Note: This article explains the Reko Diq project as well as sheds light on the economics aspects. Article also discusses in detail the job opportunities this project will create for the people of Balochistan.
As the controversial legal case and internal political resistance around Reko Diq comes to closure upon new agreements between Pakistan and Canadian Firm Barrick, a new era of investments and economic growth awaits Balochistan. The Reko Diq Cooper/Gold mine project has received the required approvals and work has begun on the Reko Diq feasibility study which is expected to go on till the end of 2024, with 2028 targeted for first production.
The summary of new agreement terms and developments is as follows:
- The Canadian Firm Barrick would bear the initial capital cost of around $7-8 Billion required to develop the project
- The Canadian Firms share has been reduced to 50% as compared to earlier 75%. The remaining 50% is to be shared between The Government of Balochistan (35 %) and Three Pakistan State Owned Enterprises (15 %) i.e., OGDCL, PPL and GHPL.
- The share of economic benefits to Pakistan increased to 63 % (financial effect approx. $64 Billion) as compared to only 41 % in the previous agreement.
- Substantial increase in royalty to the Government of Balochistan (earlier 2% now increase to 5%)
- Annual income of approximately Rs 150 Billion to Government of Balochistan for 35 years.
- Estimated direct job creation in Balochistan projected at around 8000 skilled and non-skilled while 12000 indirect jobs also expected.
- Deal capitalizing updated Baluchistan Mineral Rules and National Mineral Policy making sure no discriminatory incentives accorded to Barrick Gold.
- $11 Billion fine case on Pakistan resolved.
Long Term Benefits to Balochistan
The Reko Diq project is perhaps Balochistan’s most important door opener towards a new wave of economic development and wealth creation through a series of foreign direct investment injections in Billions, new stream of Government revenue generation and job creation in the thousands for locals. As a result, Balochistan can expect new infrastructure development (New Roads, Power Plants, Schools etc.), new services availability and greater sustainability through reduction of poverty.
In simpler words, the project demands employees/workers creating jobs and sources of revenue for Balochi family’s, meanwhile the large influx of workers and need for services will result in demand of better services such as reliable electricity supply, water sourcing, etc. Furthermore, the project itself requires infrastructure development such as roads and bridges for which will ultimately benefit Balochistan through infrastructure creation. But perhaps the biggest benefit to Balochistan are the new streams of revenue for government which will be used for human development via creation of schools, healthcare etc. Another longer-term benefit is the opportunity to attract even more foreign firms and investment for rare resources extraction which will only boost the development cycle.
Long Term Benefit to Pakistan
Pakistan also benefits from this project greatly as it has become the source of much needed foreign direct investment and opened the gates for even more such projects with foreign firms in the future. The conclusion of a mutually beneficial agreement has not only saved Pakistan from a fine of $11 Billion but also improved revenue generation share which will contribute to overall GDP positively. The largest and most important development for Pakistan however in this whole ordeal is the prime development opportunity for Balochistan which is currently the largest and poorest Pakistani province, it is also hoped that the economic uplift of people will also cause reduction in violence and miss guided youth’s temptation to join foreign backed terrorist organizations for money.
Overall, this project is a boon and much needed development during times of economic hardship and serves as a counter to those who claimed Balochistan is only open to Chinese investments.
#Taimur Hassan
#TeamPakistanStrategicForum
