ISLAMABAD: The government on Sunday approved a payment of more than $900 million to the Chilean company Antofagasta over six years to quit the Reko Diq project after the Supreme Court last week approved a settlement agreement worth more than $6.5 billion.
The committee also green-lighted about $1.91bn shareholder financing by state-owned enterprises (SOEs) to take the gold and copper mining project forward.
The decisions were made at a special meeting of the Economic Coordination Committee (ECC) of the cabinet, which Finance Minister Ishaq Dar presided over via video link from Lahore in order to meet deadlines for an out-of-court settlement with the Tethyan Copper Company in order to avoid a looming $10 billion international arbitration award. According to the settlement agreement, the “definitive agreements” are prepared to be signed by December 15.
Under the agreement, the government and its entities — the OGDCL, Pakistan Petroleum Limited and Govt Holdings Pvt Limited (GHPL) — have already deposited $900m in an escrow account for payment along with interest in six years to Antofagasta Minerals of Chile to exit the project.
These organizations must also secure around $4.3 billion in equity investments for the revamped project, now known as Barrick Reko Diq Holdings Limited (BRDHL), which will be run by Canadian mining company Barrick Gold Corporation.
“The ECC considered and approved two important agenda items related to the Reko Diq project, thus paving the way for early start of the Reko Diq Project,” an announcement said after the meeting, adding that it allowed the concerned divisions of the government and the SOEs to act in such a manner to ensure that the deposited amount along with interest deposited by the SOEs in the escrow account to form part of the consideration for share purchase of the Reko Diq Mining Company Limited.
This funding is required over six years, beginning with about $11m this year and gradually going up to $730m in the 2026-27 fiscal year.
