Mining gains traction despite Reko Diq delays

ADB approves $800m financing package as industry eyes downstream industrial capacity

KARACHI:

Although some voices that once loudly touted Pakistan's rare earth potential have faded as attention shifts to geopolitical developments, particularly the country's perceived role in easing tensions between the United States and Iran, Pakistan's emergence in the global race for critical minerals is gaining traction. Backed by multilateral financing and large-scale mining investments, anchored by the Reko Diq copper-gold project, this shift is beginning to reshape the country's export profile and industrial landscape.

An industry insider remarked that the pace of the mineral sector doesn't quite match the "adrenaline-fueled claims of the gentlemen boasting that the country will pick up pace by 2027 and will be standing among developed countries by 2030," instead, mining is following a natural course that will eventually benefit the entire economy. The Asian Development Bank (ADB) has signalled continued financial backing for Pakistan, including an approved $800 million package comprising $300 million in loans and $500 million in guarantees, while officials indicate that additional financing of up to $1 billion could be mobilised. The support reflects a broader push to position Pakistan within global supply chains for copper and other strategic minerals essential for energy transition, electrification and manufacturing.

"Under ADB's approach for supporting critical minerals-to-manufacturing value chains, the bank approved an innovative financing package for a copper-gold mine in Pakistan to strengthen the global copper supply chain. ADB's financing will help unlock greater private capital by derisking the investment," the ADB Annual Report 2025 noted.

At the centre of this shift is the Reko Diq project in Balochistan, one of the world's largest undeveloped copper-gold deposits, which has drawn renewed international attention amid intensifying competition for mineral resources. However, project momentum has encountered fresh headwinds. According to a March 26, 2026 report by Reuters, Barrick Mining is extending its review of the Reko Diq project and slowing development activity due to rising security concerns in Pakistan and the broader Middle East. The review, initially announced on February 5, covers all aspects of the project, including capital allocation and risk assessment. A company spokesperson confirmed that the review timeline will now be extended by 12 months from July, potentially affecting previously disclosed budgets and project timelines. The extended assessment aims to refine the delivery strategy and evaluate evolving geopolitical and operational risks.

Despite these delays, stakeholders within Pakistan's mining ecosystem continue to frame Reko Diq as a transformational project with far-reaching economic implications. Shamsuddin A Shaikh, CEO of National Resources Limited, described the project as critical to Pakistan's long-term economic trajectory. "A huge project for Reko Diq is underway. It was delayed due to security concerns, but it remains extremely important for Pakistan's destiny," he said in a conversation with The Express Tribune. He emphasised that the project serves as an anchor for broader mining activity in the region. "Several smaller projects are already taking place in the surrounding areas. If Reko Diq succeeds, it will create momentum for other ventures and attract both local and foreign investment," he noted.

Industry participants argue that while rare earth minerals are not currently identified in the Chagai district, the success of large-scale copper and gold mining could catalyse exploration and development across adjacent regions, including Khyber-Pakhtunkhwa and Chitral, where such deposits are more likely.

Local participation in the mining sector is also expanding. Alongside National Resources Limited, entities such as the Balochistan Mineral Exploration Company (BMEC), Mari Mining, Hubco and the Frontier Works Organisation (FWO) are actively engaged in exploration and related activities. New entrants continue to apply, reflecting growing investor interest despite the sector's high capital intensity and technical complexity.

"Mining and exploration require significant investment and expertise, but Pakistani companies are increasingly willing to take the risk," Shaikh said, adding that capacity building, technology transfer and workforce development remain key challenges.

Beyond upstream extraction, experts highlight the need to develop downstream industrial capacity to fully capture value from mineral resources. This includes establishing smelting and refining capabilities to produce finished metals domestically rather than exporting raw ore."If Pakistan can move towards producing refined copper, it will enable the development of downstream industries such as electrical wiring, automotive components and manufacturing inputs," Shaikh explained. "Exporting raw materials without processing limits economic gains."

Such industrial integration could reduce import dependence, lower production costs for domestic industries and enhance export competitiveness, particularly in sectors linked to electrification and infrastructure. Despite near-term uncertainties surrounding Reko Diq's timeline, industry stakeholders remain optimistic about its eventual execution. "Even if timelines shift or costs fluctuate, the project will move forward," Shaikh said, pointing to changes in management and ongoing strategic reviews by international partners.