ISLAMABAD: The government on Thursday approved definitive agreements and financial commitments for the revised cost of $7.723 billion for the first phase of the Reko Diq Copper-Gold Project, clearing the way for formal signing within two weeks.
The Economic Coordination Committee (ECC) of the cabinet, chaired by Finance Minister Muhammad Aurangzeb, endorsed agreements between state-owned entities (SOEs), the Balochistan government and lenders to operationalise the country’s largest mining venture.
The estimated cost for Phase-I has risen by 14 per cent from $6.765bn in March to $7.723bn, mainly due to higher financing costs following an increase in project debt and the inclusion of cost contingencies.
Financing structure
The project’s financing debt has been revised from $3bn to $3.5bn. With this increase, total shareholders’ financial commitments are projected to rise by $458m. However, if RDMC — the project company — manages to keep development close to $6.946bn, shareholders’ total contribution would reduce to $3.446bn, compared to the earlier $3.765bn.
ECC okays $390m bridge financing for 1,350km rail link
Of the total project cost (excluding financing costs payable in dollars), about 35pc will be incurred in rupee terms, reducing the foreign exchange exposure of local shareholders. Pro rata funding obligations of Pakistan Minerals Pvt Ltd (PMPL) and Balochistan Mineral Resource Ltd (BMRL) are estimated at $2.145bn and $1.287bn, respectively. After project financing, these fall to $1.173bn and $704m.
The ECC also allowed SOEs to repatriate funds through PMPL over seven years to meet their $2.145bn commitment, either as equity or shareholder loans. OGDCL and Pakistan Petroleum Ltd will meet the initial foreign exchange requirement from their own reserves, while the federal government will arrange any shortfall through the State Bank of Pakistan.
The committee authorised the petroleum and finance secretaries to finalise guarantees and sign agreements on behalf of the government. Any material deviation will require ECC’s nod.
Timeline and returns
Phase-I is expected to deliver first concentrate by end-2028. Phase-II would make Reko Diq one of the world’s top five mines by ore throughput. The mine’s estimated life is 37 years with projected operating cash flows of $90bn, including $70bn in free cash flows. About $53bn of revenue is expected to remain in Pakistan. This includes $11bn in fiscal revenue for the federation, $11bn for Balochistan, $6bn in free carry interest to the provincial government, $9bn equity inflows for BMRL, and $15bn inflows for PMPL.
Indirect benefits include access to safe drinking water in Humai, Mashki Chah, Nok Chah and Durban Chah villages, seven primary schools, and training programmes for local youth.
The project will employ 7,500 people during peak construction (2025-28) and 3,500 during operations. Twenty-seven Baloch graduates have been sent to Barrick’s overseas sites for training, while 300 students from Chagai district are enrolled in Hunar Foundation programmes.
Rail link financing
The ECC also approved a $390m bridge financing arrangement with RDMC to construct a 1,350km railway track to transport ore concentrate from Balochistan to Port Qasim for export. The rail link, declared crucial for the project’s commercial viability, is classified as a “qualified investment” under the Foreign Investment (Promotion and Protection) Act 2022.
The railway development agreement and financing deal will see the government provide bridge financing for three years at Secured Overnight Financing Rate+250bps, repayable in a bullet payment at maturity. The project framework was shaped after surveys by the Ministry of Railways, assessments by M/s Vecturis, and joint working groups on technical, operational and legal issues. RDMC has opted for the Port Qasim route, connecting ML-I and ML-III.
The existing Nokundi–Rohri section of ML-III requires urgent upgradation to handle projected freight volumes. The MoR has been asked to share agreements with the finance ministry for appraisal and report back to the ECC on progress by March 2026.The deal has the support of the ministries of finance, law, foreign affairs and the attorney general’s office. The prime minister had already cleared the financing plan in August, following a recommendation by the Economic Affairs Division in June.
Published in Dawn, September 19th, 2025
