Jeffrey D. Sachs in Project Syndicate:
Wall Street hedge funds and lawyers have turned an arcane procedure of international treaties into a money machine, at the cost of the world’s poorest people. The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global mining companies – Antofagasta PLC of Chile and Barrick Gold Corporation of Canada – for a project that was never approved by Pakistan and never carried out.
Here are the facts.
In 1993, a US-incorporated mining company, BHP, entered into a joint venture (JV) with the Balochistan Development Authority (BDA), a public corporation in Pakistan’s impoverished Balochistan province. The JV was set up to prospect for gold and copper, and in the event of favorable discoveries, to seek a mining license. BHP was not optimistic about the project’s profitability and dragged its feet on exploration. In the early 2000s, it assigned the prospecting rights to an Australian company, which created Tethyan Copper Company (TCC) for the project.