Pakistan mulling to sell Reko Diq shares to Saudi investors

Following the kingdom’s interest in the copper-gold mining project, the federal government is considering selling its shares in the Reko Diq project to Saudi Arabia in order to attract investment, officials privy to the development confirmed.

Under the revised agreement, Canadian company Barrick Gold Corporation owns 50% of the project’s shares, while Chilean company Antofagasta withdrew in exchange for $900 million deposited by three governmental entities, including the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Private Limited (GHPL).

The aforementioned businesses own a 25% stake in the project, which is intended to mine the undeveloped copper-gold reserves in Reko Diq, while the remaining 25% is owned by Balochistan, which includes 15% fully funded and 10% free-carried.

The newly formed Special Investment Facilitation Council (SIFC) has written to federal entities requesting that the transaction with Saudi companies be completed in the coming months. According to a source familiar with the facts, the initial directive advised accomplishing the necessary by the end of December, but the deadline was later extended until the end of March next year.

PPL and OGDCL have also provided this material information with the Pakistan Stock Exchange (PSX), although GHPL is not required to do so because it is not listed on the PSX.

“We are pleased to disclose that the Board of Directors, at its meeting held on September 28th, 2023, 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,” read the information posted by PPL in compliance with the Securities Act, 2015 and PSX regulations.

The News also contacted the Special Investment Facilitation Council (SIFC) for additional confirmation. A well-placed official confirmed the development, saying Pakistan wanted the Saudi government to conduct exploration in a separate block of Reko Diq, but the brotherly state is interested in investing in the existing project because Saudis, like any investor, do not want to take risks by venturing into an unexplored mining area.

Keeping this in mind, he stated that the value of shares is being analyzed by a third party in order to have a better negotiation. Barrick Gold is also interested in partnering with Saudis on the project. However, several concerns remain unresolved, he added.

“Pakistan wants Barrick Gold to also sell some shares to the Saudi government,” he said, although the official was unsure whether the Canadian business would agree to this demand. The crucial question at the center of this ongoing dispute is who will own the majority of the stock.

Currently, Barrick Gold and the federal and provincial governments each own 50% of the corporation, but if the federal government just surrenders its shares, the balance will shift to the Canadian company. When asked if the provincial government could be requested to sell its interests instead of the federal government, the source stated that no such plan was being considered or was likely because it would be unfair to Balochistan.

When questioned whether the Saudi investors are the Saudi government or private enterprises, the official stated that each has its own shareholding structure. Even if the enterprise is privately owned, the Saudi government will have a stake.

He stated that, while the federal government was not particularly pleased about selling its shares, it intended to do so in the hope that this choice would spur additional investment in other areas. A third-party valuation of shares, according to that official, would be completed by the beginning of December this year.

Originally published in The News

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