Reko Diq project: Ecnec concerned over distribution mechanism of refined gold

The Executive Committee of the National Economic Council (Ecnec) has expressed reservations over the final distribution mechanism of refined gold between the Balochistan government and the joint venture in the multi billion rupee Reko Diq gold/copper project, well-informed sources in Finance Ministry told Business Recorder.
Three Australian mining companies, BHP Billiton, the largest Copper mining company in the world, Tethyan Copper Company (TCC) and Mincor Resources are engaged in the exploration of copper, gold and other base metals in district Chaghi, Balochistan.
"A foreign firm had undertaken a feasibility study, but intends to work as a joint venture, and expects to take raw gold/copper for refining to their country at 50: 50 share, thus it is not yet established whether this distribution is fair or not," sources quoted one of the member''s of Ecnec as saying during the last meeting of the committee held on December 9, 2010.
Ecnec was informed that Reko Diq has the fifth largest copper ore reserves in the world with 0.8 per cent copper contents. Government of Balochistan envisaged creating a facility for processing 15,000 tons per day of copper ore to produce copper metal and other valuables such as gold, silver, molybdenum and sulphuric acid etc. It is estimated that annual income of the project, on completion, would be to the tune of Rs 15.876 billion equivalent to $185.25 million.
It was also revealed that the project will help in achieving self-reliance in the production of copper/gold ingots and some other materials, besides improving livelihood of the people of Balochistan by providing direct employment to 917 persons. It was decided that the plant and equipment would be designed and manufactured locally.
The Ecnec was further informed that the project costing Rs 8.699 billion was considered by the Central Development Working Party (CDWP) in its meeting held on March 18, 2010 and recommended for Ecnec''s approval. It was explained that due to devaluation of Rupee against dollar, the Foreign Exchange Component (FEC) has been revised to Rs 3.603 billion taking actual cost of the project to Rs 8.8122 billion.
As agreed by the Balochistan government, funds during fiscal year( 2009-10) would be arranged by the provincial government out of their annual development plan and funding from fiscal year 2010-11 onwards would either be arranged by the federal government or provincial government as per the decision of the Ecnec.
Ecnec was also apprised that local technology and expertise is available to develop the mines; therefore it would be appropriate to consider this option in the larger national interest. It was also pointed out that some cases related to the project are pending consideration in a court of law.
Ecnec directed that if an agreement has not been signed with any firm for mining and refining etc, then Balochistan government may decide to execute the project on its own. It has also been directed that if the project is to be bifurcated involving some other companies, the draft agreement shall be vetted by the Ministry of Law and Justice to ensure transparency and consistency with international law. The Balochistan government would prepare implementation mechanism of the project. The project will be funded by the Balochistan government from their own ADP as confirmed by them in the meeting.