Reko Diq project financial close likely by June 2025: ADB weighs third-party guarantee option

ISLAMABAD: The financial close of the Reko Diq Mining Project is expected by June 2025, as the Asian Development Bank (ADB) is likely to approve a third-party guarantee arrangement, sources informed Business Recorder.

According to sources, a progress review meeting on the latest developments of the Reko Diq Mining Project was held at the Prime Minister’s Office, chaired by the Team Lead of the Project Support Team (PST).

The Team Lead-PST provided an overview of the Reko Diq Project, while the Project Director of Reko Diq Mining Company (RDMC) thanked PST members for their support in addressing several outstanding issues.

Reko Diq: ADB may approve 3rd-party guarantee by Feb

Reko Diq Mine is jointly owned: 50% by Barrick Gold, 25% by three federal state-owned enterprises (GHPL, OGDCL, and PPL), 15% by the Balochistan Government (fully funded), and 10% by Balochistan (on a free-carried basis).

The meeting focused on the key milestones necessary for completing the Feasibility Study by December 2024 and achieving Financial Close by June 2025. Both the Federal Government ministries and the Balochistan Government were advised to coordinate and support the RDMC to meet these deadlines.

Joint Secretary (Corporate Finance) Ministry of Finance (MoF) stated that a third-party guarantee arrangement is likely to be approved by the ADB by May 2025. A representative from the Finance Division also shared that during the deliberations with ADB, the RDMC team was present too.

Representative of the RDMC highlighted that the provision of a GoP guarantee for the Government of Balochistan (GoB)/ Balochistan Mineral Resources Limited-BMRL and equity funding obligations are critical for the timely Financial Close of the project.

Team Lead PST highlighted that the timelines to obtain this guarantee from ADB have been extended at least thrice since December 2022 and advised the Finance Division to follow it up diligently with ADB and ensure the finalization of the guarantee at the earliest.

Credit Enhancements by three State Owned Enterprises (ie, GHPL, OGDCL, and PPL) and representative from the Pakistan Minerals Private Limited (PMPL) shared that this task is almost completed in coordination with RDMC. TL-PST asked the PMPL representative to share a written update with the PMO in coordination with RDMC.

On tax and Export Processing Zone’s Regime implementation, representative from the FBR was from the Income Tax side while the issue under discussion pertained to the customs side (PMO shared in advance the FBR related agenda of the meeting with the FBR representative). Prime Minister’s Office has already requested the FBR on September 26, 2024 to look into the matter. FBR representative was advised to get hold of the issue and share the latest progress with RDMC and PMO.

On the Track Access and Operator Agreement between Pak Railways and RDMC, representative of Pakistan Railways (PR) shared that three different working groups consisting of joint teams of Pakistan Railways and the Barrick Gold/RDMC are working to finalize the Track Access Agreement and related documents.

It was noted that 20 meetings have been held so far and the first/initial draft is ready, however, Pakistan Railways is waiting for simulation outcomes of data analysis from the RDMC to finalize the commercial features of the agreement.

RDMC representatives supported the update shared by PR and requested a meeting with the legal advisor legislation- Pakistan Railways. Pakistan Railways representative asked the RDMC team to send a desired schedule and agenda of the meeting with the Legal Advisor and the same will be arranged by the Pakistan Railways. Pakistan Railways and RDMC both shared that their coordination is working smoothly to finalize the Track Access Agreement.

During discussion on implementation of security MoU and movement of project personnel the meeting was informed that a security services agreement was signed on December 15, 2022 between the Government of Pakistan, Government of Balochistan, and RDMC, followed by an MoU on November 17, 2023 between RDMC and FC for security provision.

Representative of Ministry of Interior (MoI) shared that security is being provided to the project company, ie, RDMC as per laid down protocols/SOPs. Representative of the FC highlighted the financial constraints due to the lack of payments from MoI to FC account. The Ministry of Interior was advised to write a letter to the Finance Division regarding the pending payment issues and share progress with PMO.

On revision/harmonization in Mines Laws/Regulation, it was apprised that a Mineral Cell has been established, and work on Mineral Policy is in progress in coordination with SIFC and other relevant stakeholders. Petroleum Division has also completed the benchmarking of international and provisional Mining Laws/Rules & Regulations and updation of the regulations of mines and oil fields and the Mineral Development (Government Control) Act 1948.

Furthermore, Petroleum Division has also engaged the provincial leadership from KPK, Punjab, Sindh, and Balochistan and will update the GB and AJK in the coming weeks. Drafting of the Health and Safety Act, 1923 and Mineral Policy is underway.

Once Acts are ready, Petroleum Division in coordination with Provinces will initiate the necessary approvals from the competent forums. A detailed presentation to the Prime Minister by the Petroleum Division on this issue is also due.

The representative from the RDMC appreciated the extensive work done by the Petroleum Division, but highlighted the need for some fast-track amendments in the Mines Act 2023 to enable the project to fulfill lenders’ requirements.

Furthermore, approval (currently this approval is being extended on six months’ basis by the Inspector Mines of the Government of Balochistan) of the construction roaster of the project under the Mines Act-1923 is awaited due to some legal impending legal amendments in the Mines Act-1923.

The meeting was further informed that RekoDiq Mining Company (Private) Limited has chosen Pakistan International Bulk Terminal Limited (PIBT) as the preferred port facility for handling its cargo concentrate during the initial phase of the Reko Diq mining project.

According to Joint Secretary, MoMA, the request of RDMC has already been forwarded to the Port Qasim Authority which after due consideration has agreed and the matter is awaiting approval of the Part Qasim Authority Board.

It was informed that a public hearing has been undertaken by RekoDiq Mining Company (RDMC) and the Environmental Impact Assessment & Social Assessment (ESIA) report will be submitted to BEPA in the next week by RDMC.

Secretary Mines & Minerals-Govt. of Balochistan shared with the meeting that the Lease Deed has been signed, RDMC team also confirmed it and shared that the subject deed is legally registered too. However, the Water Extraction Permit is yet awaited.

The land allocation for the boreholes for water extraction is done, so is the land allocation for laying the pipeline. The District Water Board/Committee chaired by DC grants for permission to dig boreholes and extract water is awaited from DC Chaghai. TL-PST asked the Secretary Mines & Mineral (Govt. of Balochistan) to coordinate with DC-Chaghai for the earliest resolution of the issue.

On amendment in the Mining Lease 20, it was apprised that RDMC is coordinating with the Provincial Government on Amendment in Mining Lease 20. Reko Diq was granted surface area around the project

site. Now the company has asked for additional area for the pipeline and the boring for the water. Hence, the amendment is required in the ML 20 and which is also needed to be approved by the Provincial Cabinet. According to the Secretary Mines & Minerals (Govt. of Balochistan), the E-Case was sent to the Chief Minister’s Office for approval for placement before the Provincial Cabinet.

Subsequently, the case was sent to the Cabinet section to be placed before the Cabinet in its next meeting. The meeting is still awaited. TL-PST has asked the Secretary Mines & Minerals (Govt. of Balochistan) to follow it up and keep PMO and RDMC posted.

Team RDMC shared that the updation of the Feasibility Study is on track and will meet the targeted completion date, ie, December 2024. Some of the Chapters are already completed and others are in progress.

Power Division (National Transmission & Dispatch Company - NTDC) has already requested the RDMC to share Power Requirements with NTDC and QESCO as per the revised Feasibility Study in orderto proceed with further power supply options for Reko-Diq Mining project.

Response from RDMC is still awaited. Team RDMC shared that power requirements data will be available by the end of December 2024. TL-PST advised the RDMC to keep posted NTDC formally.

RDMC has recently made an application for permits during construction and operation which is under process.

Copyright Business Recorder, 2024