In 1993, Australian mining giant BHP (formerly BHP Billiton) began exploring gold and copper prospects in Balochistan, Pakistan’s insurgency-hit province that borders Iran and Afghanistan.
Seven years later, in June 2000, the government signed a joint venture with Pakistan getting 25% and BHP getting bulk 75%, which was not in line with the internationally established practice of sharing half revenues.
In 2006, the ownership of the project passed on to a consortium of Chile’s Antofagasta and Canada-based Barrick Gold, the world’s largest miner of the precious metal. They began work on the Reko Diq mine under an Australia-based subsidiary called Tethyan Copper Company (TCC).
But in 2011, the Balochistan government refused to permit the mining company to start digging for the minerals, saying it was not getting a good deal. On their part, the investors felt they had sufficiently compensated Balochistan with a share of 25%.
Failing to get a mining permit, TCC took Pakistan to international arbitration at the ICSID in late 2011. It claimed US$8.5 billion in compensation, even though it had only invested US$220 million in the Reko Diq project.
In July 2019, the arbitral tribunal awarded the mining company almost US$6 billion (which was almost as much as the US$6 billion bailout loan that the government would receive from the IMF over the following three years).
TCC has tried to enforce the award before a Virgin Islands court and freeze shares in two hotels belonging to Pakistan’s national airline in January 2021, even though annulment proceedings had been ongoing and Pakistan had been engaged in talks with the company to settle the case.
Last update: May 2021