PROSPECTS of the Reko Diq project taking off soon seem to have brightened lately following the completion of the updated feasibility report by the OGDCL. The study edges up project financing costs by 58pc to $6.8bn from previous estimates on account of inflation, enhanced project capacity, energy mix, alternative water supply options, and updated processing plants and machinery. However, with authorities here having already approved the increase in their contributions to the financing costs, the miner, Barrick Gold, is said to be well on track to start production in 2028 with an initial ore processing capacity of 45m tonnes per annum, followed by an expansion to 90m tonnes from 2034 onwards. For now, the successful closing of a $3bn limited recourse project financing facility and deteriorating security conditions appear to be the only ‘hitches’ in the development of the world’s largest ‘undeveloped’ copper-gold deposits in Balochistan’s Chagai district.

The project, which has undergone multiple ownership changes over three decades without delivering even an ounce of copper or gold, is of huge importance for both Balochistan and the country’s struggling economy. Barrick estimates that the project will deliver an internal rate of return of 21.32pc, generating $90bn in operating cash flow and $70bn in free cash flow (on a 100pc basis) based on a three-year trailing average copper price of $4.03 per pound and gold price of $2,045 per ounce over the mine’s 37-year life. It will generate $54bn in revenue within Pakistan. Barrick believes that the mine’s life could be extended through upgrades and expansions, which, hopefully, would generate more revenues for shareholders. Though the project feasibility study released earlier this year and the one published by OGDCL last week support the public disclosure of mineral resources and reserve estimates, concerns over the transparency of revenues to be generated remain. Many experts have said that the real, long-term benefits of the project can only be realised by the country in general and Balochistan in particular if a fully transparent system is in place. Another concern pertains to the miner’s plans to export the precious minerals in raw form rather than setting up a refinery here as the Balochistan government had planned before a World Bank arbitration forced Pakistan’s hands. Barrick should address these concerns as it seems to be in Pakistan for a longer haul.

Published in Dawn, March 30th, 2025