Reko Diq Copper and Gold Mining: Issues & Recommendations

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2.1.4The Terms Of Private Access To Mineral Resources

Restricted Areas

Neither the NMP nor the mining rules of the three provinces examined as part of this reviewimposes excessive restrictions limiting the areas available for exploration and mining. This doesnot appear to be a problem under the rules for mining in Pakistan.Availability of Information on Existing Licenses/Leases and Applications theNMP provides, in paragraph 3.3.1(vi), that the Department of Mineral Development in eachmineral rich province will be responsible for “maintenance of up-to-date master plans showingpositions of all exploration licenses and leases granted, renewals, assignments and surrenders ofmineral titles, relinquishment of acreage etc. and make this information public through regularpublication of complete details in the official gazette.” This is a fundamental component of aprivate sector-led mineral development policy. However, this provision of the NMP does not gofar enough. Balochistan and Sindh have specific rules on the receipt, time-stamping andacknowledgement of applications for mineral rights, in section 10 of their respective rules, but

Punjab does not. All three of the provinces have a series of general rules on the maintenance oftitle registries that are reasonably good. However, only issued titles are recorded in suchregistries. None of the three provinces provides for the establishment and rigorous maintenanceof a registry of applications filed for mineral titles.An efficient, objective, and rigorously maintained registry of applications for mineral titles isperhaps the central feature of a modern legal framework for private sector mineral explorationand production activity. Rules governing how, when and by whom information is recorded inthe registries of applications and titles should be set forth in the mining law and/or regulationswith precision. Such provisions are found in the mining laws of the Latin American countriesthat have been the most successful in the world in attracting a greater share of the global capitalinvested in minerals exploration during the last decade: Chile, Peru, Mexico and Bolivia. Thebest example in Asia would be the 1997 Minerals Law of Mongolia; and among AnglophoneAfrican countries, the Mining Act, 1998, of Tanzania. The 2002 Mining Code of the DemocraticRepublic of the Congo (in French, but with English translation available) also makes this featureparamount.

Relinquishment

Balochistan requires relinquishment of 50% of the license area at the time of each of the two permitted renewals of the exploration license; whereas Sindh only requires relinquishment of50% of the license area at the time of the second renewal. It appears that voluntaryrelinquishment is also encouraged through the license amendment process. The rules of the provinces also provide that reconnaissance and exploration rights continue in effect as to the areas not relinquished or transformed into another type of license or lease, which is appropriate Relinquishment does not appear to be a problem area. TransfersConsistent with the NMP, the provinces do not permit transfers of reconnaissance licenses, butdo permit transfers of exploration licenses after the first two years, subject to approval by thelicensing authority based on a review of the qualifications of the transferee to hold the license.

The restrictions on transfers do not appear to be unreasonable, on the one hand; however, ease oftransferability of mining titles has been a key factor in promoting investment in the mining sectorof the most successful mining countries such as Chile, Mexico and Peru, where transfers ofexploration titles are subject to easier and less restrictive procedures than in the provinces ofPakistan. Among the Anglophone countries of Africa, both Tanzania and Botswana revised theirmining laws in 1998 to liberalize the provisions on transfers of mineral titles consistent withevolving best international practice.

2.2 Present scenario & Challenges Ahead

The Supreme Court on Monday dated 7th January 2013 declared the Rekodiq mining lease case (Chaghai Hills Exploration Joint Venture Agreement (CHEJVA) illegal saying its execution was contrary to the provisions of various laws of the land.A three-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, in its 16-page short order in response to identical petitions filed against leasing out the gold and copper mines, including the world’s biggest gold mine worth over $260 billion situated at RekoDiq, in Balochistan to the foreign companies by the federal government.

Earlier, on December 21, 2012 the court has reserved its judgment after completion of arguments of all the petitioners and respondents.“The CHEJVA dated July 23, 1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1982, etc., and is even otherwise not valid therefore, the same is declared to be illegal, void and non est”, the court ruled.The court maintained that the ‘Novation Agreement’ for the RekoDiq mining lease was purportedly made for the purpose of substituting CHEJVA, adding that the Government of Balochistan was also made party to the joint venture.The court ruled that it was not permissible under Balochistan Mining Rules (BMR) 2002 as well as the Rules of Business of the government of Balochistan (GOB), particularly Rule 7 and other rules.

“The government of Balochistan in purported exercise of the powers vested in it under the BMR 2002m granted relaxations in violation of Rules 98 ibid as no reason was assigned for the relaxation of the relevant rules”, says the court order.Declaring all the amendments in the CHEJVA illegal the court held, “The Addendum No.1 dated March 04, 2000, Option Agreement dated April 28. 2000, Alliance Agreement dated April 03, 2002 and Novation Agreement dated April 01,2006, which are based upon, and emanate from, CHEJVA are also held to be illegal and void”.The court further noted that all the agreements in result of the addendum in the instant matter do not confer any right on BHP, MINCOR, TCC, TCCP, Antofagasta or Barrick gold.

The short order further said, “EL-5 is tantamount to exploration contrary to rules and regulations as the claim of TCCP is based on CHEJVA, which do0cuments itself has been held to be non est. Therefore, before exploration it was incumbent upon it to have sought rectification of its legal status”.

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