Reko Diq Gold Reserves

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REKO DIQ GOLD AND COPPER RESERVES89th Junior Management Course Mukhtar Ahmad Assistant Manager (CA) NPCC Islamabad

CONTENTSIntroduction y Location y Reserves y Tethyan Copper Company (TCC) y Investments y Controversies y clarification y Conclusiony

IntroductionReko 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.y

Location of Reko Diq

LocationReko 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.y

ClimateMostly 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.y

ReservesThe 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.y

Sample Reko Diq Gold Rock

Tethyan Belt

Tethyan Copper Companyy

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 Billitony

Tethyan Copper Company

Tethyan Copper Companyy

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%

y

Investments by TCCSo 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.y

Controversies25% 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.y

1.Clarifications and JustificationsMedia 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.y

2.Clarifications and Justificationsy

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.

y

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

3.Clarifications and JustificationsCondition 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 JustificationsSmelting 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 JustificationsRejecting 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.y

ConclusionDeal 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.y