Saudi insurance for Reko Diq: The caretaker government’s intention to sell 25% of the federal government’s stake in a potential mining project has alarmed Pakistan’s mining community. Although they don’t oppose this move, many question its wisdom.
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“Who moves like that? Pakistan’s inadequate capacity and economic knowledge made it weaker to protect its rights even with a 50/50 cooperation with Canadian mining behemoth Barrick Gold Corporation.
Now, by relinquishing a significant portion of its stake, one can’t help but wonder what the future holds for the country and its citizens, who rightfully expect to benefit from their own land’s wealth, “said an observer who requested anonymity out of concern for his employer’s approval.
Federal and Balochistan governments share Pakistan’s 50% joint venture project interest equally. The issue centres on divesting the federal government’s 25% portion, while Balochistan’s is unaffected.
Why change a carefully established agreement? Despite financial difficulties, Pakistan committed $900 million to the project. Barrick Gold should address reservations within the inked agreement. We cannot reopen complex accords on whim; it would be counterproductive. A technocrat with insider information said this is not the proper strategy if the investor is apprehensive.
Riyadh’s involvement would protect Barrick Gold from government haste but weaken Pakistan’s interests.
Key officials, experts, and executives of state-owned enterprises (SOEs) were reluctant to publicly comment on the Pakistan government’s proposal to reduce its stake in the multi-billion-dollar copper and gold mining project, calling it ‘extremely sensitive’. This strategy aims to attract foreign investors and boost FDI in Pakistan.
The Special Investment Facilitation Council (SIFC) announced its plans to attract Saudi investors to the Reko Diq project. The SIFC press statement noted that the new mining collaboration might attract much-needed investments from our oil-rich sister nation.
According to reports, SIFC will sell 25% of the federal government’s stakes in three state-owned entities: OGDCL, PPL, and GHPL. The relevant SOEs have engaged with Saudi investors per SIFC directions. PPL and OGDCL, two of the three listed SOEs, informed the Pakistan Stock Exchange of their intent.
Ahmed Hayat Lak, MD, OGDCL, Masood Nabi, MD and CEO, GHPL, and Imran Abbasy, MD, PPL, received input requests on their phones. The only respondent was Abu Dhabi’s Mr. Abbasy. He promised an update upon return. Two other executives ignored the question.
Barrick’s objectives and official negotiations were revealed by a corporate lawyer familiar with the foreign business. “Saudi involvement would serve as a safeguard against hasty or illegal decisions by the Pakistan government, given the imperative not to strain relations with Saudi Arabia for obvious reasons.”
“Initially, the government wanted to sell half its shares to Saudi investors and expected Barrick to sell half its stakes, but Barrick declined.”
Considering the agreement, he said, “I think the government is making a mistake by selling all of its shares to Saudis. How can prices be set without competition? This might cause a major scandal.”
Multiple attempts to get SIFC and Barrick Gold to comment on recent developments failed. People involved in the lucrative Reko Diq project were reluctant and apprehensive about writing or calling to express their opinions.
“Foreign investment is vital for capital-intensive, technologically advanced mining projects in remote regions of the country, but it should not come at the expense of the people’s rights to mineral wealth,” said one overseas investment expert.
Anonymously, a caretaker’s top team member spoke. “I firmly believe that Pakistan needs strategic investment from Saudi Arabia to make them stakeholders in Pakistan’s progress,” he said.
Dr. Shamshad Akhtar, the Caretaker Finance Minister, did not respond with comments in time.
Domestic mining sector sources, lobbying for a stake in the country’s largest mining project, have closely monitored the process. They alleged Canadian businessmen wanted to replace Pakistan’s government with a Saudi one to reduce the risks of a massive Western investment in restive Baluchistan.
“Barrick and Ma’aden have collaborated. Their Jebel Ali copper and gold project in Saudi Arabia is also joint. As expected, they are comfortable and want to expand to Pakistan, a mining company executive said.
Barrick also seeks to gain government leverage by including Ma’aden in the joint venture.
The government considers Saudis a reliable ally and would bend over backwards for them, he said. He opposed increasing outside investors’ shares over 50% in the project.