resources lying dormant for centuries. But to say that one project is worth more than entire economy of Pakistan is feeding the general public with unrealistic expectations. In fact, no mining house in the world is worth that much. No logical and scientific mind can accept this.

As per media reports, Tethyan Copper Company has so far invested over 220 million dollars in the exploration phase of the Reko Diq project and plans to invest over 3.3 billion dollars in the development of the mine. They plan to inject 400 million dollars every year to run this project. Figures show job statistics at over 11,500 direct jobs produced over the mine development phase of the project only. So far I haven’t read or heard anyone prove that this investor has violated any clause of their exploration license and the agreement with the Government of Balochistan. It seems like any good corporate citizen doing its job, investing in our country, producing more jobs, transferring mining technology and expertise and paying its dues to the respective provincial and federal governments. The only contract dishonoring vibes that we feel are coming from none other but the regulators and policy makers themselves! Any reasonable and unbiased mind fails at acknowledging such a bizarre proposal; a Government itself proposing how to dishonor a state contract. The ultimate economic security any country can offer!

The Governments of Balochistan and Pakistan must honor their contracts with all investors and not risk the fate of this nation in this already alienating international community. Pakistan is already widely perceived an extremist if not a terrorist country. I do not see any economic future if we are also branded a defaulting country that reverts on its commercial commitments. Let us not be where we are now after 20 years and instead take such development opportunities and put ourselves on the track to growth and global acceptance.


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