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December 9, 2022
The Supreme Court (SC) on Friday declared an agreement signed between the Pakistan government and two international firms — Antofagasta PLC and Barrick Gold Corporation — in March for the revival of the long-stalled Reko Diq mining project as legal.
The verdict was pronounced by a five-member SC bench, headed by Chief Justice of Pakistan Umar Ata Bandial, on a presidential reference that sought the SC’s opinion on whether a 2013 judgement by the apex court prevented the federal and provincial governments from entering into the implementation agreement afresh.
In the 13-page short order, a copy of which is available with Dawn.com, the court said: “The process for the reconstitution of the Reko Diq project has been undertaken transparently and with due diligence. The agreements are being signed by authorities duly authorised and competent to do so under the law.”
It added that expert advice on financial, technical and legal issues was sought from local and independent international consultants to ensure transparency and fairness in the project.
The court further observed that the agreements under which the terms for consultancy were settled were also constituted after “due deliberation and have not been found by us to be unconstitutional or illegal”.
The court order stated that the proposed Foreign Investment (Protection and Promotion) Bill, 2022 and any amendments to it would not violate the Constitution or the law, provided that the relevant resolutions were passed by the Sindh and Balochistan assemblies and by the National Assembly after following due process.
“We also note that the proposed [bill] will not only pave the way for the implementation of the Reko Diq project in its present form but will also facilitate and encourage direct foreign investment in similar mining projects and other high capital-intensive industries in which direct foreign investment is required to be encouraged through guarantees assured by laws and regulatory measures,” the court order reads, adding that the bill was not rendered “person-specific” just because the Reko Diq project was the first to be identified as a “qualified investment” under its terms.
Regarding the questions posed by President Dr Arif Alvi on the project, the court observed that while it was settled law that disposal of public assets through a competitive process was the ordinary rule, “it is not an invariable rule”.
The order said the Constitution did not forbid the disposal of public assets other than through a competitive process as long as the alternative process had legal support and was rationally justified, pointing out that these conditions were met in the Reko Diq project.
The order further stated that provincial assemblies alone had the exclusive legal competence to deal with mines and mineral development, therefore, they were “competent to alter, amend or repeal any existing law” regarding these areas.
The court said that the Balochistan cabinet had approved the decision to enter the project agreement and an apex committee headed by the prime minister and involving relevant stakeholders had negotiated the agreement terms.
“Prima facie, the agreements cannot be faulted for lack of due diligence on the part of state authorities,” the order said, adding that the agreements were backed by the law.
“We have also been informed that the provincial assembly of Balochistan was given a detailed in-camera briefing and was taken into confidence regarding the entire project and the terms and conditions of the proposed settlement between the parties were accepted without any objections being raised.”
The court further remarked that it also had been assured that the agreements contained no exemptions from environmental laws and required Barrick to act in accordance with both international environmental standards and domestic laws.
The order also elaborated more on the validity and constitutionality of the FI Bill 2022, stating that the court was informed that the exemptions granted under the bill were already available through other ways.
“Further, the exemptions being granted from the operation of labour laws do not denude the labour force of their rightful entitlement to fair wages, allowances and guarantees/benefits provided by law.
“The learned counsel for Barrick has categorically assured us that the applicable minimum wage laws will be fully observed and the agreements expressly provide that all operations will be carried out in accordance with international mining standards,” the court said.
The court added that it was also assured about Barrick contributing towards corporate social responsibility by dedicating a portion of its returns towards the provision of fresh drinking water, health facilities, schools and local infrastructure to native residents.
“In addition, most of the labour force will be employed from amongst the local population of the province. In addition, programmes for the development of skills will also be put in place” the order said.
‘Historic decision’
Balochistan Chief Minister Mir Abdul Quddus Bizenjo welcomed the SC’s decision, terming it “historic”.
He said it was an acknowledgement of the Balochistan government’s “determination and efforts for the economic independence of the province and protection of its resources”.
Reko Diq deal
The original agreement for the Reko Diq mining project was signed in 2006, and it set aside a share of 37.5pc to Canada’s Barrick Gold and Chile’s Antofagasta each while the Balochistan government received a 25pc stake.
The two international firms were part of the consortium Tethyan Copper company and had found vast gold and copper deposits at Reko Diq in Balochistan.
But the hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper’s lease, and in 2013 Supreme Court declared it invalid.
In 2019, the World Bank’s arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining.
However, in March, the federal and Balochistan governments reached an agreement with two international firms — Antofagasta PLC and Barrick Gold Corporation — on a framework to reconstitute the Reko Diq project that allowed Antofagasta to make an exit.
The reconstituted project, which will excavate gold and copper reserves in Balochistan, saved Pakistan from an $11 billion penalty in the Reko Diq case.
Under the new agreement, Barrick decided to become a 50 per cent partner with the governments of Pakistan and Balochistan and three state-owned entities in the project, while the Chilean firm exited the contract in exchange for $900 million by Pakistani shareholders.
Balochistan government holds a 25pc stake in the project under the new pact and the rest of the 25pc shareholding is controlled equally (8.33pc) by the three state-owned enterprises.
On October 18, President Dr Arif Alvi moved a reference seeking the apex court’s opinion on the proposed reconstitution of Reko Diq project in Balochistan and interpretation on whether its 2013 judgement in the case prevented the federal and provincial governments from entering into the implementation agreement and the constitutionality of the proposed Foreign Investment (Protection and Promotion) Bill 2022.
SC declares agreement for Reko Diq revival legal
Haseeb BhattiDecember 9, 2022
The Supreme Court (SC) on Friday declared an agreement signed between the Pakistan government and two international firms — Antofagasta PLC and Barrick Gold Corporation — in March for the revival of the long-stalled Reko Diq mining project as legal.
The verdict was pronounced by a five-member SC bench, headed by Chief Justice of Pakistan Umar Ata Bandial, on a presidential reference that sought the SC’s opinion on whether a 2013 judgement by the apex court prevented the federal and provincial governments from entering into the implementation agreement afresh.
In the 13-page short order, a copy of which is available with Dawn.com, the court said: “The process for the reconstitution of the Reko Diq project has been undertaken transparently and with due diligence. The agreements are being signed by authorities duly authorised and competent to do so under the law.”
It added that expert advice on financial, technical and legal issues was sought from local and independent international consultants to ensure transparency and fairness in the project.
The court further observed that the agreements under which the terms for consultancy were settled were also constituted after “due deliberation and have not been found by us to be unconstitutional or illegal”.
The court order stated that the proposed Foreign Investment (Protection and Promotion) Bill, 2022 and any amendments to it would not violate the Constitution or the law, provided that the relevant resolutions were passed by the Sindh and Balochistan assemblies and by the National Assembly after following due process.
“We also note that the proposed [bill] will not only pave the way for the implementation of the Reko Diq project in its present form but will also facilitate and encourage direct foreign investment in similar mining projects and other high capital-intensive industries in which direct foreign investment is required to be encouraged through guarantees assured by laws and regulatory measures,” the court order reads, adding that the bill was not rendered “person-specific” just because the Reko Diq project was the first to be identified as a “qualified investment” under its terms.
Regarding the questions posed by President Dr Arif Alvi on the project, the court observed that while it was settled law that disposal of public assets through a competitive process was the ordinary rule, “it is not an invariable rule”.
The order said the Constitution did not forbid the disposal of public assets other than through a competitive process as long as the alternative process had legal support and was rationally justified, pointing out that these conditions were met in the Reko Diq project.
The order further stated that provincial assemblies alone had the exclusive legal competence to deal with mines and mineral development, therefore, they were “competent to alter, amend or repeal any existing law” regarding these areas.
The court said that the Balochistan cabinet had approved the decision to enter the project agreement and an apex committee headed by the prime minister and involving relevant stakeholders had negotiated the agreement terms.
“Prima facie, the agreements cannot be faulted for lack of due diligence on the part of state authorities,” the order said, adding that the agreements were backed by the law.
“We have also been informed that the provincial assembly of Balochistan was given a detailed in-camera briefing and was taken into confidence regarding the entire project and the terms and conditions of the proposed settlement between the parties were accepted without any objections being raised.”
The court further remarked that it also had been assured that the agreements contained no exemptions from environmental laws and required Barrick to act in accordance with both international environmental standards and domestic laws.
The order also elaborated more on the validity and constitutionality of the FI Bill 2022, stating that the court was informed that the exemptions granted under the bill were already available through other ways.
“Further, the exemptions being granted from the operation of labour laws do not denude the labour force of their rightful entitlement to fair wages, allowances and guarantees/benefits provided by law.
“The learned counsel for Barrick has categorically assured us that the applicable minimum wage laws will be fully observed and the agreements expressly provide that all operations will be carried out in accordance with international mining standards,” the court said.
The court added that it was also assured about Barrick contributing towards corporate social responsibility by dedicating a portion of its returns towards the provision of fresh drinking water, health facilities, schools and local infrastructure to native residents.
“In addition, most of the labour force will be employed from amongst the local population of the province. In addition, programmes for the development of skills will also be put in place” the order said.
‘Historic decision’
Balochistan Chief Minister Mir Abdul Quddus Bizenjo welcomed the SC’s decision, terming it “historic”.
He said it was an acknowledgement of the Balochistan government’s “determination and efforts for the economic independence of the province and protection of its resources”.
Reko Diq deal
The original agreement for the Reko Diq mining project was signed in 2006, and it set aside a share of 37.5pc to Canada’s Barrick Gold and Chile’s Antofagasta each while the Balochistan government received a 25pc stake.
The two international firms were part of the consortium Tethyan Copper company and had found vast gold and copper deposits at Reko Diq in Balochistan.
But the hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper’s lease, and in 2013 Supreme Court declared it invalid.
In 2019, the World Bank’s arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining.
However, in March, the federal and Balochistan governments reached an agreement with two international firms — Antofagasta PLC and Barrick Gold Corporation — on a framework to reconstitute the Reko Diq project that allowed Antofagasta to make an exit.
The reconstituted project, which will excavate gold and copper reserves in Balochistan, saved Pakistan from an $11 billion penalty in the Reko Diq case.
Under the new agreement, Barrick decided to become a 50 per cent partner with the governments of Pakistan and Balochistan and three state-owned entities in the project, while the Chilean firm exited the contract in exchange for $900 million by Pakistani shareholders.
Balochistan government holds a 25pc stake in the project under the new pact and the rest of the 25pc shareholding is controlled equally (8.33pc) by the three state-owned enterprises.
On October 18, President Dr Arif Alvi moved a reference seeking the apex court’s opinion on the proposed reconstitution of Reko Diq project in Balochistan and interpretation on whether its 2013 judgement in the case prevented the federal and provincial governments from entering into the implementation agreement and the constitutionality of the proposed Foreign Investment (Protection and Promotion) Bill 2022.
SC declares agreement for Reko Diq revival legal
Observes experts consulted on agreement, Balochistan assembly taken into confidence; concludes new pact not in violation of its 2013 judgement.
www.dawn.com
