Pakistan military to play key role in developing giant Afghan copper and gold mines

Pakistan’s military is taking a key role in the development of one of the world’s biggest untapped copper and gold deposits, which is currently stalled by a multi-billion dollar legal wrangle with foreign mining firms, multiple sources familiar with the situation revealed to Reuters News Agency.

The Reko Diq mine has become a test case for Prime Minister Imran Khan’s ability to attract serious foreign investment to Pakistan as it struggles to stave off an economic crisis that has forced it to seek an International Monetary Fund bailout.

Ten current and former provincial and federal government officials and mining sources familiar with the project in the Baluchistan region say the military has become the most important voice on the future of Reko Diq, which it sees as a strategic national asset.

The military will not only be in a position to decide which investors develop the deposit, but an army-controlled engineering firm, Frontier Works Organization (FWO), is positioning itself to be a member of any consortium involved.

Buried at the foot of an extinct volcano near the frontier with Iran and Afghanistan, the mine’s development has long been delayed by a dispute with previous investors in the project, Canada’s Barrick Gold and Chile’s Antofagasta.

The government is urgently trying to settle the dispute as a World Bank arbitration tribunal, which ruled against Pakistan in 2017, is in the next few months expected to announce how much in damages the country must pay to the foreign firms, who are claiming more than $11 billion. The dispute relates to the withholding of a mining lease.

Islamabad is also trying to find new partners to invest in the project. But any new investors will need the blessing of Pakistan’s military, according to government officials and mining sources.

State-run companies from resource-hungry China have long coveted Reko Diq and more recently Saudi Arabia has shown interest, according to Pakistani officials.

The mine is currently believed to be taken over by GHQ, the Pakistan army’s General Headquarters in the garrison city of Rawalpindi.

FWO, best known for building roads through Pakistan’s rugged and lawless border regions, has developed “substantial” mining capability in recent years and would be interested in taking a role in the project.

According a Reuters report, the maneuvering behind the project shows how the military, which has historically dictated Pakistan’s security and foreign policy, is leveraging its sway over the civilian government at federal and provincial level to carve a growing role in the nation’s business affairs.

The army has ruled the nuclear-armed nation for nearly half its history and is considered to have a major influence over Khan’s recently elected government.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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