MARKETPLACE

Mine Hits Nationalist Ve Pakistan

Imperiling Massiue P Terms FromVenture Barrick Antofagasta, of and Seeks Baluchistan Richer
Toso lv Owars \tro AlnxMecDorep ISLAMABAD, PaKistan_A nassivecopper-and gold-devel)pment project set to become lakistan'slargestinvestmentto faces late by foreigr companies lelaysor camellationas provin:ial officials seekto dictatenew :ermsin order to extract a bet:er deal. The go{ernnrnt of Balprovince rchistan a s<ruthwest lut ne[:]rbon .{f8hanistan and ran. sa.ld:: nould only grant a runint pe:-;: to a joint venture qua'li) cnrrd b'UJ(-listed Chilran cogger rninr Antofagasta 4t ad C:nada-basedBarrick ;d CorT J they agree to sell ilt dP r.-c q'e to the province :o refirx rd seli onward. The :e](i ror'ernmenthas no lxpenencle:ti smelting,but ;ay'srt a.readl' contractedas a rroject erpen a renownedPaki;tani nucler scientist, Samar f,ubaraiau-od. who helped orfirst nuJrst-:e :be .-ountry's :lear :es: :r 1998 and is inoh-e<iin *reloping its Thar
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TlE Ri{- Drqproject is being rz:ciredcicsell'by other mining omp.r5 :o determinehow tie will :orvrr-::P!r:of Baluchistan Etot;:: k'.ue mining licenses. lfrrrr! 1a concerned that redrrr n ::onalism is leading ortr:ltrE:s like Baluchistanto Fn? fer';ently push for a ree:cr :aie in the profits of rot c.s :irough increasedeqr't)' s.r<-. laxes or royalties, at ::.=r nhen companiesare :-.i&L::d to satisfy the voraqlx apgetiteof emergingeconr:rs -ie Chinaas they rapidly d;:r:-alize. '1:. someparts of the world, E:P rs a danger that it will 'ru becomethe conventional isdom that nationalization of inrng assetsis a path to prosrq'.- CynthiaCarroll, chief exutjve of globally diversified rpr Anglo American PLC,said June. Baluchistan's chief minister, rrab Aslam Raisani,said his vernment will only grant a uirrglicense RekoDiqsTlo/o to te owner,joint-venture comny TethyanCopperCo. Paki-

proiect Workmen the gold-andcopper-mining at being developed a ioint venture Antogafasta Barrick by of and Gold. that stan Ltd., if Tethyanagrees concentrateproducedfrom the project will be sold to and refined by the province. "I would never allow [Baluchistanl just to dole out ow resources to people who would just plunderand take them elsewhere,"he said in an interview. Mr. Raisani also wants to tweak RekoDiq's equity and royalty componentsto boost Balprofits and reduceits uchistan's riskq although he didn't provide details. "If Tethyanwants to do mining, well and good, but I have decided that the total refining will be doneby us," he said adding that if Tethyan makes ore concentrate,"we will buy from them." A person familiar with the matter said Tethyan has no plans to move into smelting,and is instead offering to supply a third party with concentrateat commercialrates under a longterm contract. Tethyandeclinedto comment on the government'sproposed changes the mining proposal, to as it hasn't yet receiveddetails. The governmentis slated to decidein about a weekwhether or not to issueTethyana mining licenseand on what terms. There is much at stake.If it goes ahea4 Reko Diq will becomethe country'slargest single sourceof foreign direct investment to date,instantly doubling suchinvestmentat a time when the U.S.is consideringreducing foreign-aidexpenditureto cut its budget deficit. The three-year, $3.4 billion developmentproject will be able to produce200,000metric tons of copper and 250,000 troy ounces of gold from 60O000 tons of concentrate over a mine Iife span of 56 years,making it one of the largest copper-gold operationsin the world. The project is expected to start production sometimebetween2016and 2018, depending on when it gets its mining licenseapprovedand then secures the neededfinancing. Reko Diq will generatesubstantial locd employment,plus revenueof S25billion over the life of the mine to each of the Baluchistanand state governments, accordingto a Tethyan feasibility srudy. The projected revenue is likely to rise: tle.study doesn't take into actount currently higher metal prices. But Mr. Raisani,Baluchistan's chief minister. doesn't think it is enough. "I don't walt to ward the foreign companiesoff, never," he said, but, "in business... you would alwaysgp for the benefits of your own en4'he said. Mr. Raisani is confident the province can develop a smelter and refinery a Reko Diq on its own. Baluchistrnhasalreadyset aside8.5 billio Pakistanirupees ($97 million) br the project, vvhidrfurclufu Uirg a smelter capable of funrilly processing l5O0O meut tc of ore daily, and a refirnry.

If it needsto seek t expertise from abroad will, Mr. Raisanisaid. Mr. Raisani said he ' proached a Chinese by c interested in both min smelting at RekoDiq, hI there are currently no r tions with the compan he declinedto name. China'sMCCResourc opment Ltd., a subsi China Metallurgical Corp.,alreadyoperatesa at the adjacentSainda and gold project, Mr. said. Baluchistanevent negotiatedbetter roy'alry uity terms on the proja Mr. Raisanisaid he 1 give Tethyana respons censeapplicationb1'S and remainsopen to drs with the company, althc gotiationsare likely to ! after he said the compe tlree times to dislodgeh power. He didn't elabora Tethvandidn't commen

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