Islamabad, Jul 15: An international arbitration court has imposed a penalty of $5.976 billion on Pakistan -- one of the biggest in its history -- for the unlawful denial of a mining lease to a company in 2011, the Express Tribune reported.
The Tethyan Copper Company (TCC) -- a joint venture between Chilean mining company Antofagasta and Canada's Barrick Gold Corporation -- had filed claims for international arbitration before the World Bank's International Centre for Settlement of Investment Disputes (ICSID) in 2012 after the Balochistan Government rejected a leasing request from the company for the Reko Diq project.
The case between the Pakistan government and the company continued for seven years.
In its 700-page ruling against Pakistan, the tribunal on Friday awarded a $4.08 billion penalty and $1.87 billion in interests, Dawn reported.
The company had claimed $11.43 billion in damages.
Prime Minister Imran Khan on Sunday issued orders for the formation of a commission to investigate and fix responsibility for the massive loss borne by Pakistan in the Reko Diq case.
Reko Diq is a small town in Chagai district in Balochistan, close to the border with Iran and Afghanistan. The Reko Diq mine is famous for its vast gold and copper reserves and is believed to have the world's fifth largest gold deposit.
The TCC completed an extensive and detailed bankable feasibility study establishing the basis for mine development at Reko Diq during August 2010 and submitted a mining lease application in February 2011, along with an environmental and social impact assessment report, the paper said.
The project stopped in November 2011, when the Balochistan government summarily rejected the application by the TCC's local operating subsidiary for a mining lease in respect of Reko Diq.
The then Supreme Court chief justice Iftikhar Muhammad Chaudhry had in January 2013 declared the Reko Diq agreement void and in conflict with the country's laws.
The ICSID ruling is a major setback for Pakistan, which is at a "critical juncture" where it needs an ambitious and bold set of reforms, according to the Washington-based International Monetary Fund (IMF) which agreed to give a $6 billion bailout package to the country.
A thorough internal review of this long-standing arbitration will also be conducted in due course. (UNI)