Pakistan to pay firm $6bn over mine closure

Mining in Pakistan’s Balochistan province is dominated by small companies focused primarily on marble and granite. (Reuters/ File)
Updated 14 July 2019

Pakistan to pay firm $6bn over mine closure

  • Country’s legal experts are ‘studying’ financial and legal implications
  • The consortium Tethyan Copper is the largest foreign direct investment mining project in Pakistan

ISLAMABAD: Pakistan will have to pay almost $6 billion in damages to a foreign gold mining firm whose dig was shut down by the government in 2011, the World Bank said on Sunday.

The consortium Tethyan Copper company — of which Canadian gold firm Barrick and Chile’s Antofagasta Minerals control 37.5 percent each — is the largest foreign direct investment mining project in the country.

More than a decade ago the group found vast gold and copper deposits at Reko Diq, in the turbulent southwestern Balochistan province, and had planned a hugely lucrative open-pit mine.

But the project came to a standstill in 2011 after the local government refused to renew the consortium’s lease, and in 2013 Pakistan’s top court declared it invalid.

On Friday, the World Bank’s international arbitration tribunal committee awarded $5.84 billion in damages to Tethyan, according to a statement from the company, because of the government’s decision to shut down the mine.

Pakistan’s attorney general, Anwar Mansoor Khan, said in a statement they had noted the decision “with disappointment.”

The country’s legal experts were “studying the Award and reflecting upon its financial and legal implications,” the statement continued.

Ivan Arriagada, Antofagasta’s Chief Executive Officer, said: “We are pleased to reach this milestone after more than seven years of arbitration.”

“We remain willing to discuss the potential for a negotiated settlement with Pakistan and will continue to protect our commercial interests and legal rights until the conclusion of this dispute,” consortium chairman William Hayes added.

It comes weeks after Prime Minister Imran Khan secured a $6 billion bailout from the International Monetary Fund (IMF), amid devaluations of the rupee and soaring inflation.

Barrick and Antofagasta say the proposed plant could produce 600,000 tons of copper and 250,000 ounces of gold a year.

The provincial government is also a sleeping partner in the Reko Diq project with a 25 percent stake.

Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts say, which waste up to 80 percent of potential because of poor extraction techniques.

Experts have called for more transparent policies to allow mining to flourish.


Property investors turn to SE Asia amid Hong Kong unrest

Updated 2 min 38 sec ago

Property investors turn to SE Asia amid Hong Kong unrest

  • The summer of rage in Hong Kong has been fueled by years of simmering anger toward Beijing

KUALA LUMPUR: From luxury Singapore apartments to Malaysian seafront condos, Hong Kong investors are shifting cash into Southeast Asian property, demoralized by increasingly violent protests as well as the China-US trade war.

Millions have taken to the streets during four months of pro-democracy demonstrations in the southern Chinese city, hammering tourism while also forcing businesses to lay off staff — and the property sector is feeling the pain.

Property stocks in one of the world’s most expensive housing markets have plummeted since June, with developers being forced to offer discounts on new projects and cutting office rents.

Hong Kong businessman Peter Ng bought a condominium on the Malaysian island of Penang — which has a substantial ethnic Chinese population and is popular among Hong Kongers — after the protests erupted.

“The instability was a catalyst for me,” the 48-year-old stock market and property investor told AFP, adding he was worried about long-term damage to the Hong Kong economy if the unrest persists. “Investors will always look at things like that, political stability.”

And Derek Lee, a Hong Kong businessman who owns a Penang apartment, said he knew others in the semi-autonomous city who were considering investing in Southeast Asian property because of the unrest.

“People are thinking about how to quicken their ideas, how to make a more stable life,” the 55-year-old told AFP.

Adding to the allure of Malaysia is its relative affordability and prices much lower than Hong Kong.

The Malaysia site of Southeast Asian real estate platform Property Guru has seen a 35 percent increase in visits from Hong Kong, according to its CEO Hari Krishnan. 

While Hong Kong’s protests are primarily pushing for greater democratic freedoms and police accountability, the summer of rage has been fueled by years of simmering anger toward Beijing and the local government over falling living standards and the high costs of living.

Hong Kong’s property market is one of least affordable in the world with sky-high prices fueled, in part, by wealthy mainlanders snapping up investments in a city which has failed for years to build enough flats to meet demand.

But now mainland Chinese, who traditionally viewed property in Hong Kong as a safe investment, are opting for rival financial hub Singapore as a result of the protests and the US-China trade war, according to observers.

There has been a jump this year in sales of luxury apartments in the city-state — which like Hong Kong is known for pricey property — driven partially by mainland Chinese buyers, according to the consultancy OrangeTee & Tie.

“The protests in Hong Kong have made some of the (mainland Chinese) based there ... (more concerned) about investing in Hong Kong real estate, so they carry that investment to Singapore,” said Alan Cheong, executive director of the research and consultancy team at Savills.

As well as hitting China’s economy, trade tensions may have discouraged some Chinese from investing in the West and pushed them toward Singapore, with its mostly ethnic Chinese population.

“I think they don’t want to go to the West,” said Cheong.

Singapore is “the closest country culturally to China other than Hong Kong, and I think they feel more comfortable with that.”

There are further signs the stable, tightly ruled city is benefiting from the Hong Kong turmoil — Goldman Sachs last week estimated as much as $4 billion flowed out of Hong Kong to Singapore this summer.

And analysts warned there was little hope of Hong Kong’s property market recovering soon.