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Pakistan to pay foreign firm US$6bn over mine closure

16 July 2019

It stated that the World Bank arbitration court has ordered the Pakistani government to pay damages of $5.8bn to Tethyan Copper, a joint venture between the company and its partner Barrick Gold.

Tethyan Copper said it had invested $220m by the time the licence was denied, and part of the damages ruling includes $4.09bn in compensation for the project's fair market value when the licence was denied, as well as $1.75bn in interest.

The company had claimed United States dollars 11.43 billion in damages.

The case between the Pakistani government and the global company continued for at least seven years.

The ruling comes at a sensitive time for the government of prime minister Imran Khan, which is facing increasing economic headwinds and which earlier this month signed a $6 billion bailout agreement with the International Monetary Fund to stave off a looming balance of payments crisis. "The government of Pakistan welcomes this approach to work towards a mutually beneficial solution that works for both sides", it added.

Sources said Pakistan has chose to challenge the decision before an global court by filing a revision application and a verdict on review petition can take 2 to 3 years. The global tribunal on Friday issued a 700-page ruling against Pakistan in the Reko Diq case.

Pakistan said it was disappointed but would be willing to continue discussions.

A statement issued by attorney general's office said the commission will determine who was responsible for making the country suffer such a loss.

A thorough internal review of this long-standing arbitration shall also be conducted in the due course, it added.

The large, low-grade porphyry project, with an estimated $3 billion capex, had been expected to produce about 200,000t of copper and 250,000 ounces of gold in 600,000t of concentrate a year over a 56-year mine life.

"The government notes with disappointment the award by ICSID in the matter of Tethyan Copper Company (TCC) vs Islamic Republic of Pakistan".

"International tribunals are also urged to consider the implications of their decisions and the impact on development and poverty alleviation".

According to one filing that is public, lawyers for Pakistan claimed that no project of the size and scale of Reko Diq had ever been built in Balochistan; and the country's supreme court had ruled that local authorities acted properly in blocking the mining project because there was never a guarantee that Tethyan would be able to convert is exploration license into a mining lease.

Pakistan to pay foreign firm US$6bn over mine closure