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Operator hopeful of salvaging $3bn copper venture

Tethyan Copper Co. said the authorities were worried about getting a fair deal and also wanted to undertake smelting and refining to ensure the maximisation of benefits. - File phot
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Wednesday, 10 Mar, 2010
ISLAMABAD: The operator of a $3 billion joint venture copper and gold project in Pakistan is hopeful the project will go ahead despite a government threat to scrap it because of misgivings about the share of benefits.

The project is owned by Canada’s Barrick Gold and Chilean copper miner Antofagasta.

The two firms are partners in the Tethyan Copper Co. (TCC) which has a 75 per cent interest in the Reko Diq project in Balochistan and hold the exploration licence for the site.

The provincial government holds the remaining 25 per cent.

Tethyan is finishing up a feasibility study into the site, which could yield 22 billion lb (10 billion kg) of copper and 13 million oz (368 million grams) of gold over the 50-60 year project, and aims to apply for a mining licence within weeks.

But late last year, the provincial government said it wanted to cancel the project, ostensibly to get control of resources in Pakistan’s poorest province where anger over exploitation of gas and minerals is fuelling insurgency.

Peter Jezek, chief executive officer of Tethyan Copper Co., said the authorities were worried about getting a fair deal and also wanted to undertake smelting and refining to ensure the maximisation of benefits.

But Jezek said anxiety about Pakistan’s first world-class mining operation was largely the result of misunderstandings.

“There is a combination of a lack of information and fear of the unknown,” Jezek told Reuters in an interview in his Islamabad office. “The problem to a very large extent is not having the basics of understanding in place.”

“The fear on their side, obviously, is ‘are we getting a fair deal?’”, he said.

The authorities’ proposal to set up a smelting and refining operation was based on a doubtful perception of benefits. “Mining and concentrating actually captures over 90 per cent of the copper chain value, smelting less than 10 per cent ... We have pointed out that the economics of smelting and refining are very poor,” Jezek said.—Reuters

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