UPDATE: Tethyan: Reko Diq Mining Lease Rejection Breaches Pakistan Law
November 18 2011 - 7:17AM
Dow Jones News
Tethyan Copper Co. Pakistan Ltd. said Friday that this week's
rejection by Pakistan's provincial Baluchistan government of its
Reko Diq copper gold mining lease application breaches the
province's 2002 mineral rules, agreement with the joint venture and
Pakistani law.
The Baluchistan "Licensing Authority's summary refusal to grant
the Mining Licence to which TCC [Tethyan] is entitled breaches not
only the Baluchistan Mineral Rules (2002), but also TCC's rights
under the Chagai Hills Exploration Joint Venture Agreement (CHEJVA)
and Pakistani law," the company said.
Reko Diq, one of the world's largest untapped copper and gold
deposits, is located in the Province of Baluchistan, which borders
Afghanistan and Iran. The Baluchistan government owns a 25% stake
in the project while Tethyan, a joint venture equally owned by
U.K.-listed Chilean copper producer Antofagasta PLC (ANTO.LN) and
Canada-based Barrick Gold Corp. (ABX), owns the remaining 75%.
If the $3.3 billion project were to go ahead, it would instantly
double the country's foreign direct investment at a time when the
U.S. is considering reducing foreign-aid expenditures to cut its
budget deficit.
Tethyan didn't disclose its next steps but said the rejection
notice "compromises" its preferred route of negotiating a
resolution.
"We firmly believe that our activities to date have been fully
in line with the Baluchistan Mineral Rules (2002) and would welcome
the opportunity to discuss this with the Provincial regulator and
government," said Chief executive Tim Livesey in a statement.
He added that the company is committed to developing the Reko
Diq mine in line with international best practice on environment,
labor, health and safety issues and noted that the project could
act as a catalyst to attract more investment into the province and
kick start the province's nascent mining sector.
Livesey previously said Tethyan had the option to potentially
launch two international arbitration cases to resolve the dispute:
one with Baluchistan's provincial government and another with
Pakistan's federal government.
Tethyan has spent just over $220 million on exploration and
technical studies since 2006. It initially filed a mining lease
application for the project in February and then received a letter
of objections and observations from the Baluchistan government in
September, which stated that the company had 30 days to
respond.
After failing to secure clarity or meetings with the Baluchistan
government, Tethyan issued a notice of dispute on Oct. 19, which
gave the joint venture another 120 days to resolve any outstanding
issues.
The Baluchistan government did not respond to request for
meetings to resolve outstanding issues, Tethyan said, and Nov. 14
rejected the mining lease application, citing that it was
incomplete and that Tethyan's application wasn't legal since
Baluchistan didn't give its consent as an equity partner in the
project, among other things.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)7776 200 924,
alex.macdonald@dowjones.com (Owais Tohid in Pakistan contributed to
this story)
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