REKO DIQ GOLD AND COPPER RESERVES

89th Junior Management Course Mukhtar Ahmad Assistant Manager (CA) NPCC Islamabad

CONTENTS
Introduction y Location y Reserves y Tethyan Copper Company (TCC) y Investments y Controversies y clarification y Conclusion
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Introduction
Reko Diq is a sparsely populated desert in Balochistan. y It is famous world wide for its huge Gold & Copper reserves. y TCC is developing and will operate a world class gold mine at this site. y Supreme court has recently passed judgment on this case.
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Location of Reko Diq

Location
Reko Diq is a remote location in the North-West of Chagai district. y It is close to Pakistan, Iran and Afghanistan border. y Access to the Chagai district is via Zahidan - Quetta highway.
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Climate
Mostly low relief and thinly populated desert. y In Summers temperature range is 40oC - 50oC. y In Winters temperature drops to -10oC. y Windy area with sand storms.
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Reserves
The deposit at Reko Diq is world 5th largest reserves. y Total reserves : 5.9 billion tons ore y Copper grade of 4.1Kg/ton and gold grade of 0.22 g/ton. y Mineable portion : 2.2 billion tons y Copper grade of 5.3Kg/ton and gold grade of 0.30 g/ton. y Mining life is 56 years.
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Sample Reko Diq Gold Rock

Tethyan Belt

Tethyan Copper Company

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In 1993, the GOB signed an agreement with Australian company BHP Billiton for exploration purposes.

TCC was formed in 2000 y TCC company with shares as: 25% GOB 75% BHP Billiton
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Tethyan Copper Company

Tethyan Copper Company

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BHP Billiton sold its share to Barrick Gold and Antofagasta in 2002. Current share status :Barrick Gold => 37.5% Antofagasta => 37.5% GOB => 25.0%

Investments by TCC
So far 220 million US$ have been spent on exploration since 2006. y Feasibility report was submitted to GOB in august, 2010. y 3.3 billion US$ of initial investment is required. y 2 billion US$ is for a 600km pipeline from Reko Diq to Gwadar for transportation of the slurry bearing copper.
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Controversies
25% Share of GOB is very small. y Federal govt. is not playing good role. y MNC wants maximum profits. y Local people will get no benefits. y Only copper ore will be extracted. y Smelting and refining will be done in foreign countries.
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1.Clarifications and Justifications

Media is discussing only the US$260 billion worth of Reko Diq's reserves. y They forget about financial costs, investment costs and technology. y They have the right to mine, for they discovered it. y GOB has not spending a single penny for exploration.
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2.Clarifications and Justifications

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Balochistan Mineral Rules:

Balochistan Mineral Rules 2002 also stipulate exclusive rights of exploration to the investor with mining lease entitlement upon discovery of a viable resource.

50% of the total output when royalties, taxes and 25% profit share are taken into account comes to Govt.

3.Clarifications and Justifications

Condition of the Area y Most backward and least-developed areas of Pakistan. y Very low human development indicators. y Harsh weather. y Project like this can really boost the economy and social uplift.

4.Clarifications and Justifications

Smelting and Refining y Smelting captures less than 10% of the copper economic chain value y Smelting and Refining will be done in foreign country. y This will vitalize the Gwadar port. y But now it will be done indigenously too.

5.Clarifications and Justifications

Rejecting the foreign company will impart a bad image on foreign investors. y Lack of Technology and Funds. y No significant development in local mining. y Example of Saindaq and bad image of government.
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Conclusion
Deal should be transparent. y We should not reject the foreign investment. y We can use local investment on other sites. y We should use the opportunity to boost our local mining industry.
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