Barrick Gold is coming back to Reko Diq

[Big_bud]

barrick is walking away with 50%

day light robbery by PTI -


A new agreement was signed by representatives of the federal and Balochistan governments with a delegation of Barrick Gold, led by Chief Executive Dr. Mark Bristow. As per the terms of the new agreement, the Reko Diq project would be revived and developed by Barrick Gold in partnership with Pakistani entities. The new project will be owned 50 percent by Barrick Gold and the remaining 50 percent shareholding will be owned by Pakistan, divided equally between federal government and the provincial government of Balochistan.

BR-ePaper | Mar 21, 2022 | Page Front Page 1

epaper.brecorder.com

They were previously walking away with 75%!! And weren't bringing that much investment either! You are lucky it has been that well negotiated. We were 11 billion USD out of pocket. Waived 11 Billions USD penalty. Received 10 Billion USD investment. That's 21 Billion USD benefit right there. They are responsible for exploration & extraction.

 

[313ghazi]

I am not an expert but I LIKED your reply if you note

220 million people get 50% one small company gets rest of the 50%, this is rip off

I was furious too, but according to members who are familiar with these industries, this is the sort or contract that is standard.

This is the price we pay for not developing our own industrial capabilities. Also apparently not many companies hold these skills/tech because it's a niche industry, so they have somewhat of a monopoly on it too.

 

[Imad.Khan]

exactly, this is what i wanted to hear from some member, calculate the price of hotel and flight and contact China for extraction of gold at 5%

Also to all the people that were talking about getting Chinese to mine it on 5%. Read the Saindak agreement, on which Balochistan govt gets 35%, Federal gets 15% and 50% is for the Chinese company.

Saindak project: Govt to extend Chinese firm’s gold, copper mining contract | The Express Tribune

Balochistan to get 5% additional shares in the project.

tribune.com.pk

@blueazure @Thinker3

 

[Sayfullah]

This mine will only change Pakistan’s future IF all the refining and value addition work is done in Pakistan.
Pakistan should ban the export of raw metals. We will only export refined value added products!
Already the copper we have, Chinese companies extract our raw copper from other mines, export to China where it’s refined and value added, then we import stuff like copper wires from China which costs us many times more then if we did it in Pakistan.

If value addition work and refining isn’t done in Pakistan, this deal will not change our future or benefit us much.

 

[Imad.Khan]

I was furious too, but according to members who are familiar with these industries, this is the sort or contract that is standard.

This is the price we pay for not developing our own industrial capabilities. Also apparently not many companies hold these skills/tech because it's a niche industry, so they have somewhat of a monopoly on it too.

People have to understand that these companies only objective is to make money for themselves and their investors, they are not a social welfare organization.

 

[Imad.Khan]

Just for comparison, one of the companies i have invested in is Alara Resources, they have gold-copper projects in Oman and Saudi Arabia. I will list the breakdown of the company shares in the projects.

Washihi-Mullaq-Al Ajal Copper-Gold - Oman​

maiden Ore Reserve (9,700,000 ton @ 0.88% Cu and 0.22g per ton Au)

Alara (51%), Al Hadeetha (30%), Al Tasnim (19%) shareholders

Daris Copper-Gold - Oman​

Alara – 50% with right to increase to 70%+, Al Tamman Trading Establishment LLC – 50%

Saudi Arabia Project - Khnaiguiyah Zinc-Copper​

Alara – 50%, United Arabian Mining Company (Manajem) – 50%

Alara Resources Limited

Alara Resources (ASX: AUQ) is an Australia-based mineral Exploration and Mining company with operations currently focused in the Middle East.

www.alararesources.com

Hope this information eases the minds of people that were still disappointed

 

[Imad.Khan]

This mine will only change Pakistan’s future IF all the refining and value addition work is done in Pakistan.
Pakistan should ban the export of raw metals. We will only export refined value added products!
Already the copper we have, Chinese companies extract our raw copper from other mines, export to China where it’s refined and value added, then we import stuff like copper wires from China which costs us many times more then if we did it in Pakistan.

If value addition work and refining isn’t done in Pakistan, this deal will not change our future or benefit us much.

Unless its already part of the agreement, the only way would be for Pakistan govt to sign an off-take agreement where they will buy all the raw material that comes out of the mine and then either use its own refineries to make the end product or invite Barrick Gold or other companies to establish refineries and again will have to share the profits.

 

[Enigma SIG]

Can you please bring up some past record of companies to provide extraction services against the profit margin they are taking
you might be surprised

Services dont come cheaper, Ever you had a Safai wali at your home, you might have known

I am actually advocating for the mining contract and disagreeing with the poster

 

[Amaa'n]

Infograph with highlights of the deal and history

experimenting with new stuff... open to feedback on how we can improve infographs

 

[Amaa'n]

I am not an expert but I LIKED your reply if you note

220 million people get 50% one small company gets rest of the 50%, this is rip off

I was furious too, but according to members who are familiar with these industries, this is the sort or contract that is standard.

This is the price we pay for not developing our own industrial capabilities. Also apparently not many companies hold these skills/tech because it's a niche industry, so they have somewhat of a monopoly on it too.

Original agreement of 1993 gave 75% shares to Company, 25% to Provincial Govt. Agreement was signed by care taker govt….
So consider today’s deal a blessing

 

[GOAT]

Let's do some simple analysis to assess the potential economic and social value generated by this decision.

Disclaimers:
- I'm using estimates for certain variables
- Assume the mine’s aggregate output is worth $1 trillion but there is a 50% cost to extract and sell the minerals
- All amounts are in current USD
- There are several other variables that can take place which improve or reduce the value of the mine
- The lists are not exhaustive

Analysis:

Lifecycle financial value:

1. $125 billion (25% incremental equity gain in an asset estimated to be worth $500 billion profit over its lifecycle of say 50 years - note that this could be worth more or less in the future depending on commodity prices.
2. $37.5 billion (corporate tax over 50 years assuming a simple 15% corporate tax rate, note that I am not familiar with Pakistan's corporate taxation system)
3. $15 billion (3% increase in royalties)
4. $11 billion (cash penalty avoided - this has important implications for Forex reserves)
5. $10 billion (foreign direct investment from Barrick including $1 billion in social uplift investment)

Total incremental financial value over the mine's lifecycle: $198 billion (roughly 70% of Pakistan's current annual GDP, not counting the informal economy)

Non-financial value in the short to medium-term:

1. 8,000 good quality jobs
2. reputational boost to the country
3. attractive to other foreign investors that are considering mining investments around the world
4. potential to develop a modern mining and metals industry in Pakistan with value-add services (e.g. refineries)
5. economic development in restive Balochistan
6. Major source of foreign currency and will help manage persistent current account deficits

 

[Enigma SIG]

They were previously walking away with 75%!! And weren't bringing that much investment either! You are lucky it has been that well negotiated. We were 11 billion USD out of pocket. Waived 11 Billions USD penalty. Received 10 Billion USD investment. That's 21 Billion USD benefit right there. They are responsible for exploration & extraction.

It was sold to the mining company for good commission. Barrick were probably given 75% in return for 15% commission in PDM's offshore bank accounts.

 

[Big_bud]

It was sold to the mining company for good commission. Barrick were probably given 75% in return for 15% commission in PDM's offshore bank accounts.

Off course, as always but those details wont come out. As the company is still doing business with us.

 

[hydrabadi_arab]

Let's do some simple analysis to assess the potential economic and social value generated by this decision.

Disclaimers:
- I'm using estimates for certain variables
- Assume the mine’s aggregate output is worth $1 trillion but there is a 50% cost to extract and sell the minerals
- All amounts are in current USD
- There are several other variables that can take place which improve or reduce the value of the mine
- The lists are not exhaustive

Analysis:

Lifecycle financial value:

1. $125 billion (25% incremental equity gain in an asset estimated to be worth $500 billion profit over its lifecycle of say 50 years - note that this could be worth more or less in the future depending on commodity prices.
2. $37.5 billion (corporate tax over 50 years assuming a simple 15% corporate tax rate, note that I am not familiar with Pakistan's corporate taxation system)
3. $15 billion (3% increase in royalties)
4. $11 billion (cash penalty avoided - this has important implications for Forex reserves)
5. $10 billion (foreign direct investment from Barrick including $1 billion in social uplift investment)

Total incremental financial value over the mine's lifecycle: $198 billion (roughly 70% of Pakistan's current annual GDP, not counting the informal economy)

Non-financial value in the short to medium-term:

1. 8,000 good quality jobs
2. reputational boost to the country
3. attractive to other foreign investors that are considering mining investments around the world
4. potential to develop a modern mining and metals industry in Pakistan with value-add services (e.g. refineries)
5. economic development in restive Balochistan
6. Major source of foreign currency and will help manage persistent current account deficits

Habib report

https://twitter.com/x/status/1506165745700507653

They expect benefits to Pakistan in terms of $3-4 billion exports with average prices of copper/gold in last 10 years. But I doubt prices will come down anytime soon now, especially copper so actual exports may as well be $5-6b. Which may not sound much but these are non-textile exports.

Another thing

"Lease area: The total lease area of exploration license would be 350-400 sq. km. While mining lease area is expected to be 80-120 sq. km, the remainder land will be used to technical and feasibility studies along with seismic activities, with pending approval needed from the Federal and provincial government."

They will only work on 20-25% of RD mine. Rest will be up for grabs later on. Basically this is test case for future foreign investments in mining sector all over Pakistan. Mining exports can be $20b or more in 10 years if Barrick is allowed to work unlike last time.

It was sold to the mining company for good commission. Barrick were probably given 75% in return for 15% commission in PDM's offshore bank accounts.

Antogafasta had 25% share. They gave up on 25% share in return of $900m penalty which will be payed by federal entities by March 2023. Barrick always had 50%.

Basically now Pakistan will have 50% share instead of 25%.

 

[Sulman Badshah]