Bloomberg News

Tethyan Halts $3.4 Billion Project as Pakistan Rejects Lease

November 30, 2011

(Updates with shares in sixth paragraph.)

Nov. 30 (Bloomberg) -- Tethyan Copper Co., a venture between Antofagasta Plc and Barrick Gold Corp. to build a $3.4 billion Pakistan copper and gold mine, mothballed operations that will cost 150 jobs after its mining lease was rejected.

The company filed arbitration against the government of Baluchistan province, which refused the mining lease, and the federal government of Pakistan in Washington and Paris, Tim Livesey, chief executive officer of Tethyan, said today in a telephone interview. The company has invested about $500 million, including $214 million of expenses until the end of the feasibility study in August 2010, he said.

“We aren’t packing up and leaving the country,” Livesey said. “We are going to mothball the exploration camp and we have a voluntary redundancy program at the moment and majority of the workers accepted that very openly.” About 150 jobs are affected, he said.

The Baluchistan government on Nov. 16 refused Tethyan’s application to mine at Reko Diq, a rocky desert location in far southwest Pakistan. The government in September asked the company to explain 10 issues, including why Tethyan hadn’t submitted plans to build a smelter in the area. While Tethyan has proposed exporting copper ore concentrate from its mining operations, Baluchistan wants a copper smelter built locally.

A call to the Baluchistan Ministry of Mines and Minerals during regular working hours wasn’t answered.

Shares Advance

Antofagasta shares climbed 9.2 percent to 1,184 pence at the close of London trading. Barrick Gold shares were 3 percent higher at C$53 in Toronto.

“We can see no realistic reason why the license should be rejected,” Livesey said. “We haven’t been able to get to meet them to discuss the rejection to better understand it. Until that happens, we are pretty much in dark as to what the real reason is.”

Tethyan filed arbitration at the International Center for Settlement of Investment Disputes in Washington and at International Chamber of Commerce in Paris, Livesey said.

“It’s our hope and desire still to meet with the government and regulators to find a solution to all this,” he said.

--With assistance from Randall Hackley in Zurich. Editors: Alex Devine, Ana Monteiro

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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