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Pakistan: Insurgents threat to Barrick Gold mine

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Pakistan: Insurgents threat to Barrick Gold mine

A Canadian gold giant’s planned foray into Pakistan’s restive southwest is shaping up to be a litmus test for the government’s ability to attract — and protect — foreign investors. Barrick Gold is poised to mine an area known as Reko Diq in the Chagai district of Balochistan Province, home to one of the world’s largest undeveloped deposits of copper and gold. A formal deal with the government is expected to close this month, to be followed by a feasibility study later this year. Production would likely start in five years, Nikkei Asia reports. But the company has already found itself in the sights of Baloch separatists, who have also been threatening Chinese assets in an effort to disrupt foreign investment that cash-strapped Pakistan sorely needs.

After a legal dispute and years of out-of-court negotiations, Barrick and the Pakistani government reached an agreement to move forward in March. Almost immediately, an umbrella organization of four Baloch insurgent groups called BRAS issued a warning to the company to either stay away from Balochistan’s mineral resources or prepare for deadly attacks. BRAS includes the Balochistan Liberation Army (BLA), which is designated a terrorist organization by the US State Department.

Last week, Allah Nazar, the reclusive leader of another BRAS member, the Balochistan Liberation Front (BLF), issued similar threats to Barrick in a video released on social media. The separatist insurgents insist that foreigners should not be investing in Balochistan or exploiting its resources for Islamabad’s benefit. Their opposition to Chinese activity in the region has had deadly consequences: In April, a suicide bombing by a Baloch separatist at the Confucius Institute of Karachi University killed four people, including three Chinese staff members and a Pakistani driver.

“We’ve seen in recent months how Baloch insurgents have expanded their activities, that they clearly have the capacities to target their enemies, and that they won’t back down,” Michael Kugelman, deputy director of the Asia Program at the Wilson Center in Washington, told Nikkei Asia.

This, Kugelman added, should all worry Barrick Gold. But the company, which has 16 operating mines in 13 countries, appears convinced the project is worth the risk. The company, which had been looking to develop the site with a Chilean partner a decade ago, plans to invest $7 billion in Reko Diq over the next five years, and will have a 30-year mining lease with an option to extend. The project promises benefits for the local community and the country.

Ali Raza Rind, a journalist based in the Chagai district, said most residents are happy about Barrick’s return. “People know, based on past experience, that [Barrick] pays well and also takes care of its local employees,” he said, referring to the period when Barrick’s consortium was originally exploring the project. In government circles, many are hoping successful progress at Reko Diq can be a catalyst for more foreign investment in Pakistan. The country, which is seeking help from the International Monetary Fund after its foreign reserves fell to dangerously low levels, is keen to drum up investment activity.

Some experts, however, believe that may be wishful thinking, considering not only the threats from Baloch separatists but also the shaky standing of Pakistan’s own government. The previous prime minister, Imran Khan, was ousted in a no-confidence vote in April. He continues to pressure his successor, Shehbaz Sharif, to call fresh elections, while a legal battle brews over allegations that Khan’s party illegally accepted foreign funds.  “Successful foreign investment in Pakistan depends on political stability, which has been missing lately,” said James Dorsey, a senior fellow at the S. Rajaratnam School of International Studies in Singapore.

Still, the Barrick mine and the future of Chinese-backed projects could help or hurt Pakistan’s case, depending on how the government mitigates the danger from insurgents.

Fakhar Kakakhel, an independent analyst specializing in militancy in Pakistan, sees little immediate threat to Barrick’s operations but said numerous variables will determine the level of risk over the longer term, such as the “capacity of Baloch insurgents.  “Whether it is Barrick or Chinese players, he said, the militants “have the same yardstick for any entity working in Balochistan.” Thus, the challenge is not for Barrick but for Pakistan’s security forces.

Pakistani authorities have carried out their share of successful operations against the Baloch groups. Yet these have not stopped the threats to Chinese interests and nationals. In addition to the Confucius Institute attack, a bomber last year targeted Chinese engineers escorted by security forces in the southern Balochistan port of Gwadar — a key gateway for China’s Belt and Road infrastructure initiative. Two local children were killed.

The Wilson Center’s Kugelman said the Chinese experience is instructive in troubling ways for Barrick. “This means that even if Pakistan pledges to provide the best possible security to Barrick Gold, the firm will still be vulnerable, and especially given that it plans to operate right in the middle of the insurgents’ turf,” he said. Indeed, government officials privy to the developments said Barrick is considering using Gwadar Port to export gold and copper concentrates for further refining.

A team of senior officials from the Canadian company visited Gwadar in the last week of July. This tour preceded another ominous incident: The same night, a security checkpoint in Gwadar was attacked by Baloch insurgents with a low-intensity blast. Experts saw the attack as another message aimed at Barrick.

Dorsey from the S. Rajaratnam School thinks the only hope for truly solving the safety problem is to address the root causes and find a political settlement in Balochistan.  “The security issues,” he said, “cannot be resolved by erecting barriers and posting security guards, in the long run.”

  •  Report in Asian Age, Dhaka, Aug 11,2022