Minerals diplomacy
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CRITICAL minerals, especially lithium, copper, cobalt, nickel and rare earths, are the oil of the 21st century. The demand for minerals has been exploding due to their consumption in semiconductor manufacturing, electric vehicles, batteries, renewable energy and advanced weapons systems. This has transformed minerals from an economic commodity into a strategic geopolitical asset.
Mineral diplomacy has been increasingly replacing oil diplomacy. States are eagerly signing mineral agreements, investing in mining abroad and creating strategic reserves. Governments are also using minerals as a ‘tool’ to mend ties with the Trump administration. For instance, notwithstanding America’s looming war threat, Iran has offered a broader set of cooperative deals, potentially involving energy and mining.
The global hunt for minerals has renewed South Asia’s significance, particularly India and Pakistan. New Delhi’s minerals strategy is largely different from Islamabad’s minerals diplomacy. India is replicating Beijing’s model of acquiring overseas mining projects and introducing the Rare Earth Corridor strategy to become a manufacturing power independent of China.
Islamabad is trying to position itself as a ‘mineral state’ and has shown willingness to work with the US and the Western bloc to create an alternative supply chain. There are several factors behind Islamabad’s eagerness.
There are several reasons why Pakistan is trying to position itself as a ‘mineral state’.
First, after the US withdrawal from Afghanistan, Islamabad lost its strategic relevance in Washington’s strategic calculus. The Trump administration’s keenness to minimise China’s monopoly over rare earth elements has been viewed in Islamabad as a strategic opportunity to revive its relevance in Washington not as a mere ally in South Asian and Middle Eastern security but as an industrial partner. Islamabad believes that a security-driven relationship with the West and especially the US, continuing since the signing of Seato and Cento, and cultivated to the status of a major non-Nato alliance during the ‘war on terror’, largely remained transactional. While Islamabad has finally something to offer beyond security, it seeks to cultivate its partnership with Washington in the industrial and technology transfer sector. As envisioned, this may end the vicious cycle of short-term conflict-driven transactional relationship.
Second, Islamabad views Washington as the only reliable global power that can manage conflict between India and Pakistan. From the Kargil conflict of 1999 to the 2001-02 military stand-off and more recently the 2019 Pulwama-Balakot crisis and the May 2025 hostilities, Washington has proven time and again its utility in de-escalating tensions between the two nuclear-armed South Asian countries. Islamabad, therefore, believes that an expansion of America’s commercial stakes, particularly through investment in strategic sectors such as minerals, will create stronger incentives for Washington to actively prevent escalation and may serve as an indirect deterrent against Indian military adventurism.
Third, the minerals sector is seen by Islamabad as an instrument that can help attract much-needed foreign investment, particularly in a period of continuing economic stress. Pakistan has had partial success in wooing investors from Washington. The government will use American-backed financing to import machinery from US firms worth $1.25 billion. Moreover, Pakistan signed a $500 million MoU with US Strategic Metals in September 2025 for the exploration and development of critical minerals and the establishment of processing and development facilities inside Pakistan. Islamabad believes that the successful development of the mining sector could reduce Pakistan’s economic vulnerabilities by generating export revenues and supporting industrial development.
However, serious challenges underlie these opportunities. The principal challenge is internal security. Many of Pakistan’s mineral-rich regions, particularly in Balochistan, face persistent security threats due to terrorism and political grievances. These conditions may not only complicate extraction and industrialisation efforts but are also likely to deter foreign parties from investing in Pakistan’s minerals sector. Moreover, the security situation may delay projects and increase operational costs. Unfortunately, Islamabad’s mineral diplomacy lacks a long-term ‘Balochistan strategy’ that could address the underlying security and political issues.
Second, the G2 (US-China) competition is gradually intensifying in minerals supply chains. This competition can place Pakistan in a delicate geopolitical position. Islamabad is confident that Pakistan can benefit from the G2 competition by attracting investment from multiple partners. However, the long-term challenge for Islamabad would be to ensure that its engagement with one bloc does not alienate the other, while simultaneously protecting its national interests. Mismanagement could result in strategic dependency or unwanted political pressure, and may undermine the very sovereignty that mineral wealth is supposed to enhance. Similar patterns have been observed in other regions, particularly in Africa, where China reacted when Western countries expanded their presence in the mineral sector historically dominated by Chinese firms.
Third, mineral success depends heavily on security, stability and peace in the neighbourhood. We can take the two contrasting examples of Chile and Congo. Chile, despite having historical disputes with its neighbours, has enjoyed decades of peaceful borders without active conflict, which has enabled it to attract sustained foreign investment and emerge as the world’s leading copper producer. In contrast, the experience of the Democratic Republic of Congo demonstrates the opposite. The future of Pakistan’s minerals diplomacy will depend less on the size of the country’s reserves and more on Islamabad’s ability to ensure security and stability within its territory and in the neighbourhood. The smart management of conflicts with its neighbours and a peaceful environment will build investors’ confidence.
To conclude, minerals diplomacy has five phases, ie, resource identification; investment mobilisation; extraction; value chain capture and industrialisation; and lastly, socioeconomic transformation. Pakistan has successfully completed the first two phases of minerals diplomacy and is now moving into the extraction phase. However, its real challenge lies in the last two phases. Capturing value through industrialisation and ensuring socioeconomic transformation will determine whether Pakistan becomes a success story or a cautionary tale.
The writer is an analyst of South Asian affairs. The views expressed are his own.
Published in Dawn, February 25th, 2026
