Don’t let Riko Diq go to the dogs

Published: January 17, 2011
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According to the current estimates, the total worth of the gold and copper reserves at Reko Diq lies at more than $500 billion.

The Riko Diq deal has created a lot of hue and cry. Thanks to some conscientious petitioners, the matter has come to into the limelight with the judiciary actively investigating the viability of the deal.

Dr Samar Mubarakmand’s opinion over the issue has exposed what can be arguably regarded as one of the largest corruption scandals in the history of this nation. The Tethyan Copper Company (TTC), a conglomerate of companies, which claims to be undertaking the project in goodwill and bringing employment opportunities here, is currently the most probable candidate for getting the project. It had been sanctioned by both former President Musharraf’s regime and President Zardari’s officials.

Corruption’s new milestone

The problem is that TTC’s goodwill is evident in the fact that when the deal was being brokered, it initially offered an insulting two per cent to the government. Eventually, the deal was struck at some 25 per cent, even if the motives for the official end were personal benefits and perks, having nothing to do with national economy.

According to the current estimates, the total worth of the gold and copper reserves lies at more than $500 billion. The deal brings Pakistan a paltry $165 million a year – whereas it could be actually some $2 billion if no outsourcing was being done. The intriguing part is that the TTC intends to transport the ores in their liquid form through an underground pipe which will bar anyone else from estimating the real amount being mined. The ores will then be transported to Chile where they will be chemically processed and made hefty profits from.

A miracle for the economy

The worst part in this entire saga is that a project worth billions of dollars that can immensely help Pakistan with its foreign debt, is going to the dogs simply because of an utter lack of will. Government officials seem to love closed-door negotiations where they can dump all the workload on someone and get millions in return, even if that’s peanuts compared to what could actually be earned. This ends all chances of the project contributing to the national economy. Not only that, it also removes a huge employment opportunity for the people of Balochistan.

According to experts, if the processing plant is placed within Pakistan, ideally near Riko Diq, quite like the Chinese plant at Saindak, this would provide thousands of employment slots to locals. This single project may become the start of a change in the fate and fortunes of Balochistan. But like always, it is being negotiated by the government in terms of the bumps in personal accounts of officials and the rest is left to be damned, exploited and enjoyed by a foreign company while leaving the locals, as usual, in tatters.

Let the Chileans have it

The question is not whether or not the judiciary will go against the deal. In all honesty, that barely changes things. Even if the Supreme Ccourt rules for the project to be domestically treated, if the government is not a willing partner, it will still go to the dogs. Hefty resources will be poured and then left to rot , and if that’s what will become of it – if the judiciary and civil institutions can only pursue things to an inconclusive end – they’d better be left as they are. Let the Chileans have it, I say!

Govt scams and the need for transparency

If, on the contrary, the case is pursued so that not only is the ruling extracted against the TTC party, but the government too is forced to work fully on the project with a proper accountability setup installed, then the pains are worth it.

A workable plan was proposed by former financial minister Shaukat Tareen. According to him, even if excavations are done by the government, a company could be hired only to install and process the ores, a service for which it can then be fairly paid. Considering our lack of both technical equipment and personnel, this could be a viable plan and would leave government with no more excuses.

This and similar other scams from the state require a monitoring authority which should overlook the transparency of the governmental projects being outsourced and approve them before they are quietly ticked off in a clandestine meeting.

The absence of such a body is doubly damaging since on one side, it results in losses of God-knows-how-many billions of dollars to the national economy, thanks to corrupt officials. And on the other, it earns us a bad reputation with prospective investors from abroad. If we want to become anything other than a degenerate, dwindling third world economy, it’s time we got serious about it.

salman.latif

Salman Latif

A blogger who blogs at salmanlatif.wordpress.com/ and tweets @salmanlateef

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • Nadir El-Edroos

    We have all now lost any neutral perspective on this issue now. The fact that a foreign company has to deal with politicians rather than a regulator for a mining concession doest bode well for us. The fact that politicians are involved means that whether the deal is good or bad by international standards is inconsequential as the opposition will highlight problems in the agreement.

    Further, the emphasis on individuals is also disappointing. Dr Samar Mubarakmand for example is being looked on as some great saviour, however many mining experts who have written into this paper, the Dawn, Daily Times etc, have questioned his statements and assumptions.

    Then they are other considerations. Who is going to pay for the infrastructure development? How are the minerals from the mine to be transported to Gawadar? Who is going to secure it? Who is going to compensate the local community? What about environmental damage?

    The $500 Billion figure is based on alot of assumptions as well. Especially accelerating commodity prices in the future. However, if prices do increase as predicated there will be greater incentives for innovation and finding alternatives for gold and copper.

    What about the relationship between the federal and provincial government? If so much money starts pumping in, there is likely to be a tussle in one form or the other between Quetta and Islamabad. Islamabad may count on relying on revenues from mineral resources. While Quetta may get the revenue from the gross revenue, Islamabad may impose taxes on transport, berthing at Gawadar etc.

    The essential problem is the weakness of regulation and the absence of a regulator, which has considerable resources, skill and legitimacy. The Reko D project is being held up for media scrutiny quite rightly, however we are all viewing this from the now familiar narrative of foreign exploitation and domestic corruption. Though as we as a nation have never really prospected for $500 billion of copper and gold, no one really has the requisite skill and know how to analyse the assumptions and observations made by supporters and critics of the project.Recommend

  • Mahvesh

    I agree with Nadir – there have been questions raised about the level of expertise this country has to take on something like this all on its own. How can we demand ‘no outsourcing’ when we don’t have the capabilities to undertake such projects! It’s all very nice to appreciate how we have the 4th largest mines in the world of Kryptonite and can earn trillions in a day, but it takes serious contemplation to actually consider how. Sadly though, the saner and more professional voices will not be heard because of the attention crazy sensationalists will hog. Recommend

  • http://www.pakspectatogooutr.com Sana Saleem

    Our Government and the politicians are unreliable and it is very necessary that there is some check on all of them.Recommend

  • http://syedaabidabokhari.wordpress.com The Only Normal Person Here.

    Most surprising part is that it came under media attention after so long. Anyways… It would be unfair to TTC who went through all the hurdles of intensive research and at the end is being played by our good for nothing politicians. Also, it would be a major blow to PPP regime if this crucial project didnt materialize. Recommend

  • parvez

    The deal should be renegotiated with TTC in a transparent manner where the interests of the country are kept intact. Examples of PIA and Pak Steel and the burden of these on the tax payer is legend. Do we want Riko Diq to join this club ?? Recommend

  • Raqib Ali

    Let the foreign company do its work. They are promising technology transfer. We can also force them to train 100s of local engineers.

    We couldn’t do anything in 65 years. Now please let someone else do this for a change. When you give stake to powerful foreign countries (like the US/Canada etc), they will protect you for their own interest. It is a win-win situation. Being over clever and too greedy can make us like oil rich Iraq where no US company lobbied to save it when it was in trouble!!!Recommend

  • Raqib Ali

    If we were so intelligent, we would have made at least mobile phones/dvd players by now! Plz accept reality. Don’t let much needed foreign investment go away.

    I agree with Nadir el Edroos. Statements of Dr Samar are not credible.Recommend

  • Majid Urrehman

    We cannot do it. Let TTC handle it and govt should try to get some better deal otherwise, this wealth will be of no use for anyone. Govt of Pakistan will make it a liability for people of Pakistan rather than any useful project like other stakes like Steel mill, PIA, Railways etc.
    TTC is giving 5 figure (per month) salaries to potential Pakistanis and can provide more jobs to Pakistanis. I strongly suggest that Govt should negotiate with TTC to process molten metal here in Pakistan rather than exporting to chile. It will also provide great opportunities for educated Pakistani youth.Recommend

  • Majid Urrehman

    It would also be interesting to study Oil and Gas sector in Pakistan and put sided by side multinational companies and Pakistan organizations which are working in the same arena to understand and predict fate of mining sector in Pakistan. Oil & Gas sector and mining both involve similar type of heavy investment and nature of business and due to these reasons most of the times same consortium are involved in both O&G and Mining.
    Currently there are several multinational companies working in Pakistan in O&G sector to name a few OMV, BHB Billiton, BP (now gone), ENI etc. The Pakistani counterparts of these companies are OGDCL, SNGPL, SSGC, POL etc.
    Now it is easy for Supreme Court to decide whether they want to turn Riko D into an OGDCL which works under the chairmanship of a politically appointed criminal or into into a SNGPL which is working under the same incompetent chairmanship from last several years (a decade almost) or into a five star Australian company like BHB Billiton or Italian comapny like ENI which are providing state of the art engineering culture and opportunities to Pakistani graduates.
    A good foreign company is always a best bet for Pakistan. They are source of inspiration for Pakistan pvt sector, they provide excellent job opportunities, they provide continuous businesses to Pakistani companies and they provide a source of prevention from isolation from developed world.
    Dr. Samar is here for few years, then who we will look as Saviour. He is specially taking interest into this matter being member of planning commission. Otherwise he has neither been related to this matter nor will be after his tenure ends with planning commission. He has been a good scientist and has come up with good organizations for Pakistani defense industries like NESCOM and NDC.
    TTC has already done a lot of work, indeed they are the ones who have initiated this project. What Geological survey of Pakistan has been doing all this time who as per them has all the mapping of all Pakistan?
    If still govt and supreme court is interested to handle this with Pakistani resources, give it to ENGRO group, since they are only successful industrial group which can handle it in its purity.Recommend

  • Amadeus

    I just love the experts here. From mining to quantum physics, everyone knows everything here =D

    @author: How much, just how much (other than fwded emails) do you know about mining to be able to create an opinion over this?Recommend

  • khan

    From all what I’ve read I am still as confused as ever. However there there remain, to my mind, a few pertinent questions:
    1. Are there (as opposed to ‘of course there ought to be’) mining and engineering experts currently available in Pakistan who can build and manage a refinery plant?
    2. Do we have the financial resources to build a refinery plant – if not, then can it be part of the contract that one is built here with foreign expertise, which then develop local staff over time to eventually occupy senior executive positions in the plant.
    3. With so much money at stake is there anyone who can we trust to offer us a true analysis of this growing conundrum where every one appears to voicing opinion possibly from there own selfish and perhaps monetary perspectives?
    4. How will the local Baloch populace benefit from all this?Recommend

  • mian Aleem

    yes.Salman is right.This project should be handled by a Pakistani company on merit basis. It is time for our nation to rise up from poverty.Recommend

  • Ali

    When the poiliticians get involved you can bet that things will go awry.
    There’s probably only a single national institution which possesses reasonably good engineering knowledge and which isn’t as corrupt as the politicians and that’s the army.

    Samar Mubarakmand is a very good scientist and his counsel should be taken but I think he might be wrong on this one.
    Do we have the technical knowledge to do this on our own? Find Pakistan’s premier engineering/mining companies and ask them. If they can’t do it then we need foreign help. We can’t even supply a steady supply of gas & electricity to homes and factories, how is the infrastructure going to cope with this new load on the national grid, gas supply? I am not sure we can even refine this stuff on our own if we wanted to.

    Let’s get the scientists and engineers/ domestic mining comapnies in and kick out the politicians and lawyers.
    Give them a deadline and if they fail to meet it then hand it over to the Chileans.Recommend

  • Majid Urrehman

    Just saw Kamran Khan show on Riko Diq. Shocked how BHP gave the project to a dummy TTC. Now I am very much clear that this deal must not be done. Definitely it’s a fraud and people of Pakistan must stop it to going to foreigners. Lets’ support Supreme Court and Pakistani scientists who at least has some credit of building a self sufficient defense industry. If they are honest, they can do it.Recommend

  • http://dreamsbecomedestiny.wordpress.com/ Fatima

    Mineral resources of such unmatched value must be dealt with supreme oversight, similar to nuclear missiles.
    I dont believe a scientist of Samar Mubarak,s stature went as far as stating in the court, that we can manage on our own, without any factual knowledge. Also Shaukat Tareen and many more.

    I disagree with the notion that we dont have the level of expertise/skill. A self-reliant nuclear Pakistan cant tap her own resources of grave importance – unconceivable! However, you can say its a policy failure or undermining the importance.

    Moreover, you have Jems/marble here, not fully exploited .You cant let it all go like this. Recommend

  • http://dreamsbecomedestiny.wordpress.com/ Fatima

    Also, if we dont have an effective infrastructure; now is the time to develop one. Time to prioritize and make it feasible.
    Hire Chinese like we do everywhere or else, because today it is Reko Diq, tomorrow it will be N Waziristan and so on.Recommend

  • IZ

    The issue has become so politicized that it is very difficult to get a clear understanding of the pros and cons. I think Nadir’s comment is spot on.Recommend

  • http://www.salmanlatif.wordpress.com Salman Latif

    To all cynic friends who have a knack of slamming Pakistan well on issues, thus gaining accolodes for qualified self-pity, here’s the
    thing:
    1 – If only you’d have the patience the entire article, you’d have known I never ‘assumed’ that pakistan has the technology pre-requisite for mining these available resources. And precisely that’s why, towards the close of the article, I quotes Shaukat Tareen’s statement, proposing hiring a non-local company for the technical expertise needed. What does intrigue me though is: why would do you guys, commenting eagerly on the post, not want an outsider company just to help in the project and not own it and give us peanuts in return? Pray, do tell me.

    2- To all those ‘mining experts’ and ‘resource management professionals’ telling me to mind my business, here’s my humble response: I never claimed any expertise in those domains. however, going by your logic, only a law expert can comment on law ministry’s doing and if any of you guys talks about CJ or Supreme COurt, you’d be an assinine, unqualified person if you don’t know all about the legal issues. Luckily, the yardstick you define here is, evidently, flawed and I can comment and opine over ‘mining projects’ when they are affecting national economy and leave a chronology of similar projects and misappropriations in the past. This is because the Riko Diq deal is not about just mining – it’s about lot more! :)Recommend

  • http://www.pakistanandpakistanis.com imran

    after reading all the material related to Reko Diq project, i am still confuse that how it is possible that a project of $3 trillion had been given to foreign company against against some millions………… dr samar mubarak mand is the only man who can save this projectRecommend