Barrick Gold is coming back to Reko Diq

[farok84]

I think the figure of investment gives us the clue. A $10b investment can't be just the mining ore shipping investment but also the processing/treatment facilities.

This is just my opinion though.

Hi,

Yes, they will be processed to Copper/ Gold concentrates but will not be refined to final product. Something akin to surface separation units in Oil and Gas industry to produce marketable Crude Oil. Nonetheless its a huge win for Pakistan, comparable to setting up of OGDCL by Soviets.

Barrick press release:

On closing, Barrick will start a full update of the project’s 2010 feasibility and 2011 expansion prefeasibility studies, which envisaged a conventional truck-and-shovel open pit operation with comminution and flotation processing facilities producing a high-quality copper-gold concentrate. Bristow said that if all went according to plan, Reko Diq could be in production within five to six years.

As per media briefing, it is only a block and in future more investors can invest in other blocks. Hopefully, the next step will be involving Chinese and Russian investors not only in exploration/ mining but also in setting up in house smelting/ electrolysis units, even the experience gained by Pakistani Companies can help them expand their portfolios in Copper/ Gold mining industry.

 

[farok84]

Just how significant is this Reko Diq Barrick gold deal?, I see Hammad Azhar saying how this deal can help us with our dollar/foreign exchange problem to a great extent?
when will we start seeing results from this deal? @farok84 @hydrabadi_arab @CrazyZ

Hi,

I must confess I have very limited knowledge related to mining industry.

The timeline for production according to Barrick's statement is 5-6 years after SC approval. This deal has huge implications and a successful implementation will invite in more investors specially Chinese. An increase in royalty for Balochistan from 2 to 5% is in itself testimony of a Balochistan/ Pakistan friendly deal.

The next logical step, is to setup refining units for final products (Gold bars, Copper Cathodes), which should be on the agenda specially with the 50% participation of GOP controlled companies.

 

[Darth Vader]

A lot of members are here complaining that Return for the State and Balochistan is really low.

People we have to be reasonable here. Pakistan needs to start from somewhere since everyone thinks Pakistani land is full of natural resources, what good are those if those cant be adequately utilized, in start things are bad, but when you actual projects start to bear fruits it will bring more interest to the region which will bring more competition, and when companies wanna invest in future they will compete with better returns.
BABY STEPS
One even these bad projects provide jobs to the locals Balochistan needs some sort of stability which can be only be provided by giving jobs to locals.

You hear reports by politicians and news channels every day, OIL has been found in that place, GOLD has been found on that place but where are the results, in many instances the quality and quantity is not even worth investing by our current Tech so we just have wait.



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High time, State starts ventures with private companies in this arena for these projects, so even if they currently don't have the expertise, knowledge or trained man power to at least start from somewhere and in 10 to 15 years might have companies which can do these projects individually or with Chinese help with a better return for Pakistan.

Few other benefits in long term, In many instances, if regions have a lot of mines, you will need train routes which means earlier undeveloped regions get connected by road and rail, that will allow more population to move in and out that will balance out and diversify the region itself as well

 

[FuturePAF]

Operations start in 5-6 years.

All the ground work should be laid, infrastructure wise, to make sure there will not be any bottlenecks in the extraction and transportation of the processed items to world markets.

The motorway between Sukkur and Hyderabad needs to be completed ASAP. The Railway lines between the Mine to Quetta, from Quetta to Sukkur, and Sukkur to Karachi should be prioritized to be modernized first. With freight oriented modernization over passenger train oriented development (ability for the tracks to carry heavier loads rather then the trains going as fast as possible)

Security along these corridors needs to be airtight, politically and physically.

 

[Aasimkhan]

Reko Diq has 500 billion dollars worth of gold, 50% (which Barrick will get) comes to 250 billion dollars. Just to avoid 11 billion dollar fine we are agreeing to pay 250 billion dollars ? am I right ?

 

[FuturePAF]

Reko Diq has 500 billion dollars worth of gold, 50% (which Barrick will get) comes to 250 billion dollars. Just to avoid 11 billion dollar fine we are agreeing to pay 250 billion dollars ? am I right ?

Yes and no.

1. It’s probably worth more for both sides as world prices go up.
2. A bird in hand is worth two in the bush. Just like Mideast oil, it’s not worth anything until it’s extracted and sold to global customers.
3. Just like gulf oil, there is a cost to extract, process, and transport the raw materials. Pakistan needs to use this mine not just to earn an equal share of the material and the labor wages, but to gain ToT in the machinery, management, etc. as well as use it to charge the mine to use our roads (and future rails) build under CPEC so we can get ROI on them as well.
4. With the mine we need to use it to gain global leverage, economically, the way the gulf Arabs do, especially to counter balance India.
5. With an literal gold mine, we can put Gold in our physical central bank in Islamabad, strengthening our overall economy, and improving our economic reputation around the world, which we can leverage to get out of FATF, lower interest rates on our foreign loans, attract FDI, especially in the mining sector and associated processing industries.
6. With the associated mining industry processing facilities, work force, and transportation infrastructure built up we can be in a good position to leverage it work to be the middle man in bring foreign western and Chinese companies to work with the Afghans to mine in their country, and process the ore in our country. If we do these deals right, our own mining industry can in the future, explore for and extract, process, and transport our own resources ourselves, the way Saudi ARAMCO does its own oil.

Financially is just one way to look at it, but if we use this mine to gain all the other elements I have outlined above, it will benefit the whole nation and help lower our debts, so in the long term, we are not beholden to anyone and welcomed by everyone. We should be careful to not let anyone to spook investors by even threatening to nationalize these mines.

These mines should be look at as partial profit and as partially a loss leader; to get investors in the door across the board the way the UAE did with Dubai; only 5% economy on oil.

 

[CrazyZ]

Reko Diq has 500 billion dollars worth of gold, 50% (which Barrick will get) comes to 250 billion dollars. Just to avoid 11 billion dollar fine we are agreeing to pay 250 billion dollars ? am I right ?

Pakistan does not have the capital or know how to exploit the resource. The correct comparison is 250 billion or 0. All of it with add to our GDP metrics.

 

[Aasimkhan]

Pakistan does not have the capital or know how to exploit the resource. The correct comparison is 250 billion or 0. All of it with add to our GDP metrics.

If we paid 11 billion to Barrick, 50 billion to some new company (may be Chinese) and keep the rest of 439 billion dollars ? is it possible ?

 

[FuturePAF]

Pakistan does not have the capital or know how to exploit the resource. The correct comparison is 250 billion or 0. All of it with add to our GDP metrics.

And all the jobs it will create will also make an incentive to keep Baluchistan stable and catching up to Pakistani national standards. It will also incentivize the Afghans to work with Pakistan (by keeping good relations) if they want to also earn from their mines. The mining industry will also pay market rate to consume any excess electricity, underutilized roads, etc. so it will under burden the nation of those tea sources, and allow the nation to build all future projects on economically viable terms.

Basically it will allow the nation to offload its currently subsidized sectors on a profitable venture.

If we paid 11 billion to Barrick, 50 billion to some new company (may be Chinese) and keep the rest of 439 billion dollars ? is it possible ?

NO

We have all of it now. It’s safe and sound under the ground, but if no use to us until it is extracted, processed and exported to earn money to invest in other sectors (and keep some for our national reserves)

We should study how the major oil and mine rich countries used their resources to extra the best development for their nations, and not think like the Venezuelans or Iranians that gave out money to the people and nationalized their industries into ruin.

Also, going with a western company will add more credibility that we are neutral; not in either block. We should avoid being overly dependent on any one source for economic growth, because there is a risk the west will put Pakistan in a position to be in the Chinese camp. Doing it partially with a western Company and partially ourselves is probably best. For future mines, we should strive to be as independent as possible.

What we should be careful of is any efforts by foreigners (and locals), once this mine is up and running, to try to split Baluchistan (and Sindh) from Pakistan. Therefore there should never be a direct railway to the coast. It should always run through Quetta, down to Sukkur, and then Karachi. Efforts need to be made to use the profits earned to prevent successionism, through spending on defense and intelligence. Economics will take care of the rest of the money is spent properly in human capital development, once security is beefed up.

 

[Type59]

People want 100%, hence deal will not satisfy them.

SC will get involved, unfortunately they will block agreement.

 

[AZ1]

People want 100%, hence deal will not satisfy them.

SC will get involved, unfortunately they will block agreement.

saudi also made deal to extract oil with usa so why this is difficult to understand that we dont have tech

 

[Aasimkhan]

saudi also made deal to extract oil with usa so why this is difficult to understand that we dont have tech

I think 250 billion USD is too big a profit to pay to a company, afterall we have only 100 billlion USD loan in 72 years

 

[Enigma SIG]

People want 100%, hence deal will not satisfy them.

SC will get involved, unfortunately they will block agreement.

100% gets nothing done.

I think 250 billion USD is too big a profit to pay to a company, afterall we have only 100 billlion USD loan in 72 years

100% of 0 is still 0 buddy.

Pakistan is therefore way behind.

Learn to partner in economic benefit.

 

[Aasimkhan]

100% gets nothing done.


100% of 0 is still 0 buddy.

Pakistan is therefore way behind.

Learn to partner in economic benefit.

make it 80%

 

[Type59]

saudi also made deal to extract oil with usa so why this is difficult to understand that we dont have tech

I been commenting on Reko since around 2005, on the other Pakistani defence forum (not active). The opponents of project will derail this deal, they rather have resources stay in ground.