TCC serves ‘notice of dispute’ over Reco Dic

The Tethyan Copper Company (TCC), a joint venture of the world’s leading miners Antofagasta and Barrick Gold, has served a “notice of dispute” to the government of Balochistan over its Reko Diq Copper Gold Project giving 120 days for the settlement of the dispute otherwise the company will seek international arbitration.
Extension demanded
A statement issued by TCC on Friday said that the notice of dispute was filed on October 19, 2011 which allows a 120 day period, during which TCC and the Government of Balochistan may seek to meet and resolve the dispute. The joint venture partners had spent $200 million to buy the exploration license from Australian BHP Billiton in 2006. The company filed the notice with the provincial government after it refused to meet its executives or extend a deadline to respond to the objections that officials had raised over a mining lease being sought for the Reko Diq project. “The company sought to meet with the government of Balochistan to better understand their observations and concerns and requested an extension of an additional 60 days in order to engage with the government of Balochistan, however no extension was granted”, the statement said.
Reserves estimated at 5.9b tonnes
The copper reserves at the Reko Diq are estimated 5.9 billion tonnes, with an average copper grade of 0.41 per cent and an average gold grade of 0.22 grams a tonne. TCC plans to initially invest $3.3 billion in foreign direct investment and its investment will substantially increase during the 56 year mining operation. The project has the potential to become a model for the development of a modern mining industry in Balochistan. The statement said, “Tethyan Copper is hopeful that the Government of Balochistan will engage to meet and discuss the mining lease application. We would like to see the project move forward with the Government of Balochistan as a participating partner, for the benefit of Balochistan and Pakistan”. In February 2011, TCC filed an application for a mining lease over a mining area within the exploration license EL-5 in the Chagai district of Balochistan. The basis of the application was a feasibility study of an initial mine development at the Reko Diq project.
Feasibility study
The feasibility study was given to the provincial government in August 2010 under an existing agreement between TCC and Balochistan, the Chagai Hills Exploration Joint Venture Agreement or CHEJVA. At the time of the completion of the feasibility study in 2010, and under the provisions of the agreement, Balochistan was entitled to become a 25 per cent equity partner in the project, enabling them to profit additionally from the mine development and operations over and above the normal royalty and taxation payments. The provincial government on November 24, 2010 decided not to become a participating party in the project. Upon receipt of the mining lease application from the company in February 2011, the provincial regulatory body responded in September 2011 with a number of observations, made in the context of an intended refusal. TCC was given 30 days to respond to the observations. The company sought meeting with the provincial government to better understand their observations and concerns and requested an extension of an additional 60 days in order to engage with the Government of Balochistan, however no extension was granted, the statement said.