Barrick Gold will start to develop one of the world's biggest gold and copper mining projects after out-of-court settlement with Islamabad.

Pakistani PM Imran Khan says the project
Pakistani PM Imran Khan says the project "will potentially be the largest gold & copper mine in the world". (Reuters)

Pakistan has reached an out-of-court deal with a foreign firm that has agreed to waive $11 billion in penalties and revive a mining project stalled since 2011, officials said.

"The agreement has nullified the award of around $11 billion on us and secondly Barrick and its partners will invest $10 billion," Finance Minister Shaukat Tarin said during a press conference on Sunday.

"It will benefit Pakistan and Balochistan for the next 100 years," he added.

The consortium Tethyan Copper company –– of which Canadian gold firm Barrick and Chile's Antofagasta Minerals control 37.5 percent each –– had found vast gold and copper deposits at Reko Diq in Pakistan's Balochistan province.

The hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper's lease, and in 2013 Pakistan's top court declared it invalid.

In 2019, the World Bank's arbitration tribunal committee imposed a 5.8 billion penalty on Pakistan for unlawful denial of mining.

After a decade-long legal battle, Pakistani officials announced the out-of-court settlement with Barrick Gold.

READ MORE: Multi-billion dollar fine on Pakistan puts the spotlight on a secret court

End to 'crippling debt'

Pakistani Prime Minister Imran Khan said the project "will potentially be the largest gold & copper mine in the world".

"It will liberate us from crippling debt & usher in a new era of development & prosperity," he said in a statement.

Balochistan –– which borders Iran and Afghanistan –– is Pakistan's poorest province, despite its abundance of natural resources.

Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts have said, which waste up to 80-percent of potential yield because of poor extraction techniques.

The country is fighting several low-level insurgencies in the province, waged by militants, separatist and sectarian groups.

In recent weeks separatists have stepped up attacks with a series of bold raids on state security bases.

READ MORE: Leading economist slams World Bank’s unjust arbitration fine on Pakistan

Best deal for Balochistan province 

Legal expert Osama Malik told AFP news agency that Pakistan's settlement was the only solution and best deal for the provincial Balochistan government.

"There were no further appeals available for the Pakistani side. The country also didn't have the resources to pay the exorbitant damages, one of the highest ever granted by the World Bank's arbitration forum," he said.

After reconstitution of the project, Barrick will own 50 percent, the Pakistan federal government enterprises 25 percent, and the Balochistan government 25 percent.

READ MORE: World Bank stays $5.8B fine on Pakistan in Reko Diq mine case

Source: AFP