960408

China disappointed

over sale of Saindak

copper in Europe

IQBAL MIRZA

KARACHI: China has expressed disappointment over the sale of Saindak copper in European market instead of China despite the agreement between China and Pakistan which gives the right of first refusal to China.

Ma Lin, Assistant President, China National Nonferrous Metals Import & Export Corporation (CNIEC) who is a member of the high powered Chinese delegation now in Karachi, told the Business Recorder that CNIEC had shown interest in buying the product at competitive rates from the government, but the copper had been sold to some importer in Europe. Authorities concerned, he said, were keeping the name of the importer and the rate at which the product had been sold a secret.

He said that in 1990 a contract was signed between the Resource Development Corporation of Pakistan and Metrological Construction Corporation of China in Beijing for the execution of the project.

An export credit equal to $80 million was provided by China whereas Pakistan government provided funds equal to $120 million to build the Saindak project.

Ma Lin said that since China was concerned about the repayment of Chinese credit by Pakistan, it had agreed to buy the entire left-over quantity of Saindak copper after meeting the requirement of Pakistan. Thus Pakistan could pay back the credit in kind by exporting copper to China.

He said the project had been complete. "We came here and tried to get the product but were told that the consignment worth about $5 million had been sold to some European importer".

In the original contract, he said, it was agreed that China would have the first right of refusal for the product but that clause of the agreement was not being adhered to.

Ma Lin said they had been given to understand that the project was facing working capital problem. He, therefore, suggested that the best way of over-coming the liquidity problem was to sell the product to CNIEC, which was a ready customer and that would not only meet the cash flow problems but also pay back the Chinese credit.

At the FPCCI dinner on Sunday night, in reply to a question, Ma Lin gave detailed reply and expressed his concern over this issue.

Senator Ilyas Bilour, President, FPCCI, who was the host had assured him that though the matter belonged to the public sector, he would take it up with authorities concerned in Islamabad to find a solution to this important issue.

Ma Lin said that at the EPB lunch on Sunday, Mian Habibullah had impressed on the Chinese delegation the need to buy rice, textiles and some other products to correct the trade imbalance which was in favour of China.

He said China itself produced commodities like rice and textiles in abundance and could not afford to buy these things from Pakistan. The quality of Pakistani rice was not popular with the Chinese and had no buyers. He, however, said that the leader of Chinese delegation, An Chengxin, had assured that they would try to buy rice from Pakistan. Ma Lin said Pakistan should try to offer commodities and products which were not produced in China to be able to capture that market.

It is estimated that Saindak fields would yield for about 20 years an average annual production of 15,810 tons of copper, 1.47 tons of gold and 2.76 tons of silver.

Once production starts the government will earn $55 million annually.

The project, it appears, has run into difficulties because it is faced with a liquidity crunch and is indulging in "distress sales", according to informed sources, to tie over this situation.