Saudi investors eye Pakistan's Reko Diq project
Shares
In an effort to attract investment, the federal government is considering the sale of its shares in the Reko Diq project to Saudi Arabia, as the kingdom has expressed interest in the copper-gold mining venture, according to officials familiar with the matter.
Under the revised agreement, the Canadian company Barrick Gold Corporation currently holds 50% of the project's shares, while the Chilean company Antofagasta withdrew from the project in exchange for $900 million, deposited by three governmental entities: the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Private Limited (GHPL). These entities collectively possess a 25% share in the project, which is focused on extracting untapped copper-gold deposits in Reko Diq. The remaining 25% ownership belongs to Balochistan, with 15% being fully funded and 10% on a free-carried basis.
The newly formed Special Investment Facilitation Council (SIFC) has communicated with the federal entities, urging them to finalize the transaction with Saudi companies in the coming months. Initially, there was an instruction to complete this process by the end of December, but the deadline was subsequently extended to the end of March next year. It has been reported that PPL and OGDCL have shared this information with the Pakistan Stock Exchange (PSX), as they are listed, while GHPL, which is not listed with PSX, was not required to do so.
PPL's disclosure reads, "We are pleased to disclose that the Board of Directors at its meeting held on September 28th, 2023, has decided to evaluate a potential engagement with sovereign foreign investors with respect to the Reko Diq Project and has decided to appoint advisors through its associated company M/s Pakistan Minerals (Private) Limited to assist in this regard," in compliance with the Securities Act, 2015, and PSX regulations.
The News contacted the Special Investment Facilitation Council (SIFC) for verification, and a well-placed official confirmed the development. Pakistan is interested in having the Saudi government invest in the existing Reko Diq project rather than exploring a separate block, as it reduces risks associated with unexplored mining areas. The shares' value is currently being assessed by a third party to facilitate negotiations.
Barrick Gold is also interested in having Saudi partners in the project, but certain issues still need to be resolved. The negotiation involves determining who will hold the majority of shares. Currently, Barrick Gold, the federal government, and provincial governments each hold 50% of the shares. If the federal government sells its shares, the balance would shift in favor of the Canadian company. There are no plans to ask the provincial government to sell its shares, as this would not be equitable for Balochistan.
Regarding the identity of the Saudi investors, the official explained that they have their own shareholding structure. Even if the company is privately owned, the Saudi government will hold its shares. Although the federal government is not eager to sell its shares, it hopes that this decision will attract further investment in other sectors. A third-party assessment of the shares' value is expected to be completed by the beginning of December this year.
