Pakistan’s Tycoons Seek to Take Over Disputed Barrick Mine

[Zulfiqar]

Pakistan’s Tycoons Seek to Take Over Disputed Barrick Mine

Barrick venture awarded $5.8b in damages from Pakistan in July
Consortium met Balochistan govt officials, people familiar sayBy Faseeh Mangi
(Bloomberg) -- Pakistan’s top business tycoons have offered to take over a disputed copper and gold deposit that was once explored by Barrick Gold Corp. and Antofagasta Plc, according to people familiar with the matter.
Officials at the provincial Balochistan government are said to have met with a consortium of four business groups including tycoons Arif Habib and Muhammad Ali Tabba who are willing to invest about $1 billion of their own cash in the project, the people said, asking not to be named because the discussions are private. The consortium is willing to go through a bidding process to take over the project, the people said. Pakistan’s provincial government spokesman didn’t respond to requests for comment.
An international tribunal run by the World Bank in July ordered Pakistan to pay $5.8 billion in damages to Barrick Gold and Antofagasta after the country denied them a license to develop the Reko Diq mine in 2011. Collecting the funds though may be a challenge, given Pakistan’s fragile economic state. The damages almost match the International Monetary Fund’s $6 billion bailout for Pakistan earlier this year to help the South Asian nation avert an economic crisis.
The provincial chief minister has expressed a preference for Pakistani companies to take over the mine, the Dawn newspaper reported earlier this month. The business groups that showed interest in the mining project are: Yunus Brothers Group that owns Lucky Cement Ltd., Arif Habib Group, Fatima Group and the owners of Liberty Power Tech Ltd., the people said. The four are being led by Shamsuddin Shaikh, who spearheaded a group of companies to mine coal from Pakistan’s Thar desert for the first time.
Reko Diq is one of the largest undeveloped copper and gold deposits in the world, capable of producing 200,000 tons of copper and 250,000 ounces of gold a year for more than half a century, according to a feasibility study before the dispute. The capital investment at the time would have exceeded $3 billion.
_______________________________________________________________________
End of report
_______________________________________________________________________

This was send to me by a credible friend, but I wanted to confirm as my own Bloomberg terminal is in my home laptop, unfortunately damn thing is not working today. I did pay the annual Rs.42K subscription back in July.

Just to put things in perspective Sheikh sb told me this thing about 6 months ago during my visit to Karachi, but I didnt 100% believed, till I met Najam who too told me the same still I am not absolutely sure, called someone else while on my way back he confirms the news is true (if someone has bloomberg terminal please confirm, as soon as I could log on will do so myself), not only that Barrick want to renegotiate the deal big time, apparently Karkey threat has worked, but let us see who is the final winner of the deal.

@The Eagle , @Mangus Ortus Novem @Signalian @Verve , @graphican , @syed1 , @Shane , @Dubious , @Sine Nomine

It would be good if true. Banks would also have field day in participating in this consortium via debt (depending upon sector allocation and risk appetite).

BTW FWO wanted to set up a cement factory with around 220 M+ $ outlay with around 30% equity. We approached the lead bank for participation and they gave us the investment memo but our per party limit did not allow us as we already had significant exposure on several projects under FWO.

I don't about its present status. However, if FWO has postponed the project then they would have some free cash lying around to participate in the consortium.

 

[ps3linux]

As per my knowledge the offer was made and the consortium did some initial assessment but then backed later on as the capital investment and technical expertise required were not available and returns were too slow from just minning operations ... for some real returns refineries was also required which means further capital expenditure hence they backed out.

In the latest development GoP has reached back Barrick to re negotiate the contract ... however all of these rumors till to date ... nothing signed...

One of the discipline I picked up from my career in finance is that "never be rigid in your opinion/decision", so unlike many others I wont be challenging your views vehemently, just a bit of info what you are saying is correct and what I am saying is correct too. The consortium has shown interest twice once earlier. That interest did not take off due to capital extensive and longer payback period.

However, after meeting with Army Chief, interest of Fauji group and few international/sovereign partners interest has again motivated the consortium to reconsider the option. Some classified info too was shared about the actual estimates of the per year extract able gold which is more than double of Barrick estimates. With the looming global recession gold is bound to be around $1700+ an ounce, so payback period is now less of a concern.

Don't think of China/Russia/Pakistan/Turkey just a defense cooperation bloc its future is way beyond mere defense.

It would be good if true. Banks would also have field day in participating in this consortium via debt (depending upon sector allocation and risk appetite).

BTW FWO wanted to set up a cement factory with around 220 M+ $ outlay with around 30% equity. We approached the lead bank for participation and they gave us the investment memo but our per party limit did not allow us as we already had significant exposure on several projects under FWO.

I don't about its present status. However, if FWO has postponed the project then they would have some free cash lying around to participate in the consortium.

Sir having an idea what kind of people/organizations/and more are interested in this project debt is least of their concern they have really deep pockets, they would be able to raise equity easily by floating shares of a limited/listed company. Arif/Najam sb have done it before many times.

I don't know which wise guy advised FWO to setup a cement factory, our existing production capacity is many multiples of our current and future requirements CPEC/Dams construction estimates included, but then again if "wise generals" could make APC by putting up steel plates around tractors or create Fauji Shoes whose claimed quality is at par with Clarks and Paul Smith then I would say they could sell their cement too, even if it has to be sold in a liquid form as energy drink at all CSDs, DHA stores, askaris, fizaias, anchorages and AWTs.

Fauji Group as a whole has lions share of PSX cap, despite the fact their dividend payouts is between 90-100%.

Discount rates are in the declining phase, two successive T.Bill auctions have seen an almost 60bps decline in policy rates, I'd say November policy rates announcement will see a slash, but even after that a 12% borrowing rate is not congenial for business health that too for a longer payback period one. So I guess is would be it will be a mix of foreign investors, local investors equity, share offer to public and may be some debt going further down the road.

Then again it is all a big may be, if local consortium wins the bid against Barrick.

 

[blueazure]

thank god almighty, a good news after all @ps3linux

arif habib and tabba sb are genuine, patriotic businessmen and would serve the national interest

superb

put a whole division of pak army at reko diq please . too many greedy neighbors


extract gold, back it in central bank reserves, dump the dollar for good

 

[ps3linux]

thank god almighty, a good news after all @ps3linux

arif habib and tabba sb are genuine, patriotic businessmen and would serve the national interest

superb

put a whole division of pak army at reko diq please . too many greedy neighbors


extract gold, back it in central bank reserves, dump the dollar for good

Sir don't worry, when it goes online we'll have enough to protect ourselves and if a Chinese or Russian or Turkish concern or all of them are a part of the consortium any adventurist will think hundreds of times before such adventure.

Case in point there was no oil from Kekra 1, right why the area is still very regularly patrolled by over/under water assets of Pakistan Navy?

Things have changed.

 

[Imran Khan]

If pakistani company take benifits of 100bn$ i will be happy as long as money stay in pakistan

 

[ps3linux]

Hopefully their will be news in money recovery from these scums too

Inshallah very soon.

InshaAllah good times will be here soon. Some day.

Just one addition, some day, just not today.

 

[Zulfiqar]

One of the discipline I picked up from my career in finance is that "never be rigid in your opinion/decision", so unlike many others I wont be challenging your views vehemently, just a bit of info what you are saying is correct and what I am saying is correct too. The consortium has shown interest twice once earlier. That interest did not take off due to capital extensive and longer payback period.

However, after meeting with Army Chief, interest of Fauji group and few international/sovereign partners interest has again motivated the consortium to reconsider the option. Some classified info too was shared about the actual estimates of the per year extract able gold which is more than double of Barrick estimates. With the looming global recession gold is bound to be around $1700+ an ounce, so payback period is now less of a concern.

Don't think of China/Russia/Pakistan/Turkey just a defense cooperation bloc its future is way beyond mere defense.



Sir having an idea what kind of people/organizations/and more are interested in this project debt is least of their concern they have really deep pockets, they would be able to raise equity easily by floating shares of a limited/listed company. Arif/Najam sb have done it before many times.

I don't know which wise guy advised FWO to setup a cement factory, our existing production capacity is many multiples of our current and future requirements CPEC/Dams construction estimates included, but then again if "wise generals" could make APC by putting up steel plates around tractors or create Fauji Shoes whose claimed quality is at par with Clarks and Paul Smith then I would say they could sell their cement too, even if it has to be sold in a liquid form as energy drink at all CSDs, DHA stores, askaris, fizaias, anchorages and AWTs.

Fauji Group as a whole has lions share of PSX cap, despite the fact their dividend payouts is between 90-100%.

Discount rates are in the declining phase, two successive T.Bill auctions have seen an almost 60bps decline in policy rates, I'd say November policy rates announcement will see a slash, but even after that a 12% borrowing rate is not congenial for business health that too for a longer payback period one. So I guess is would be it will be a mix of foreign investors, local investors equity, share offer to public and may be some debt going further down the road.

Then again it is all a big may be, if local consortium wins the bid against Barrick.

The project was feasible in a sense that nearly 60-70 percent of the actual production was to be used by FWO on own projects. However, that was more than a year ago when economic reality had not set in and discount rate was low and FX rate had not significantly jumped higher.

The lead bank even was to arrange foreign debt in order to cover 50 percent FX outflow as per unwritten SBP instructions.

However, now the project costs are significantly higher. I don't know about its present status.

The lead bank is the same as the one that paid the highest penalty in recent times.

They actually were working on another cement syndicate last year as well but we opted out.

I would like more local players for this project so that maximum income is retained in the country. Let us see what happens.