Pakistan Approves $7.7B Reko Diq Mining Project Package

The federal government on Thursday approved the estimated cost of $7.723 billion and financial agreements for the first phase of the Reko Diq copper-gold project. This is Pakistan’s largest mining scheme which will be ready for formal signing within the next two weeks after final agreements are completed.

The approval came during a meeting of the Economic Coordination Committee (ECC) chaired by Federal Finance Minister Muhammad Aurangzeb. The ECC endorsed financial arrangements between state institutions, the Balochistan government and lenders.

Rising Project Costs

• Initial estimate (March 2025): $6.765 billion
• New estimate (September 2025): $7.723 billion
• Increase: 14%
• Major reasons for increase:
  • Rising cost of loans
  • Additional contingency expenses

Financial Structure

According to the ECC, significant changes have been made in the project’s financial framework:

* Conditional: If the project is completed at $6.946 billion, investment will be lower.

• Pakistan Minerals Private Limited (PMPL): $2.145 billion (post-debt: $1.173 billion)
• Balochistan Mineral Resources Limited (BMRL): $1.287 billion (post-debt: $704 million)

Project Timeline and Expected Returns

• Phase-I: First concentrate expected by end of 2028
• Phase-II: Reko Diq to be among the world’s top 5 mines
• Total expected mine life: 37 years
• Projected gross operating cash flow: $90 billion
• Revenue staying in Pakistan: $53 billion

Expected Revenues for Federation and Balochistan

Socioeconomic Benefits

The project will not only bring billions of dollars into Pakistan’s economy but also provide major benefits to local communities in Balochistan:

• Clean water supply in Human, Mashki Chah, Nok Chah and Durbin Chah villages
• 7 primary schools to be established
• Training programs for local youth
• 27 Baloch graduates sent abroad for training
• 300 students from Chagai district enrolled in Hunar Foundation programs

Employment Opportunities

• Construction Phase (2025–28): 7,500 jobs
• Operational Phase: 3,500 jobs

Rail Project, 1,350 km Track for Mineral Transport

The ECC also approved a $390 million bridge financing arrangement with Reko Diq Mining Company (RDMC) to construct a 1,350 km rail line from Balochistan to Port Qasim. This has been declared essential for the project’s commercial success.

• Loan tenure: 3 years
• Interest rate: SOFR + 250 bps
• Repayment: Bullet payment at maturity

The Ministry of Railways has been directed to update the ECC on progress by March 2026.

Analysis

The approval of the Reko Diq project marks a milestone for Pakistan. It sends a positive signal to global investors while promising jobs, education and basic facilities for the people of Balochistan. If completed on schedule, the project could prove to be a long-term game changer for the national economy.