Saindak Copper Gold Project
|Location||Saindak, Chagai District|
|Products||Copper, Gold, Silver|
|Company||Metallurgical Corporation of China Ltd.
Saindak Metals Ltd.
Saindak Copper-Gold Mine is located near Saindak town in Chagai District of Balochistan, Pakistan. The discovery of copper deposits at Saindak was made in the 1970s in collaboration with a Chinese engineering firm. The Saindak Copper-Gold Project was set up by Saindak Metals Ltd, a company fully owned by the Government of Pakistan, by the end of 1995 at a cost of PKR 13.5 billion.
Pakistan and China signed a formal contract worth $350 million for development of Saindak Copper-Gold mine. The mine was leased for a 10-year period to Metallurgical Corporation of China Ltd. (MCC), a subsidiary of the China Metallurgical Group Corporation. As per the lease agreement 50% of revenues from the mine go to MCC, 48% go to the Government of Pakistan, while 2% go to the Government of Balochistan.
Trial production at the Saindak Copper-Gold project started in 1995 with commitment of funding from the Government of Pakistan. The four-month trial operation had a monthly production rate of 1700 tonnes of copper, 6000 oz of gold, 12000 oz. of silver. A 50MW power plant was constructed at Saindak with aid grants from Germany and France. German and French aid grants and the Balochistan government also funded the bulk water supply system of 32,000 tonnes of daily drinking water, water treatment plant, warehouse, workshops, laboratories, storage, airport and railroad link with ECO Highway. The Balochistan government also invested funds in building a township with schools, hospitals, shopping plazas, streets, lighting and water pipelines for over 2000 residents.
After the construction of the infrastructure and the trial run, the project was to be operated by Saindak Metals Ltd, a company owned by the Pakistan government. The federal government was to provide funding for operations of the mine through Saindak Metals. Proceeds from the mine were then to be split between the provincial government of Balochistan and the federal government of Pakistan. However, the PKR 17 Billion required to start operations were not received due to political wrangling and bureaucratic delays. As a result, after the 1995 trial run, the project faltered for a number of years.
In 2002, the Government of Pakistan invited foreign investors to provide funding for the project. The Pakistan government awarded the mining project to the Metallurgical Corporation of China (MCC) Ltd under a 10-year lease due to expire in October 2012. MCC is a subsidiary of the Chinese government owned company, China Metallurgical Group Corporation. Under the terms of the deal, MCC paid an annual rent of $500,000 for the mine to the Government of Pakistan. Under the re-negotiated terms, 50% of the proceeds from the mine were retained by MCC, while 48% of the proceeds went to the Pakistan government. Although the mine is located in Balochistan and the infrastructure was funded by aid grants and the Balochistan government, the province got only 2% of the proceeds. The terms of the lease agreement caused major discontent among Balochistan's population.
As per the Aghaz-e-Haqooq-e-Balochistan package, the federal government agreed to transfer a majority of its holdings in Saindak Metals Ltd to the provincial government. The Balochistan government would then receive 35% of the proceeds from the mine. However, this transfer of shares was stalled when the federal government demanded that Saindak Metals first repay PKR 29 Billion to the federal government which the government had invested in Saindak Metals. The company repaid PKR 6 billion to the federal government but then ran out of funds. So it offered the federal government an additional 20% stake in the company (for another 10% of proceeds from the mine) in lieu of the remaining loan amount. However, the Pakistan government has refused to transfer the shares in the company to the Balochistan government.
Another cause for concern for the provincial government has been over mining of resources from Saindak. With MCC mining more ore from the mine than originally estimated, Balochistan was concerned that there would be fewer years of life in the mine once it receives ownership.
In Mar 2011, the Pakistan government extended MCC's lease of the Saindak mine by another 5 years from October 2012. Under the re-negotiated terms of the lease, MCC would receive 45% of proceeds from the mine, while Balochistan would receive an additional 5%.
The Saindak mine was estimated to have ore reserves of 412 million tonnes containing on average 0.5 gram of gold per ton and 1.5 grams of silver per ton. According to official estimates, the project has the capacity to produce 15,800 ton of blister copper annually, containing 1.5 ton of gold and 2.8 ton of silver.
- C. Christine Fair (2012-02-08). "Balochistan: U.S. House of Representatives, Committee on Foreign Affairs, Oversight and Investigations Sub-Committee".
- "Reviving the Saindak project". Pakistan & Gulf Economist. Dec 20–26, 1999. Retrieved 2012-02-07.
- "The revival of Saindak project". Pakistan & Gulf Economist. Mar 18–24, 2002. Retrieved 2012-02-07.
- "Saindak project: Govt to extend Chinese firm’s gold, copper mining contract". The Express Tribune. 2011-03-17. Retrieved 2012-02-07.
- "China digs Pakistan into a hole". Asia Times Online. 2006-10-05. Retrieved 2012-02-07.