By Sohail Khan
ISLAMABAD: The Supreme Court was told on Monday that leasing out of the Reko Diq gold and copper mines in Balochistan to a foreign company was the biggest case of bad governance and irresponsibility.
A four-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, and comprising Justice Muhammad Sair Ali, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday, was hearing a case against the leasing of Reko Diq gold and copper mines in Balochistan worth over $260 billion to a foreign exploration and mining company by the federal government in violation of law.
Raza Kazim, the counsel for one of the petitioners, while concluding his arguments, told the court that Reko Diq case was bigger than the Pakistan Steel Mills and eight times bigger than the Indian Telecom case, wherein the Indian Supreme Court had stayed the licence in the case.
Justice Khalilur Rehman Ramday recalled that even the Indian IT minister quit after the court gave its judgment. At one point, Justice Ramday observed that as per the initial agreement made with the foreign company, it was held that the company will give instructions to the Balochistan government. “It is very painful how the provincial government surrendered in such a manner,” he said, adding: “The fault is on our side, if we do not honour ourselves then the foreign company is right in ruling us. We have given this right to the foreign company, and it is shameful to read the privileges that we have given in it (agreement).”
Raza Kazim contended that the status of Tethyan Cooper Company (TCC) was like an agent because it had sold out shares to other companies, Barrick Gold and Antofagasta Minerals. At this, Justice Muhammad Sair Ali asked the learned counsel as to whether the TCC was registered as a Pakistani company.
“Till 2000, it was not registered,” Kazim replied, adding that the company wanted to hold a monopoly in the area, so that neither local nor any other foreign company could come.
The counsel further submitted that EL-6 and EL-8 were in their possession despite the fact that their licence got expired in 2009. He further submitted that the company also got possession of EL-25 and 26 for which it had not yet attained any licence.
Balochistan Advocate General Salahuddin Mengal submitted before the court that the provincial government had expressed serious reservations over the feasibility report submitted by the company. He further submitted that their experts had made analysis of the said feasibility report and found that the company had covered so far only six square kilometres while the total area was about 450 square kilometres.
He further submitted that geologists of the Mineral Department had started their survey, adding until it was completed, no work would be started on the project. Meanwhile, Raza Kazim suggested to the court to constitute a commission that could make analysis of the feasibility report.
Later, Tariq Asad, the main petitioner, informed the court that he had not yet been provided relevant documents about the project. The court however, asked him to commence his arguments on the basis of whatever information he had as he had filed the petition.
Meanwhile, he argued before the court about the rules and bylaws concerning the lease. The court, however, directed him to give his formulations in a proper manner and argue as to how rules had been violated in the case and adjourned the hearing till today (Tuesday).
The News on November 3, 2010, had reported that some 20 top corporate bosses and lobbyists of two of the world’s largest gold mining groups had been meeting President Asif Ali Zardari, Prime Minister Syed Yousuf Raza Gilani, the State Bank governor and others in Islamabad throughout the week, pressing them to quickly hand over one of the world’s biggest gold and copper treasures found in Balochistan at Reko Diq, worth over $260 billion, to their companies, and for peanuts.
Later, Tariq Asad, advocate challenged the case in the apex court. Similarly, 26 senators also filed a joint petition against the leasing out of Reko Diq mines to a foreign company. APP adds: The chief justice observed that the feasibility report was with the Balochistan government since October last year and they were not sharing it with the apex court.
By Shaheen Sehbai
WASHINGTON: The mystery of Reko Diq gold mines deepened on Tuesday as the Supreme Court prepared to hear the case on Wednesday, when Tethyan Copper Company (TCC), the Canadian-Chilean giant working in Balochistan, issued a long statement which coincided with a stinging attack on TCC by a US company which has eight exploration licences in Pakistan,
including two in Reko Diq. The official statement by TCC (reported separately in these columns) came 20 days after the original story by The News on how Reko Diq was being sold for a song by the Pakistani government but the statement by Benway Corporation of New York was a stunner as its president and CEO accused TCC and its principals of playing games with Pakistan.
He levelled serious allegations against TCC and Barrick Gold Corporation and announced his company will soon request the Supreme Court of Pakistan to become a party in the Reko Diq case. The company said Reko Diq deposits had not been fully declared to the government of Balochistan by its sponsors.
“They are playing games with their government of Balochistan partners,” CEO and president of Benway Corporation, Sheikh Tanvir, a Pakistani-American, said in the statement. The TCC statement added further confusion to the already complicated situation about the original size of the deposits at Reko Diq, the share of Pakistan and whether laws were followed or twisted.
TCC claimed that the mineral resource at Reko Diq was estimated at 5.9 billion tons. “From this resource, an estimated 2.2 billion tons of economically mine-able ore, with an average copper grade of 0.5 per cent and an average gold grade of 0.3 gms per ton will be processed to produce 2.2 billion pounds of copper (10 million tons) and 13 million ounces of gold in form of payable metal in about 56 years of mine life.”
But this statement militates directly against what the Barrick Gold of Canada told the Canadian and American Mines Handbook, 2009-2010, a bible of the mining industry. It shows Barrick’s 37.5 per cent share of measured and indicated resources in Reko Diq was equal to 1,125,071,000 tons average 0.008 opt gold, for 8,487,000 ounces of gold and 11.5 billion lbs of copper. Inferred resource was shown as 895,089,000 tons average 0.009 opt gold, for 8,398,000 ounces of gold and 8.5 billion pounds of copper.
If this estimate is the share of Barrick, then the Chilean share is exactly the same and Pakistan’s share would be slightly less as Pakistan has 25 per cent stake as against 37.5 per cent each of the two big companies. Experts have to calculate the worth in the present bullish gold and copper market.
The confusion gets further confounded as a 2008 study conducted by both these companies involving top experts of Geology and mining reported much larger deposits. This study was published in “Economic Geology”, a bulletin of the Society of Economic Geologists (Vol. 103 December 2008 No. 8), written by Jose Perello of Antofagasta of Chile, Abdul Razique and Asad-ur-Rehman of Tethyan Copper Company, Pakistan and John Schloderer of Albidon Ltd of Australia.
These experts concluded that the 300-km-long Chagai porphyry copper belt had 48 deposits and prospects containing porphyry-type alteration and mineralisation. “Three medium-sized porphyry copper deposits are present in the belt at Saindak and Tanjeel and H8 at Reko Diq, the former currently providing small scale production. The H14-H15 copper-gold deposit at Reko Diq, currently at the feasibility stage, is world-class and contains open pittable resources of approximately 18 million tons of copper and 32 million Oz of gold.”
So while on Tuesday TCC claimed that Reko Diq had only 2.2 billion pounds of “mine-able” copper (10 million tons), these experts hired by TCC in 2008 had found the deposit of copper to be 18 million tons. Likewise while TCC today says gold deposits are only 13 million ounces of “payable” metal, the experts had estimated it to be 32 million ounces.
What is the difference between a “mine-able” and “payable” ore and by using “ton” and “tonne” in the same statement is not evident to ordinary people but the US company, also working in Reko Diq, in its statement on Tuesday said TCC was twisting words.
“For some 15-20 days we hear TCC keeps saying they are doing everything according to Balochistan Mining Rules of 2002. They say they are doing everything lawful in Pakistan. We disagree with most of what they are telling Pakistani people and the media. They are not fully telling the truth. They twist words,” the Benway statement said.
Sheikh Tanvir heads Benway, a privately held corporation incorporated in New York State since 1998 with 38 shareholders, mostly US citizens, a Canadian, an Australian, a Turk and three 3 Pakistanis. Its business is mining and works to discover copper and gold deposits.
His statement revealed that Barrick Gold Corporation went to Benway in 2007 to go into a joint venture with Benway on EL-24 in Chagai Balochistan, owned by Benway, located south of Reko Diq with a 30 km long common border.
“Barrick in 2007 offered us a package of $10.6 million. We refused that very very low offer. Then Barrick and Antofagasta’s front company TCC invited Balochistan officials to Toronto and Chile and ended up building an airport on EL-24 instead of their EL-5. We went to Balochistan High Court against 3 international companies and their front company, TCC Pakistan,” the statement said.
Benway accused Barrick Gold of playing games “with your partners and host country.” “They please officials of GoB and GoP and convince those officials to play games for the sponsors. We believe business must be done truthfully and ethically. Reko Diq was found in 17 years and we believe we have similar deposits and we found this in 3 years. These mining companies are stifling the competition and pushing fair competition laws of US and Pakistan.”
The US company claimed that Barrick Gold had broken Canadian laws. “They have broken Australian laws and they have criminally broken US laws of Foreign Corrupt Practices Act. They have broken Pakistani and Balochistani laws by their tangible actions in Balochistan and Pakistan. We believe that highest officials of these corporations are involved, some of them hold the highest civilian awards of Canada.”
The company said now that the Supreme Court of Pakistan was hearing the matter, we are happy that truth will emerge soon. “We are in BHC since May 2008 and we will approach the SC soon to allow us to be disposed in BHC in a speedy manner and/or kindly enter us as the main injured party in SC.”
“We are against the law breaker mining companies. We believe Pakistan and Balochistan are not dependent on a few bad eggs of the mining industry. There are 150 major mining and over 3000 junior mining companies in the world. Pakistan has 1000 choices. It is not because of terrorism that mining companies are not coming to Pakistan. It is because of corruption of officials, politicians and Pakistanis not following Pakistan’s own rules and laws. We will show Pakistan who is right and who is wrong,” the statement concluded.
$260 billion gold mines going for a song, behind closed doors–>Special Report By Shaheen Sehbai, The News
Special Report By Shaheen Sehbai
WASHINGTON/ISLAMABAD: Quietly, and below the media radar, some 20 top corporate bosses and lobbyists of two of the world’s largest gold mining groups have been meeting President Asif Zardari, Prime Minister Gilani, Governor State Bank and others in Islamabad throughout last week, pressing them to quickly hand over one of the world’s biggest gold and copper treasures found in Balochistan at Reko Diq, worth over $260 billion, to their companies, and for peanuts.
Before these highly enticing visits of the mining tycoons to clinch the deals, which followed intense behind-the-scene negotiations and bargaining through middle men, some highly bizarre developments have been taking place, leaving experts and the rest of the mining world stunned, amazed and confused.
These companies want that the mining licences should be issued by Pakistan immediately after their exploration licences expire soon. But there are legal hitches and pressure is now being put through the backdoor to get the target.
In recent years, so many games have been played to keep Pakistan’s share in the enormous treasure to a bare minimum, thanks to some greedy politicians and bureaucrats who sold their country’s natural wealth.
A deep study of numerous documents, statements of major players, stakeholders and competitors, interviews with key Pakistani officials, including Chief Minister of Balochistan Nawab Aslam Raisani, the picture that emerges is so murky and mind boggling that any ordinary soul just cannot fathom what is going on. Only a thorough and detailed judicial probe can untangle this mystery.
There is a plethora of documents, which prove that almost everybody involved is trying to deceive everybody else, the real picture is never presented, misleading statements and even contradictory claims have been made in the media, the issue has been kept confused as the real mega deal is maturing fast behind closed doors.
“Because there is no effective investigating agency like NAB operating in the country, it is just the right case for the Supreme Court and the Chief Justice of Pakistan to pick up the issue, put a hold on whatever is going on before any binding contracts and deals are signed, which may cause losses of billions of dollars, yes billions of dollars to Pakistan,” according to a corporate executive involved in the mining industry, based in New York. His company chairman is a reputed former three-term Congressman.
“The Reko Diq scandal is equal to 260 steel mills valued at one billion dollar each or 570 steel mills at $350 million each, the price at which PSM was being sold by PM Shaukat Aziz before it was stopped by the Supreme Court,” shows a calculation.
And according to one Washington mining industry expert, if Pakistan gets its fair share from the gold and copper mines, Balochistan and Pakistan would become richer than any of the present oil producing Gulf countries, many times over. “They have the goods, they need the will,” he said.
The massive mine deposits at Reko Diq in Chagai Balochistan are part of the same geological belt discovered in Afghanistan, which the Pentagon recently claimed was worth one trillion dollars, though President Hamid Karzai claimed it was worth more than 3 trillion dollars.
According to a report in the New York Times on June 13, 2010 by James Risen: “The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe. An internal Pentagon memo, for example, states that Afghanistan could become the Saudi Arabia of lithium, a key raw material in the manufacture of batteries for laptops and Black Berrys.”
Pakistan, it is estimated in mining circles, has more deposits than Afghanistan, so the enormity of the riches and the cost of the backdoor deals can easily be guessed. “It would be the mother of all the deals and grandfather of all the corruption cases in Pakistan, put together,” according to one expert.
Reading the piles of documents, statements, interviews and legal papers available with The News, the picture that emerges is one of a grand deception, loot and plunder that never happened before on such a scale and the facts, untruths, half-truths, attempts to sabotage, frauds and backdoor bribes, are all documented.
It all started in the Musharraf era but once the massive scale of the stakes involved became apparent to the PPP government, the Raisani/Zardari camp quickly jumped into the fray to renegotiate the deal, behind closed doors.
An Australian mineral exploration firm originally started the exploration and invested some $30 million but in 2006 sold the company to a Canadian and Chilean joint venture for $230 million. The old company was an Australian public company Tethyan Copper Prosperity Limited and the new company was named Tethyan Copper Company (TCC) of Pakistan. A trick game is being played in these cosmetic changes. The Canadians and Chileans, according to publicly declared information to their shareholders and regulators, took 37.5 per cent share each, while Pakistan only had the remaining 25 per cent.
Seeing the vast potential, the TCC soon raised its investment to half a billion dollars. The Pakistani shares belong to the Government of Balochistan and the federal government has no share. Due monies have not been paid to Pakistan or Balochistan treasuries.
Two licences (EL-6 and EL-8) for exploration were also given on a 100 per cent ownership basis to these foreign firms, with Pakistan (or Balochistan) having no share at all.
All this was done during the Musharraf regime and bureaucrats played havoc with Pakistani interests. They were trying to emulate President Hamid Karzai’s mining minister, who was caught with $30 million in his Dubai bank and later removed. According to a Washington Post report on Nov 18, 2009: “The Afghan minister of mines accepted a roughly $30 million bribe to award the country’s largest development project to a Chinese mining firm.”
Quoting a US official, the Washington Post said: “The alleged payment to Mohammad Ibrahim Adel was made in Dubai within a month of December 2007, when a big Chinese metallurgical group received the contract for a $2.9 billion project to extract copper from the Aynak deposit in Logar province. Aynak is considered one of the largest unexploited copper deposits in the world.”
The Pakistanis were never told the exact size of the gold and copper deposits that were found by these foreigners. Even until July this year, when a top level delegation of the Canadian company led by Aaron Regent met Prime Minister Gilani in Islamabad, the PM was told that development of this mega project shall generate a revenue of only about $3.5 billion for Government of Pakistan and $4.5 billion for Government of Balochistan over 40 years.
But the Canadian company has to report the real value to its own Canadian government agencies every year and on December 31, 2008 it informed these agencies, and its shareholders, that its 37.5 per cent share in Reko Diq would yield 17 million ounces of gold and 20 billion pounds of copper in measured, indicated and inferred resources. And these deposits have to be mined in 25 years, not as PM of Pakistan was told in 40 years.
At current prices of these two minerals, the total asset of the Canadian, Chilean and Pakistan government would be over $260 billion and according to former Finance Minister Shaukat Tarin, as the prices of gold and copper go up, the total yield could be even $500 billion or may be a trillion.
In 2008 the PPP leaders entered the equation and on Dec 25, 2009 the Government of Balochistan announced the cancellation of the Reko Diq agreement. The decision was taken unanimously by the provincial cabinet, which also means the entire Balochistan Assembly. The cabinet also decided not to extend exploration licence of Reko Diq to the Canadian company and not to issue any mining licence for further work. Chief Minister Nawab Aslam Raisani said on the occasion: “Cancellation of the Reko Diq copper and gold project agreement is a step towards getting control over provincial resources in accordance with the wishes of the people.”
The key statement he made was that he had held consultations with the coalition partners (read PPP and President Zardari) on the matter.
Before Raisani’s decisions in 2008 and 2009, the former chief minister during the Musharraf regime, Jam Yusuf had visited Canada and Chile in early 2007, why no one knows as it can only be guessed what a CM could do in the corporate HQ of a company.
Early this year, Raisani handed over affairs of the project to the Department of Mines and Mineral Development of Balochistan and acquired the services of eminent nuclear scientist Dr Samar Mubarakmand, who was made head of its Board of Governors.
After the July 2010 visit of the Canadian company head to Islamabad, Chief Minister Raisani and Federal Minister of Petroleum and Natural Resources started pressurising the federal and provincial government officials to make an early decision about Reko Diq. Lots of officials were transferred from their posts. In October, in an unprecedented letter, the CM asked President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani to convene a high-level meeting to take the final decision. It seems double games were already underway.
But in Dubai, before the Canadians visited Islamabad to see President Zardari, the CEO of the company announced on October 25, 2010 that Reko Diq project would go ahead as planned despite plans by the provincial government to cancel it. “The project is going ahead and will not be cancelled, we are now in talks with the government and we expect production to start by the end of 2015,” Gerhard Von Borries, Chief Executive of TCC, said on the sidelines of an industry event in Dubai.
One month before the October visit to Islamabad, the company submitted a 100,000 pages feasibility study and gave the cost as $3.3 billion. Experts say this $3.3 billion will be the construction cost to build the mining infrastructure to extract the gold and copper. It took three years to write this report and the Samar Mubarakmand Board was expected to study and give its finding, quickly, may be in just a few days.
But before the Board of Governors headed by Dr Samar could open the report, a new committee was formed on October 1, 2010, excluding most of the board members and perhaps the new committee would now decide everything, in undue haste shortly.
The Canadian company, Barrick Gold, with 29 mines all over the world, is already being accused on the web of some strange activities. These include spills of cyanide, mercury and other heavy metals, police and legalistic repression of critics, threats to water resources on four continents and even food poisoning, as well as rape.
In 2008, under oath in the Balochistan High Court, Barrick Gold stated it had nothing to do with building an airport in the heart of Balochistan for its mining operations. It turned out the airport was actually built but on someone else’s property, a neighbouring exploration company from the US.
However, in its quarterly filings of March 2007, Barrick reported to the Securities Exchange Commission (SEC) in Washington DC that they had spent $30 million to build the airport in Pakistan and other activities. It was the same strip built on the neighbour’s property. The company made a false statement, to either the Balochistan High Court or the SEC. It was potential perjury any way. The US company, Benway Corporation, which is also exploring in the same area, has gone to Balochistan High Court against the intrusion on its land besides reporting the case to the SEC, which is looking whether violations of the US laws on corrupt practices have been violated.
While these confusing details may not make any sense for an ordinary reader, some 1,050 documents filed in the Balochistan High Court show that the TCC has been given unlawfully 508 sq km land on 30-year leases, a fact which CM Raisani has no clue about.
On Oct 28, when TCC executives were meeting the top PPP bosses in Islamabad, Chief Minister Balochistan was also around and he told Ahmad Noorani of The News: “This is impossible. As so far issues have not been finalised, so in no way TCC could be leased such a big land and that too for 30 years”.
He was asked: “Do you know that Reko Diq Exploration Licence No 5 gives TCC 240,000 acres of land and it expires in 2011. That TCC has had this licence from the Department of Mineral and Mining Development and on December 24 2009 you declared by a unanimous cabinet decision not to renew EL 5. But actually TCC had carefully bought and leased all that land from Board of Revenue of Balochistan in 2008 for 10 million dollars for 30 years. Your December 24 decision really had no teeth. TCC owns the land for 30 years. What has changed since December 24, 2009 that you are ready to sign a new agreement within a week or by November 24, 2010?”
The chief minister, who had no idea that a 30-year lease had been granted, responded: “It is not possible that such a big chunk of land is leased to TCC for a period of 30 years.” He asked his personal secretary to recheck and confirm the exact situation of the land lease to the TCC.
He was then asked about the cheques of millions of rupees he had received from the Canadian company. “How many total cheques you received from TCC or their related companies since you were sworn in as the CM. Why he thought they were giving him checks when their case was in the process of a major decision.”
Raisani admitted that a total of two cheques were given to him for Rs 10 million and Rs 8.5 million. “Both cheques were for the chief minister’s relief fund and were deposited in the Government of Balochistan account,” he maintained.
A spokesman of the TCC in Islamabad told The News that a cheque of Rs 8.5 million was given to Chief Minister Balochistan on Aug 25, 2010 for CM’s flood relief fund only and this cheque was for chief minister. But Press Secretary to the Chief Minister, Kamran, claimed that the cheque of Rs8.5 million was given by the TCC in the name of the Government of Balochistan and was deposited in the CM’s account for flood relief. He said this cheque had nothing to do with the files of the TCC in CM’s office.
CM Raisani told The News after the Dec 24, 2009 decision that the TCC had submitted a fresh feasibility study, which was being analysed and so far no final decision had been taken. Despite the statement of his press secretary, the CM asserted that no date could be given when the decision to award this project would be taken.
Asked about the licences, which were totally foreign owned without any share of Pakistan, the CM answered that for exploration licences there was no question of any share of Government of Balochistan. “For exploration, Balochistan will have to pay the TCC,” he argued.
In answer to the most pertinent question asked about the size of the deposits and what Pakistan would get out of the deal, CM Raisani was evasive.
He was asked: “Do you know that the value of Reko Diq is $260 billion as per records of the Canadian company (at today’s gold/copper international market rates), the government and former Finance Minister Shaukat Tarin said its value was $500 billion but in July the President of Barrick Gold came to PM Gilani and said the value was only $50 billion. Why is the government in such a hurry to decide this matter in favour of TCC on the fast track?”
In a surprising statement, Raisani just said the total cost was Rs 8.9 billion, not dollars. He ignored the rest of the question. Asked whether any international consultant was being hired to study the 100,000 pages feasibility studies as this was the first project of its kind in Pakistan, the CM said: “No, we don’t. We don’t need any. We have so many experts in different fields.”
“Is it correct that CM Balochistan is being pressurised by President Zardari to sign a deal with TCC,” he was asked.
His response: “I met President Zardari on this issue on Wednesday (last week).” Asked what the president told him to do, he said it was between President Zardari and him and he would not disclose what Zardari asked him on awarding of the project to the TCC.
But then, as an after thought, he added: “The federal government is not pressurising me on this issue. We are dealing with this ourselves.”
The bottomline is that Pakistan now has to issue mining licences to extract gold and cooper, which is worth billions of dollars and the current mood in Islamabad is to give the foreign companies a huge share. In fact, Pakistan should retain 70 to 80 per cent of these treasures.
In many countries, where agreements had already been signed giving a much bigger share to foreigners, these agreements were revised in the interest of the host country. Ireland, South Africa, Venezuela renegotiated their mining and oil exploration contracts to their benefit.
Anyone interested in making a few million dollars, like the Afghan minister of the Karzai government, which could cost the country billions, must not be allowed to do so. This is the role the Supreme Court, parliament and the media have to play at this crucial time.
Note: The Islamabad portion of this Special Report including CM Raisani’s interview was filed by Ahmad Noorani.
Comments : Thanks to the journalist for this great service to the nation. This is another joint venture of Mush/Zardari governments like NRO. This plunder started in Mushi time and still on in Zardari time and going for final phase. Even the parties involved in Rental Power Projects also invested on both Mushi and Zardari gangs.