ISLAMABAD: Pakistan has approved a $7.72 billion package for the Reko Diq copper and gold mine, clearing the way for the signing of a final agreement within two weeks in what officials call a landmark step for the country’s largest mineral project.
The Economic Coordination Committee (ECC), chaired by Finance Minister Muhammad Aurangzeb, ratified the revised cost of the first phase and endorsed agreements between state-owned enterprises (SOEs), the Balochistan government, and lenders.
The first phase’s cost rose to $7.723 billion from $6.765 billion in March, largely due to higher debt and additional estimated costs. Project debt increased from $3 billion to $3.5 billion, raising total shareholder obligations by $458 million.
If the Reko Diq Mining Company (RDMC) manages to limit costs to $6.946 billion, total shareholder investment could drop to $3.446 billion from $3.765 billion. Roughly 35% of the project’s cost, excluding dollar-denominated financing, will be paid in rupees, lowering foreign exchange risks for local investors.
Pakistan Minerals Private Limited (PMPL) and Balochistan Mineral Resources Limited (BMRL) will shoulder proportionate liabilities of $2.145 billion and $1.287 billion respectively, which will fall to $1.173 billion and $704 million after financing.
The ECC authorized SOEs to withdraw funds over seven years to meet their $2.145 billion commitment. OGDCL and Pakistan Petroleum Limited will cover the initial foreign exchange needs from reserves, while the government will use the central bank to bridge any gaps, reported Dawn News.
The project is expected to produce its first concentrate by late 2028. A second phase will elevate Reko Diq into one of the world’s five largest mines. The site’s 37-year life is projected to generate $90 billion in operating cash flow, including $70 billion in free cash flow.
Officials estimate that $53 billion will remain in Pakistan, with $11 billion each for the federal government and Balochistan, $6 billion in free carry interest for the province, $9 billion for BMRL, and $15 billion for PMPL.
Indirect benefits include clean water for local villages, seven new schools, training programs, and thousands of jobs. The project will employ up to 7,500 workers during peak construction and 3,500 during operations.
The ECC also cleared a $390 million bridge financing arrangement with RDMC for a 1,350 km railway linking the mine to Port Qasim. Officials say the rail link is essential for the project’s commercial viability and has been classified as a “qualified investment” under Pakistan’s Foreign Investment Act.
Also Read: Reko Diq Project enters new era of partnership with SIFC support
The government will provide bridge financing for three years at a secured overnight financing rate plus 250 basis points, repayable upon maturity. RDMC selected the Port Qasim route, connecting to ML-I and ML-III. The Nokandi-Rohri stretch of ML-III requires urgent upgrades to handle expected freight volumes.
The Ministry of Railways will report progress by March 2026. The financing plan, supported by several ministries and the Attorney General’s office, received final approval from Prime Minister Shehbaz Sharif last month.
