Pakistan has been recently slapped with a whopping $5.96 billion fine in the legal dispute between the government and the company, Tethyan Copper, over rights for a copper and gold mine in Balochistan.
The amount of damages is almost equal to the recently released bailout package from the International Monetary Fund (IMF) and twice the amount of Balochistan’s annual expenditures. According to legal experts, the country cannot appeal the court’s decision. The only option is to apply for a technical review under which the government can ask the court to review the amount of fine.
The process can prolong for three years, thus buying more time for Pakistan to arrange the amount. As for gathering funds for the payment of fine, the most probable option seems to be China, according to the experts.
Reko Diq is a mine in Balochistan that contains gold reserves with an estimated value of over $100 billion. Pakistan and Tethyan Copper had agreed that the company would prepare a feasibility report and apply for a mining license. However, work at Reqo Diq suspended in 2011 when Pakistan rejected the company’s application to mine the area after Chief Justice Chaudhary Iftikhar ordered the controversial agreement to be terminated.
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The issue was taken to the International Court for Settlement of Investment Disputes, which issued its decision in favor of Tethyan Copper. Recently, the court has slapped the aforementioned fine on Pakistan in lieu of damages and interest.
However, the board chairman of Tethyan Copper, William Hayes, seemed to be open to a settlement that is mutually beneficial with Pakistan. This settlement can make room for a third party like China to provide assistance.
“Given the ever-growing domestic consumption of gold in China and Beijing’s interest in investing in gold and copper mining industries abroad, I won’t be surprised if China makes a bid to take over the Reko Diq gold mine project and offers to pay the penalty in return for long-term lease and exclusive ownership rights,” says Mohan Malik, a professor at the Asia-Pacific Center for Security Studies in Hawaii.
Michael Kugelman, the deputy director of Asia programs at the Wilson Center in Washington, also said that in the backdrop of Pakistan in Beijing’s Belt and Road project, the possibility of Beijing leveraging the Reko Diq case cannot be dismissed.
Experts opine that China has been interested in Reko Diq for years. “The Chinese were very instrumental in lobbying to dislodge [Tethyan Copper] from Reko Diq in 2012,” says an expert.
Via: AsianReview
