Tribunal favours Barrick, Antofagasta in Pakistan lease denial case
A World Bank’s tribunal has ruled in favour of Tethyan Copper Co. (TCC), a joint venture between Barrick Gold (TSX, NYSE: ABX) and Antofagasta (LON:ANTO), in relation to the denial of a mining lease for the multi-billion-dollar Reko Diq copper and gold reserve in the Pakistani province of Balochistan.
Ruling confirms that Pakistan violated several provisions of its bilateral investment treaty with Australia, where Tethyan Copper, the Barrick-Antofagasta joint venture, is incorporated.
The decision by the International Center for Settlement of Investment Disputes (ICSID), issued on Monday, confirms that Pakistan violated several provisions of its bilateral investment treaty with Australia, where Tethyan Copper is incorporated, Barrick said in a statement. The ruling also rejects Pakistan’s final defense against liability.
The case dates back to 2011, when the provincial government of Balochistan rejected TCC’s application for a mining licence at the remote Reko Diq site, near the Afghan-Pakistan border, even though the firm had been awarded a licence for exploration in the area in 2006. Such move came shortly after Chinese competitors pushed an alternate plan for what could have become Pakistan’s biggest mine. As part of that counter proposal, the Metallurgical Corporation of China (MCC) offered the province a larger share in income and royalty.
TCC took the case to the international arbitration court claiming damages because it had invested more than $500 million in exploration and feasibility studies. The firm had also vowed to investment $5 billion over five years in what it could have been the biggest foreign-financed project in Pakistan’s history.
Based on the latest estimates available, the $3.3 billion Reko Diq open pit mine project was estimated to yield 200,000 tons of copper and 250,000 ounces of gold a year, contained in 600,000 tons of concentrate, over its 56-year life.
After disclosing yesterday’s ruling, London-listed Antofagasta said the damages phase of proceedings would begin Wednesday, with a final verdict on the total amount owed by Pakistan expected in 2018.