Antofagasta agrees to exit Pakistan mining project

Mining giant Antofagasta is to exit its contentious project in Pakistan in a 900 million dollar (£684 million) deal.

The FTSE 100 firm said it has agreed a deal with Canadian partner Barrick Gold Corp and authorities in Pakistan to end its involvement in the Reko Diq copper and gold mine project.

It comes after work at the site was suspended in 2011 due to a dispute over the legality of the licensing process.

The legal row resulted in the World Bank arbitration court hitting Pakistan with an 11 billion dollar (£8.4 billion) fine.

Pakistan Prime Minister Imran Khan tweeted that the penalty will be waived a result of the new agreement.

Antofagasta’s exit plan will see the project reconstituted under Tethyan Copper Co (TCC), a joint-venture controlled by the FTSE firm and Barrick.

A consortium of state-owned Pakistan-based firms will the buy shares in the TCC group which operates the projects, the companies said.

Antofagasta said proceeds of the 900 million dollar move will then be distributed as it leaves the TCC group.

“If the conditions to closing are satisfied during 2022, the company would expect to receive those proceeds during 2023,” the firm told shareholders.

Antofagasta said it does not want to be involved in the reconstituted project to focus on its core markets, including Chile, Peru and the US.

In a statement, Barrick added: “Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilising the fiscal regime applicable to the project for a specified period.

“The process to finalise and approve definitive agreements, including the stabilisation of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan.”

Shares in Antofagasta moved 3.3% higher at the start of trading.