10/09/2023, 00:35 Miners’ hunt for copper takes Barrick to Pakistan’s western frontier | Financial Times

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Barrick Gold Corp

Miners’ hunt for copper takes Barrick to Pakistan’s western frontier

Reko Diq has potential to be one of world’s biggest suppliers of metal needed for energy transition

Local government officials visit the gold and copper mine site in the town of Reko Diq in Pakistan © Naseem James/AP

Benjamin Parkin in New Delhi and Harry Dempsey in London SEPTEMBER 6 2023

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For three decades, international mining companies have tussled with officials and
locals over a patch of desert around an extinct volcano in Pakistan’s neglected,
insurgent-prone western province of Balochistan.

Now, after resolving years of legal disputes, Barrick Gold wants to invest $7bn to
revive the mining project, Reko Diq, which experts believe contains one of the
world’s largest untapped reserves of copper and gold.
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10/09/2023, 00:35 Miners’ hunt for copper takes Barrick to Pakistan’s western frontier | Financial Times

Barrick and Pakistani authorities say Reko Diq will not only be Pakistan’s largest
foreign fixed investment but a vital source of copper — a key component for the
world’s energy transition — at a time when global supplies are barely likely to meet
demand.

“Reko Diq is one of the bigger copper-gold undeveloped projects in the world,” said
Mark Bristow, chief executive of Barrick, which aims to start mining in 2028
subject to an ongoing feasibility study. “It’s a very big deal. Any copper mine right
now is a big deal.”

The project highlights how the copper shortfall is pushing miners into ever trickier
markets in search of supply. Pakistan’s repeated political and economic crises have
scared away all but the most determined foreign investors, and local authorities
had blocked an earlier attempt involving Barrick to mine Reko Diq.

Balochistan, Pakistan’s poorest province, borders Afghanistan and Iran and is

suffering a brutal, simmering conflict with separatist militants motivated in part by
alleged exploitation of the region’s mineral wealth.

Bristow argues that the project, in which Barrick has a 50 per cent stake alongside
the Pakistan and Balochistan governments, will bring much-needed development
to the region.

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“Mining, when it goes into emerging markets, is obsessed with getting its money
back,” he said. “We’ve learned that you start paying benefits and dividends early
on.”

As countries transition to clean energy sources, copper — whose conductive

properties make it crucial to transporting electricity — is only expected to become
more important to the global economy.

But with supply from incumbent mines in countries such as Chile and Peru
stalling, an estimated $118bn of investment by 2030 is needed to plug a supply gap
that will by next decade be equivalent to 35 Reko Diq-sized projects, according to
analysts at CRU Group.

Mark Bristow, chief executive of Barrick, said the company aimed to start mining in Reko Diq in 2028 © Dwayne
Senior/Bloomberg
Bristow is known in the industry as a dying breed of buccaneering executive with a
record of operating in riskier markets such as Mali and the Democratic Republic of
Congo.

While Reko Diq adds “a lot of uncertainty” for Barrick investors, “Barrick is no
stranger to frontier jurisdictions”, said Canaccord Genuity analyst Carey MacRury.

Another factor that could help steer the Reko Diq project is the presence of a new
investor. Saudi Arabia’s Public Investment Fund and state mining company
Ma’aden have expressed interest in a stake. Analysts said the involvement of one of
Pakistan’s most important allies would help shield the project from future political
U-turns.

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If successful, the mine could turn the company into one of the world’s largest
copper producers. Diversifying its portfolio into copper is particularly important
for gold miners such as Barrick to stay relevant with investors focused on
environmental, social and governance issues, since the company’s core product
plays no role in the energy transition.

Reko Diq sits along the largely untapped south Asian leg of a rock formation from
Europe to south-east Asia that is believed to hold rich copper deposits. Analysts
believe there is the potential for more mines.

Ahsan Iqbal, who recently stepped down as Pakistan’s planning minister and
worked on the project, argued that Reko Diq would “put Balochistan on the mining
map of the world”.

But the project’s chequered history has become emblematic of the difficulties for
foreign investors in Pakistan. Australia’s BHP first struck a deal to explore the site
in 1993, before a joint venture between Barrick and UK-listed Antofagasta, which
runs copper mines in Chile, eventually took on the project.

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10/09/2023, 00:35 Miners’ hunt for copper takes Barrick to Pakistan’s western frontier | Financial Times

Copper supply will struggle to keep up with demand without

more investment
Million tonnes
Existing mines Committed projects Demand

25
20
15
10
5
0
2… 2… 2… 2…

Source: CRU Group

Authorities in 2011 blocked their request to start development, citing community

opposition, leading to nearly a decade of international arbitration. In 2019 the
World Bank’s dispute resolution arm ruled against Pakistan, ordering it to pay the
companies $5.8bn in damages — a sum that would have bankrupted the country.

Barrick eventually revived the project, waiving the award in an out-of-court

settlement and restructuring the terms directly with Pakistani authorities.

But the project comes at a time when Pakistan’s intensifying economic and security
woes — with the country teetering on the brink of bankruptcy — have put off
foreign companies.

Pakistan’s most important investor over the past decade has not been a private
company but China, which has poured billions of dollars into ports and railways as
part of its Belt and Road infrastructure scheme.

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10/09/2023, 00:35 Miners’ hunt for copper takes Barrick to Pakistan’s western frontier | Financial Times

Yet Beijing, too, has run into repeated difficulties, with militants in Balochistan
targeting Chinese projects in a series of bloody attacks.

The security situation has deteriorated since the Taliban took power in
neighbouring Afghanistan in 2021, with terrorist attacks in 2022 rising 27 per cent
from a year earlier, according to the Pak Institute for Peace Studies think-tank.

Reko Diq “is 50 miles from Afghanistan and 40 miles from Iran”, one person
involved with the project said. “So it will be a target.”

For support, Barrick has turned to Pakistan’s powerful army, which helps control
the country’s politics and helped negotiate last year’s deal to revive the project,
according to a person involved.

Pakistan’s army chief also this month attended a local mining conference alongside
Bristow. “The military are a steadying hand,” Bristow said. “They are absolutely
essential on the security side.”

Yet rights groups have repeatedly accused the army of abuses in Balochistan,
including extrajudicial executions, allegations it denies.

Bristow has welcomed the potential Saudi interest in Reko Diq and dismissed
hand-wringing over whether he can see through the project.

“When you look at the world, it is more complex than when I started,” he said.
“Gone are the days that you can control a mining company from a multistorey,
cushy building in the developed world.”

Copyright The Financial Times Limited 2023. All rights reserved.

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