Pakistan to become the third largest copper producer in the world in five years

ChthonicPowers · October 22, 2003, 5:29am

Australian co to start copper project

ISLAMABAD, Oct 21: Pakistan on Tuesday said it had allowed an Australian mining company to start a $130-million copper development project in Balochistan whose $1 billion second phase of investment would make Pakistan the third largest copper producer in the world in five years.

“This could be a boom for foreign investment and place Pakistan on the second or third position on the world map of copper production,” petroleum secretary M. Abdullah Yousaf told a joint news conference with Muslim Lakhani, country representative of Tethyan Copper Company (TCC) - a Pakistani offshoot of Australian BHP Billiton.

He said a $10-million initial public offering of Reko Diq Copper Project of Chaghi district in Balochistan was “heavily oversubscribed” at the Sydney senior stock exchange and closed much earlier than anticipated.

Mr Yousaf said the company had already spent $10 million on the project and would spend another $10 million to complete the detailed feasibility in 15 to 18 months. He said that since 50 per cent shares of the $10 million IPO were subscribed by the fund managers and remaining by small investors, the company would be under pressure to start $130 million H-4 (first phase of Reko Diq) project for copper exports in three years time.

He said that $130 million project would produce 40,000 tons of copper per annum, much higher than Saindak’s 15,000 per annum and earn $75 million exports for 12 years.

The response form the investors from Canada, the United Kingdom and Australia was primarily because of the Export Processing Zone status to the Reko Diq and a very attractive national mineral policy, he said.

Abdullah Yousaf said that next phase of the project would entail an investment of $1 billion andresult in copper production of 250,000 tons and 400,000 ounces of gold per annum and could yield export earnings of $500 million per year for 50 years. He said the H-4 project would be completed in 3-5 years and Western Porphyry (phase-II) in 5-10 years.

Muslim Lakhani said that the money raised through the IPO was lying in the bank account of TCC and formal listing at the Sydney stock market would take place by the end of this month.

He said there were 90 known deposits of copper in Reko Diq area, bearing perhaps more than 11 billion tons of copper and nine million ounces of gold. He said the response from the investors was based on technical mining data and the road shows conducted by TCC internationally.

He said Indonesia had copper deposits of around 907 million tons, Iran 1,250 million tons and Argentina 694 million tons. Reko Diq’s H-4 project area contained 108 million tons and Western Porphyry had 729 million tons of copper. He said the IPO of TCC was the largest of the Sydney stock exchange during the last five years.

Abdullah Yousaf explained that 75 per cent earnings from the project would go to TCC and the remaining 25 per cent to the Balochistan government. The provincial government was funding nothing in the project but would get two per cent of royalty. The federal government would get 1.25 per cent of presumptive (export) tax and 0.5 per cent EPZ surcharge.

Mr Lakhani said the overwhelming response to the IPO was a major endorsement of the government’s policies towards foreign private investment and demonstrated confidence by foreign investors in funding high-risk exploration mining activities.

He said TCC would be trading under the symbol “TYC” on the senior stock exchange in Sydney. TYC is now controlled by some of the very large global institutional investors, including Mincor and BHP Billiton.

http://www.dawn.com/2003/10/22/ebr1.htm

What..i dont believe this. We own this land and only get a puny 25% of the revenues when if we had a local firm exploring this area we could have 100%. I am glad they’ve struck gold (literally), but furious that a foreign firm is getting more benefit out of it. :mad:

CM · October 22, 2003, 5:51am

Any idea if it is BOOT (Build, Own, Operate, Transfer)? or BOLT (Build Own, License, Transfer)? There is a third one but i dont remember what it is. Secondly does the govt get control of it after the Aussie firm recups the investment costs?

ChthonicPowers · October 22, 2003, 6:16am

There is BOT (Build, Operate, Transfer)
i found this on the News site:

SYDNEY: Mincor Resources NL said on Monday it will list its Pakistani copper and gold mining division on the Australian bourse by early November after raising A$15 million ($10 million).

The issue of 50 million shares at 30 cents each closed on Monday, including A$3 million of over-subscriptions, said Mincor, which mines nickel in the Australian outback.

Geologists regard the Reko Diq project in Pakistan as one of the biggest untapped copper deposits in the world, containing more than 4.8 million tonnes of copper and nine million ounces of gold, worth more than $11 billion at current metals prices.

Mincor plans to list its 88 per cent-owned subsidiary Tethyan Copper Company Ltd (TCC), which controls the project in Pakistan’s Western desert province of Balochistan, by late October or early November. Private investors hold the other 12 per cent.

Fellow Australian BHP Billiton Ltd/plc, which discovered the lode and has retained the mining licences for the deposit but no equity, will acquire a small shareholding in the newly listed company.

Institutions in Australia, Europe and Canada subscribed for around A$12 million in shares, Australian retails investors took up A$2.13 million’s worth, with BHP Billiton taking shares worth A$872,000, Mincor said.

The listing, will enable Mincor to focus on its nickel mining operations in Australia, the company said. After the listing, the new company will have a market capitalisation of about A$40 million.

abc1234 · October 22, 2003, 7:29am

wow…thats pretty cool :k:

cheebu · October 22, 2003, 8:18pm

there is this sayin i read....

if we are providers of raw materials.. we will always stay behind.. but if we are the other end of the production.. the final product.. we are leaders...

so rahter pakistan selling this to offshore company which will purchase 1kg of copper for say $2.. or amy be less.. then use it for wiring or computer things.. they will sell dat product for $100 or may be more depending on wat they are using for...

so wee need to get into dat final production.. not provider of raw... if we are final production. then we will use dat raw.. basically in de end.. pakistan is in win win situation.

Allah hafiz

TomSawyer · October 22, 2003, 10:15pm

Hey guys and dolls, a serious question. Foreign investment is almost always a good idea but why do you need a foreign company for mining and carting your ore? If these are proven deposits wouldn't it be far more profitable to do it indegenously?

ChthonicPowers · October 23, 2003, 5:00am

[QUOTE]
*Originally posted by TomSawyer: *
Hey guys and dolls, a serious question. Foreign investment is almost always a good idea but why do you need a foreign company for mining and carting your ore? If these are proven deposits wouldn't it be far more profitable to do it indegenously?
[/QUOTE]

The technology and the resources are not there. Witness the Saindak Project which remained shut once Chinese left. It was only revived when they came back.

akpower · October 23, 2003, 5:05pm

Re: Pakistan to become the third largest copper producer in the world in five years

y cant we let them build the project, pay them very handsomely for that n then take control over it??? instead of having them get 75% of the earnings ofr an infinite amount of time??

system · October 23, 2003, 5:15pm

^ What are you going to pay them with?

ChthonicPowers · October 23, 2003, 6:10pm

[QUOTE]
*Originally posted by Matsui: *
^ What are you going to pay them with?
[/QUOTE]

What do you think?

[quote]
SLAMABAD, Oct 21: Pakistan on Tuesday said it had allowed an Australian mining company to start a $130-million copper development project in Balochistan
[/quote]

$130 mn is not a lot of money. We just prepaid $1.1bn of debts. This shows the money is there. It just needs an avenue for investment.

[quote]

Abdullah Yousaf said that next phase of the project would entail an investment of $1 billion and result in copper production of 250,000 tons and 400,000 ounces of gold per annum and could yield export earnings of $500 million per year for 50 years.**
[/quote]

$500mn/year.

Pakistan could agree to hand over the fields to BHP for three years after production starts so that they can recoup their investment (in two years), and take a reasonable profit with them in the third year.

system · October 23, 2003, 6:38pm

If I am investing..why would I let go of Future earnings? Secondly, the multiples that would be paid byu Pakistan or pakistani companies of these facilities will be calculated atleast 10-15 times rev. because of the longterm potential + IP. So it is not simply a matter of recouping initial investment.

I could go into it..but I will let you chew on this for a while.

ChthonicPowers · October 23, 2003, 8:33pm

[QUOTE]
*Originally posted by Matsui: *
If I am investing..why would I let go of Future earnings?

Secondly, the multiples that would be paid byu Pakistan or pakistani companies of these facilities will be calculated atleast 10-15 times rev. because of the longterm potential + IP. So it is not simply a matter of recouping initial investment.

[/QUOTE]

Thats true. But Pakistan could pay them $1.13 bn in two-three years, and reach an agreement whereby Pakistan is the major or equal benificiary. Unlike right now where its only getting 25%. They'll need to haggle a little. If BHP doesnt like it, then the govt. should award it to the Chinese guys at Saindak. They've leased the Saindak project for 10 years @ $500,000/month, and 50% of the production. I like that agreement a lot better.

ChthonicPowers · October 23, 2003, 8:35pm

Not to mention the chinese won't pack up, and run at the slightest of excuses.

Malik73 · October 26, 2003, 1:24pm

Geologists regard the Reko Diq project in Pakistan as one of the biggest untapped copper deposits in the world, containing more than 4.8 million tonnes of copper and nine million ounces of gold, worth more than $11 billion at current metals prices.

Impressive facts. As foreign investors flood into Pakistan and FDI climbs to unprecedented levels, I believe that this government can realise this potential, and exploit these vast resources.

ChthonicPowers · November 2, 2003, 6:36am

MoU with Beijing for Saindak likely next week

ISLAMABAD (November 02 2003): Pakistan and China are likely to sign a Memorandum of Understanding (MoU) on the expansion and enhancement of Saindak project next week.

Sources told Business Recorder that all arrangements have been made for the signing of the MOU for expansion and enhancement of production of the Saindak Copper-Gold Project.

They said that a meeting about the signing of the MoU was held in the Ministry of Petroleum and Natural Resources on Friday and the copies of the summary were dispatched to Pakistan Embassy in China.

Pakistan Ambassador in China would sign the MOU on behalf of the Government of Pakistan, they added.

However, no feasibility study on cost or mode of expansion and enhancement plan has been conducted yet.

Sources said that ten agreements and MoUs are likely to be signed during President Pervez Musharraf’s visit to China, including the MoU on Saindak, agreement on Duddar lead-zinc, Preferential Trade Agreement (PTA) etc.

Sources said that export from Saindak would start within a month. The first consignment of copper would be exported in the first week of December, they added.

Further investment coming in. This bodes well for Balochistan. Hopefully the govt will spend a large part of the revenue on the province itself.

Link

Islamabad · November 2, 2003, 11:09am

ChthonicPowers · January 15, 2004, 3:22pm

More good news:

Gold-enriched copper deposit found

ISLAMABAD, Jan 14: Pakistan has found substantial gold-enriched copper porphyry outside the already known mineral reserves, which could rank its undeveloped Reko Diq Copper-Gold Project in Balochistan as one of the largest copper resources in the world.

“With 14 known mineralised porphyry bodies in addition to the known resources, Reko Diq ranks as one of the largest undeveloped copper resources in the world, proving TCC with unrivalled leverage to the rising copper price and expanding demand in the growing Asian economies, particularly China,” said a statement issued by the Australian firm Tethyan Copper Company Limited (TCC).

The company said it drilled two holes into the H9 Porphyry complex, located close to its existing reserve inventory, had **“encountered continuous copper and gold mineralisation from top to bottom”, **suggesting that a new copper-gold resource was likely to be present in the area.

Pakistan has already become a copper exporter following its first-ever copper sales in the London Metal Exchange last year from another project, known as Saindak Copper-Gold Project, which also falls in its largest and mineral-rich Balochistan province.

TCC of Australia, after green signal from the Pakistan government, raised $15 million through its over-subscribed initial public offering at the Sydney Stock Exchange late last year to develop first phase of the Reko Diq project in Balochistan over a 12-month period.

It also commenced a major drilling campaign late last year targeting a series of mineralised complexes known as the Southern Porphyries. The programme is designed to increase the existing JORC-standard resource inventory at Reko Diq, which already comprises over 11 billion pounds of copper and nine million ounces of gold.

Hole H-117 - drilled on the western side of the H9 Complex - returned 354 metres gracing 0.27 per cent copper and 0.41 g/t (grams per ton) gold, including a high-grade gold zone of 48 metres at 0.5 per cent copper and 0.84 g/t gold. Mineralisation is continuous from six metres down hole to the end of the hole at 360 metres, and is notable for the high gold to copper ratios.

A second hole, RD-118, drilled into the northern margin of the complex approximately 500 metres northeast of H-117, also exhibited continuous mineralisation from surface and showed increasing copper and gold values with depth. The hole did not reach the target contact breccia zone encountered in H-117.

The Southern Porphyries lie immediately east of the 730 million ton inferred resource already identified at the Western Porphyries and just two kilometres south of the 78 million ton probable reserve at the H4 project.

The H9 Complex, part of the Southern Porphyries, is approximately 700 metres by 900 metres in dimension. Previous drilling into the complex returned a best result from three holes of 65.6 metres at 0.43 per cent copper and 0.68 g/t gold from 311 metres depth.

“This is a great start to our exploration campaign and demonstrates the extraordinarily prolific nature of the Reko Diq area,” said TCC’s Managing Director David Moore.

Mr Moore said TCC was mobilising two additional drilling rigs to the site, with the existing rigs currently completing a series of holes for metallurgical test work at the H4 Project before returning to the exploration drilling programme.

“We will be drilling continuously over the next 12 months to more clearly define the true potential of this rich copper-gold system,” he said. TCC’s triple objectives are to substantially expand the existing resource base at Reko Diq, complete a major regional geophysical programme targeting giant Escondida-style supergene copper deposits and rapidly progress the feasibility study on the H4 Starter Project.

http://www.dawn.com/2004/01/15/nat24.htm

:jhanda: