Daily Times

Starved for funds to survive the economic pressure, Pakistan government was jolted with a whopping penalty of $5.97 billion by International Centre for Settlement of Investment Disputes (ICSID) on 12 July 2019 in the ReqoDiq mining case. The amount of the fine is just equal to the recently approved IMF loan package for Pakistan for which the government has flooded the public with all-time heavy taxes.

Soon after the ICSID verdict against Pakistan, the Attorney General of Pakistan (AGP) issued a press statement on 13 July showing Pakistan’s “disappointment” on the verdict. The statement said the Prime Minister has ordered to form a committee to investigate reasons as to how Pakistan ended up in this predicament, and who was responsible for making the country suffer such a loss.

The AGP also welcomed the statement of William Hayes, Board Chairman of the Tethyan Copper Company (TCC), that TCC is willing to work with Pakistan to reach a mutually beneficial settlement”.

TCC conducted an extensive technical and financial study at RekoDiq and prepared a feasibility report for creating a base for mining the area in August 2010. On February 2011, the company submitted a mining lease application along with an environmental and social impact assessment report to the local government. The development on the project was halted in late 2011 when the Balochistan government abruptly vetoed the tender by TCC’s local operating company for a mining lease at RekoDiq.

In 2013, a three-member bench of the Supreme Court, led by former Chief Justice Iftikhar Muhammad Chaudhry, gave a verdict against TCC that claims to have invested $220 million by the time Pakistan backtracked on the lease out-of-the-blue. Thus, TCC filed a case against Pakistan on 12 January 2012 and a tribunal was formed on 12th July 2012 by the ICSID – the case went on for 7 years and the ICSID ruled it against Pakistan in 2017, but they didn’t decide on a penalty back then.

Two weeks on, Pakistan is still planning as how to go back to ICSID for a review of its decision. However, the experts believe that Pakistan only can go for a ‘technical review’ of it. Digging out facts and its consolidation to a request of review may take a little more time. Meanwhile, Mohammad Ali Mirza, the former director general of the Geological Survey of Pakistan (GSP) has written a letter to the Prime Minister’s Advisor Nadeem Baber with some supplementary facts.

Mohammad Ali Mirza in his letter says, “According to TCC, the resource potential of the RekoDiq copper gold deposit include Ore reserves 5.9 billion tons, economically viable reserves 2.2 billion tons, grade of copper 0.5 per cent, average grade of gold 0.3 gram per ton, copper production 10 million tons, gold production 13 million ounces, value of resource estimated at $500 billion during the mine’s life of about 56 years.”

Having been worked on the Saindak project, similar one to the RekoDiq, for 4 years in different key positions along with a USA-based expert on copper-gold metallurgy and mining Irshad A. Rana of the Fluor Danial Inc. (Colorado), Mohammad Ali Mirza feels confident to elaborate the following technical points that resulted in refusal of mining license to TCC and cancellation of its agreement.

Two weeks on, Pakistan is still planning as how to go back to ICSID for a review of its decision. However, the experts believe that Pakistan only can go for a ‘technical review’ of it. Digging out facts and its consolidation to a request of review may take a little more time

“Baluchistan on the advice of their legal and technical experts concluded that the bankable feasibility study submitted by TCC was found unsatisfactory and cancelled the licence in 2011 and denied issuance of mining license. The Balochistan government shall indicate the names of the legal and technical experts who had critically examined TCC’s bankable document and termed it ‘legally and technically unsatisfactory’. Their pertinent findings may be elaborated too.”

“The ICSID Tribunal has given some remarks on Supreme Court Judgment of January 2013 regarding cancellation of the RekoDiq agreement with TCC. The remarks are dismaying and unfair. So, the legal team that was responsible to frame recommendations for cancellation of the agreement may have left some lacunas in their summary that was submitted to the Supreme Court of Pakistan. The team, presumably headed by Attorney General of Pakistan, may be asked to elaborate on weak points of the summary. This would help the PM’s Commission to plan its argument with ICSID for a technical review which could substantially reduce the penalty imposed on Pakistan.”

“The ICSID Tribunal has remarked that the higher amount of penalty was recommended and finalized on the basis of statement given by technical expert of Pakistan Dr. Samar Mubarakmand who stated that (i) value of RekoDiq resource is $131 billion, and (ii) yearly production will generate revenue of $2.5 billion.”

“Dr. Samar Mubarakmand is a renowned physicist for his contribution in his field and in missile technology. However, his selection as an expert for RekoDiq copper-gold project was perhaps ill-advised. He was neither a geologist nor a geophysicist or metallurgist for cooper-gold mining. Dr. Samar Mubarakmand’s statement before the tribunal was unwise and damaging, and based on the report the Balochistan government had already rejected. Therefore, he shall be asked to elaborate the basis of his statement on resource evaluation, and the estimated yearly production of copper-gold and revenue generation.”

In a way, Mohammad Ali Mirza has held responsible Dr Samar Mubarakmand for his misunderstood elaborations and calculations on RekoDiq gold and copper reserves. In the best interest of the country, Dr Samar Mubarakmand should be asked to elaborate his calculations. Meanwhile, the government should take the right technical and legal experts on board to prepare a solid and logical ‘technical review’ for the ICSID to avert the huge penalty. Out of court negotiations with TCC based on the facts may also go on as a parallel effort. This may engage TCC for three years – enough time to sort out the dispute in mutually beneficial ways.

The writer is the Director Devcom-Pakistan, an Islamabad-based policy advocacy, strategic communication and outreach consulting. Email: devcom.pakistan@gmail.com, Twitter: @EmmayeSyed