ISLAMABAD: Barrick Gold Corporation would convert Pakistan’s Reko Diq into a world-class mine that would start producing gold and copper by 2027, the chief executive officer (CEO) of the Canada-based mining firm said on Monday.
The Reko Diq project in Pakistan's southwestern Balochistan province, which hosts one of the world's largest undeveloped copper and gold deposits, was suspended in 2011 after Pakistan denied Barrick Gold and Chile's Antofagasta a licence to develop it.
An agreement reached between the Government of Pakistan, the provincial government of Balochistan and Barrick earlier this year provides for the reconstitution and restart of the project, which has been on hold since 2011. It will be operated and owned 50 percent by Barrick, 25 percent by the Balochistan government and 25 percent by the Pakistani state-owned enterprises.
“The definitive agreements underlying the framework agreement are currently being finalized by teams from Barrick and Pakistan,” Barrick CEO Mark Bristow said at a press conference in Islamabad on Monday.
“Construction of the first phase will follow that with the first production of copper and gold expected in 2027-28.”
Bristow said Barrick would bring capital and technology to convert Reko Diq into a world-class mine and transform Balochistan.
“The project will bring in $10 billion investment in Pakistan, out of this, $4 billion in the first phase till 2027, then $3 billion during the second phase and another $3 billion in the third phase,” he said.
Subject to the updated feasibility study expected in two years, Bristow said, Reko Diq is envisaged as a conventional open pit and milling operation, producing a high-quality copper-gold concentrate.
“It will be constructed in two phases, starting with a plant that will be able to process approximately 40 million tonnes of ore per annum which could be doubled in five years,” he said.
With its unique combination of large-scale, low strip and good grade, Reko Diq will be a multi-generational mine with a life of at least 40 years, according to the Barrick CEO.
During the negotiations, he said, the Pakistani government and Barrick agreed that Balochistan and its people should receive their fair share of the benefits as part of the Pakistan ownership program.
“The project will have 100 percent Pakistani worker who will be first trained by Barrick for the mining job,” Bristow said. "During the peak construction, the project is expected to employee 7,500 people and once in production it will create 4,000 long-term jobs."
Pakistan's Finance Minister Ismail said the development of Reko Diq represented the largest direct foreign investment in Balochistan and one of the largest in Pakistan.
“Like Barrick, we believe that the future of mining lies in mutually beneficial partnerships between host countries and world-class mining companies,” Ismail was quoted as saying in a Barrick statement.
"The Reko Diq agreement exemplifies this philosophy and also signals to the international community that Pakistan is open for business."
The finance minister said his government was looking forward to Barrick Gold’s investment in the copper and gold mine. "I believe this investment is going to be transformational for Balochistan and Pakistan," he said on Twitter.
Bristow said multiple social welfare programs for the people of Balochistan would be initiated in education, healthcare and food security as well as for the provision of potable water in a region where groundwater has a high saline content.
“This includes an upfront social development spend of up to $3 million in year one and up to $7 million in year two during the feasibility study update,” the Barrick CEO said.
"One percent of capital during construction phase [and] 0.4 percent of revenue thereafter on an annual basis would also go to the social welfare of the local public."
He said the unique feature of the agreement was that the Balochistan government would start receiving royalty of the project before the start of operations.
“The Balochistan government will get up to $5 million in the first year, $7.5 million in the second year and $10 million annually from the third year till commercial production is achieved,” Bristow said.
“The Reko Diq agreement also signals to the international community that Pakistan is open for business,” he added.
