Bloomberg News

Antofagasta, Barrick File Notice in Pakistan to Gain Time

October 20, 2011

Oct. 20 (Bloomberg) -- A venture between Antofagasta Plc and Barrick Gold Corp. to build a $3.3 billion Pakistan copper mine filed a “notice of dispute” to gain time to resolve issues with the local government about its mining lease.

The notice, filed yesterday, gives Tethyan Copper Co. 120 days to to engage the government of Baluchistan province in talks over the lease application, Tethyan Chief Executive Officer Tim Livesey said today by phone from Islamabad.

The government gave Tethyan 30 days until yesterday to clarify 10 issues about the application and refused the company’s request to extend the deadline by 60 days and negotiate, Livesey said. A call to the Quetta office of the Baluchistan government after business hours wasn’t answered.

“We’re hopeful and sure they will join us in discussion,” Livesey said. “However at the end of the 120 days if we haven’t been able to resolve the dispute, the next step will be to trigger international arbitration in London.”

Tethyan’s application to mine copper and gold in Reko Diq, a rocky desert location in far southwest Pakistan, has been stalled because of the dispute. The company says it has spent more than $500 million on the project and located enough ore to produce 200,000 metric tons of copper and 250,000 ounces of gold per year for 56 years.

The 10 issues, which are outlined in a letter, include why Tethyan hadn’t submitted plans to build a smelter in the area and whether it’s a registered company in the country, Livesey said. While Tethyan has proposed to export copper ore concentrate, Baluchistan wants a copper smelter built locally to refine the metal, Livesey said.

‘Communication Error’

“It seemed that they are trying to find whatever reason they can not to grant the mining license,” he said. “We hope it’s a communication error within the government; we hope it’s only a misunderstanding so we can solve during discussions.”

The government, which last year refused to become a 25 percent equity partner in the project, asked why Tethyan applied for the license on its own and not together with the government, Livesey said.

The letter also criticized Tethyan for not making a “proper feasibility or exploration of the deposit” and failing to achieve agreed targets, Livesey said. “We disagree,” he said. “It’s a very good, high-quality, international study.”

--Editors: Alex Devine, Will Kennedy

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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