Barrick Gold has declined to sell its shares in the Reko Diq project, leading to a principal agreement between Saudi Arabia and Pakistan.
Under the new deal, the Pakistani government will sell a 15% stake to a Saudi investor, reducing its overall participation in the project from 50% to 35%.
In the revised structure, the Balochistan government will maintain its 25% share unchanged, while the federal government’s stake will decrease from 25% to 10%. Consequently, Pakistan’s total shares in the project will amount to 35%, positioning it as a minority stakeholder.
The arrangement also includes establishing a payment mechanism for Balochistan and the engagement of levies by the Reko Diq mining company. Additionally, Saudi Arabia has secured access to a permanent arbitration court. Senior officials have noted the indispensable role of the Special Investment Facilitation Council (SIFC) in valuing the project, highlighting that such valuation would have been challenging without it. They also remarked on the country’s historically low investment climate since 1972.
A senior Pakistani official emphasized the country’s extensive experience in joint ventures, referencing partnerships in sectors like telecommunications and banking. The official reassured that reducing the government’s share in Reko Diq to a minority stake would not lead to “practical problems.”
Another official pointed out that under the current terms, Barrick Gold must consult before making unilateral investment decisions, ensuring that Pakistan can meet its immediate needs through these clauses. This development occurs amid a declining investment-to-GDP ratio, which has reached its nadir this fiscal year.
Certain circles expect the investment climate to improve following the Saudi deal in Reko Diq. Senior officials anticipate a formal announcement from Saudi Arabia concerning this deal in the coming weeks, which will also see Saudi Arabia increase its investment in additional project blocks.
The consultant facilitated by the SIFC has submitted a report that supports the share sale in Reko Diq, underscoring the council’s critical role in this valuation process. The Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC), which includes a significant mutual investment agreement granting access to international arbitration, is also pivotal. The federal cabinet ratified this FTA and Bilateral Investment Treaty (BIT) during the interim government, and the GCC is awaiting its ratification.
Recent high-level visits between Pakistan and Saudi Arabia, including those by Army Chief General Asim Munir and a Saudi minister, have propelled this multi-billion-dollar investment deal forward. The ratification of the FTA accommodates Saudi Arabia’s requirement for access to a permanent arbitration court, with Pakistan insisting on an 8-month domestic dispute resolution effort before international arbitration.
The Minara Minerals Investment Company, part of Saudi Arabia’s Ma’aden mining conglomerate, is set to play a significant role globally in mineral assets and has been tasked with hiring levies and establishing a payment mechanism for Balochistan’s share in the Reko Diq project.
