ISLAMABAD     -   Prime Minister Imran Khan on Sunday ordered to probe and fix responsibility for the massive loss to the country in the Reko Diq case.

The premier’s directives were communicated in a press release issued by the attorney general’s office.

The statement comes as the first official response to the $5.976 billion penalties imposed on the country by the International Centre for Settlement of Investment Disputes (ICSID).

“The prime minister has directed formation of a commission to investigate into the reasons as to how Pakistan ended up in this predicament; who were responsible for making the country suffer such a loss; and what are the lessons learnt, so that mistakes made are not repeated in the future,” read the statement.

A thorough internal review of this long-standing arbitration shall also be conducted in the due course, it added.

“The Government of Pakistan notes with disappointment the Award by a tribunal of International Centre for Settlement of Investment Disputes (ICSID) in the matter of Tethyan Copper Company (TCC) vs Islamic Republic of Pakistan,” the statement said.

The tribunal has announced an award of $4.08 billion in favour of TCC against their claim of $8.5 billion,” read the statement.

The ICSID ruling comes at a sensitive time for the PTI government, which is facing increasing economic headwinds and which earlier this month signed a $6 billion bailout agreement with the International Monetary Fund to stave off a looming balance of payments crisis.

Pakistan has partnered with China in the $60  billion China Pakistan Economic Corridor infrastructure project, part of China’s vast Belt and Road initiative but it remains in desperate need of foreign investment.

The Sunday’s press statement said, “This office of the attorney general and other stakeholders, particularly the provincial Government of Balochistan, are studying the Award and reflecting upon its financial and legal implications”.

The July 13 statement said the Pakistani government shall consult with the provincial government to devise a strategy for the future.

“For now, the Government of Pakistan reserves its right to pursue any and all legal remedies available to it under the ICSID regime, international law and all other relevant laws to safeguard its interests,” the statement read.

Tethyan Copper discovered vast mineral wealth more than a decade ago in Reko Diq , at the foot of an extinct volcano near Pakistan’s frontier with Iran and Afghanistan.

The deposit was set to rank among the world’s biggest untapped copper and gold mines, but the dispute has turned the spotlight on the business climate in Pakistan and become a test case of its ability to attract significant foreign investment.

“The Government of Pakistan takes note of the press release dated 12 July 2019 made by Antofogasta Plc, one of the parent companies of TCC, and of the statement by William Hayes, the Chairman of the Board of Directors of TCC, in which he expressed a willingness to work towards a negotiated settlement.

The Government of Pakistan welcomes this approach to work towards a mutually beneficial solution that works for both sides,” it further said.

Reiterating Pakistan’s commitment to its international obligations, the statement said Pakistan “welcomes all foreign investors and assures them that their lawful rights, interests and assets shall always be protected”.

“The mineral resources in Reko Diq are the collective resource of the people of Balochistan and Pakistan. Pakistan is keen for development of this resource to ensure that the development needs of some of the poorest people on the planet are addressed.”

“International Tribunals are also urged to consider the implications of their decisions and the impact on development and poverty alleviation,” the statement said.

 Reko Diq location and history of dispute

The mine at Reko Diq , which means sandy peak in the Balochi language, is famous because of its vast gold and copper reserves and is believed to have the world’s fifth largest gold deposits. The mine is named after a small nearby town in the Chagai district of Balochistan.

It is located in a desert area, 70km north-west of Naukundi, close to the border with Iran and Afghanistan. The area is located in the Tethyan belt that stretches all the way from Turkey and Iran into Pakistan.

According to the extensive technical and financial studies undertaken to secure optimal ‘economies of scale’ efficiencies, and lower mining and processing costs, a large scale, state-of-the-art mining and processing unit is required at Reko Diq .

The mining company says it had invested more than $220 million by the time Pakistan’s government, in 2011, unexpectedly refused to grant a mining lease needed to keep operating.

The TCC completed an extensive and detailed bankable feasibility study establishing the basis for mine development at the site during August 2010 and submitted a mining lease application in February 2011, along with an environmental and social impact assessment report.

But the progress on the project came to a standstill in November 2011, when the government of Balochistan rejected the application by the TCC’s local operating subsidiary for the mining lease.

The international mining firm then lodged the case against Pakistan on January 12, 2012, and the ICSID constituted the tribunal on July 12 the same year. The case between the Pakistani government and TCC thus continued for at least seven years.