Natural Resource Management: Legal and Governance Issues of Reko Diq Project

Abstract

Balochistan Province of Pakistan is gifted with enormous reserves of minerals owing to its unique geological condition. One of the most important mineral resource projects is the Reko Diq mining project which is one of the largest projects of its kind globally. The Reko Diq mineral resource located in the mineral-rich Tethyan belt was discovered by the Geological Survey of Pakistan (GSP) from 1960 to 1970. The estimated reserves of Reko Diq comprise 12.3 million tons of copper and 20.9 million ounces of gold. However, the Reko Diq project became embroiled in legal disputes and controversy when the Balochistan government, represented by the Balochistan Development Authority, signed agreements with foreign investment companies for gold and copper exploration in the area of Reko Diq at Chagai. This research paper examines the establishment of the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), analyzes the Supreme Court's decision on Pakistan regarding Maulana Abdul Haq Baloch's case against the government of Balochistan, and highlights the arbitration proceedings of the International Centre for Settlement of Investment Disputes. The research also concludes that an American mineral company Broken Hills Proprietary (BHP), took advantage of the unstable political situation in Balochistan under the caretaker government in 1993. The Balochistan Mineral Rules, 2002, were enacted to grant undue relaxations favoring foreign companies. These issues significantly impacted the validity of the Reko Diq agreement. Consequently, this case created an impression that foreign investments are not secure in Pakistan, necessitating actions to protect their interests. Moreover, the Reko Diq case had various economic impacts on Pakistan and hindered the development of the province and the country. This research paper recommends reforms in the legal framework of the mineral sector and advocates for advanced equipment in exploration to create employment opportunities. Additionally, establishing a domestic dispute resolution forum is proposed as a more favorable approach for settling such disputes, rather than resorting to international jurisdictions.