As global transition to clean energy picks up pace, Pakistan’s Reko Diq mine has emerged as a pivotal opportunity, attracting international interest and positioning the nation as a key player in the green energy supply chain. This landmark venture promises to not only reshape Pakistan’s economic trajectory but also establish the country as a crucial supplier of minerals essential for renewable energy technologies.
Historically, gold and copper mining has been a powerful engine for economic growth, generating jobs, infrastructure development and foreign direct investment in resource-rich nations. The cases of Chile and Australia provide compelling lessons that Pakistan can emulate to unlock Reko Diq’s full potential.
Chile, where copper mining contributes nearly 10 percent of the GDP and constitutes 50 percent of the country’s exports, largely driven by its state-owned mining giant, Codelco, serves as a global benchmark. Australia’s transformative Gold Rush in the 19th Century catalysed infrastructure investments, including railways, ports and towns to support mining and trade activities.
Over the decades, Australia has leveraged advanced mining technologies to achieve extraction efficiency and environmental sustainability, firmly establishing itself as a leading global exporter. These success stories highlight the enormous potential for Pakistan’s Reko Diq project to drive economic transformation, provided that it is managed strategically and supported by robust governance frameworks.
Pakistan now has the opportunity to adopt a two-pronged approach, mirroring Chile’s model of encouraging foreign investment while ensuring equitable profit distribution through royalties and re-investment in public welfare.
Strategic investments in infrastructure surrounding the Reko Diq mine, such as transport networks, processing facilities and export hubs, could significantly enhance the project’s economic impact, drawing parallels with Australia’s infrastructure-first strategy. Recently, Manara Minerals Investment Company of Saudi Arabia has expressed its intention to invest in the Reko Diq project, with estimates ranging from $500 million to $1 billion. This announcement reflects the Kingdom’s growing interest in strengthening its presence in the global mining sector and its commitment to deepening economic relations with Pakistan.
Barrick Gold, the operator of Reko Diq, envisions the project as a transformative contributor to Pakistan’s economy. CEO Mark Bristow has forecast a $74 billion cash flow over the next 37 years. Annual production is expected to reach 400,000 tonnes of copper and 500,000 ounces of gold upon the completion of both phases.
The substantial cash flow not only promises significant economic benefits but also has the potential to transform Pakistan’s economy by fostering foreign investment and generating numerous job opportunities for its citizens.
By leveraging this demand, Pakistan could strategically position Reko Diq as a cornerstone in the international supply chain for materials essential to green energy. The implementation of proactive policies, such as prioritising sustainable mining practices and establishing strategic partnerships with renewable energy firmscan amplify the project’s global impact.
Recently, several countries, including China, have expressed an interest in Pakistan’s natural resources. Global mining corporations from Canada and Australia too represent viable partnership options.
A 2021 report by Goldman Sachs, titled Copper is the New Oil, predicted copper’s crucial role in the global transition toward renewable energy. Four years later, the report’s projections of increased demand and significant supply gaps have proven remarkably accurate. Copper will be indispensable as wind turbines, solar panels and electric vehicles gain ground. As a result, initiatives like Reko Diq have gained heightened strategic importance. This underscores Pakistan’s opportunity to place Reko Diq at the forefront of the green energy revolution, addressing a globally recognised need that has grown more urgent than ever before.
As Pakistan embarks on the Reko Diq project, the government must maintain transparency in its investment negotiations. Clear guidelines regarding revenue sharing and project management should be implemented to foster trust among investors and the public. This transparency is crucial for building confidence in the project’s potential and ensuring its success.
Additionally, the government must address potential environmental concerns associated with the Reko Diq initiative. Prioritising the rigorous enforcement of stringent environmental regulations is essential to guarantee sustainable mining practices. Regular impact assessments should be conducted, and modern technologies should be employed to minimise ecological disruption. These measures aim to safeguard the local environment while protecting the needs and livelihoods of surrounding communities in Balochistan.
Pakistan and Saudi Arabia share a long-standing and resilient relationship. Over the decades, the Kingdom has extended various forms of support to Pakistan, particularly during crises. This has included crucial loan rollovers, central bank deposits and oil facilities.
The forthcoming investment in the Reko Diq project will further strengthen the economic ties between the two nations and reinforce their collaborative partnership. While nurturing robust relations with Saudi Arabia, Pakistan should proactively seek opportunities with other potential investors to diversify its economic portfolio and enhance its diplomatic leverage.
Recently, several countries including China have expressed an interest in Pakistan’s natural resources. Global mining corporations from Canada and Australia too represent viable partnership options. By encouraging diverse investments, Pakistan can mitigate the risk of reliance on a single investor and foster innovation and competitive practices within the sector, thus ensuring sustained economic stability.
It is imperative that the government engage in and conclude negotiations to finalise the investment agreement with Saudi Arabia within the proposed six-month timeframe.
The government must capitalise on this unique opportunity while adhering to well-established strategies emphasising transparency, addressing environmental considerations and diversifying the investment base. By doing so, Pakistan can fully leverage the potential of the Reko Diq project, which promises to stimulate significant economic growth, attract foreign investment and pave the way for a more prosperous and sustainable future.
The writer is a senior lecturer in finance and leads international and transnational education at the College of Accountancy, Finance and Economics at Birmingham City University, UK
