What is Pakistan's 'Reko Diq' Project? Received $700 Million Loan; Could Bring Massive Wealth

Pakistan has achieved a major international success for its flagship mining and resource development project, Reko Diq. The World Bank and the International Finance Corporation (IFC) have approved a concessional loan of $700 million USD (approximately ₹6,000 crore) for the project.

The Reko Diq project is located in Balochistan province, which is considered Pakistan’s mineral-rich region. This loan approval is being seen as a significant economic and diplomatic victory for Pakistan.

This approval is also important because it is expected to attract an additional $2.5 billion in private sector investment. The Reko Diq project is one of Pakistan’s largest mining ventures and is expected to provide a strong boost to the country’s resource development sector.

Production Expected to Begin in 2028

The Reko Diq project is being jointly operated by Canadian company Barrick Gold, along with Pakistan’s federal and provincial (Balochistan) governments. The first phase of production is expected to begin in 2028, and discussions with various international lenders are ongoing to secure funding for this phase.

A recently conducted feasibility report has increased the project's production capacity. The target for the first phase has now been raised to 45 million tons per year (previously 40 million), and for the second phase, it is set at 90 million tons per year (previously 80 million).

However, due to the increase in production rate, the mine's total life has been reduced from 42 years to 37 years. Still, the company believes that undiscovered mineral reserves could potentially extend the life of the project to 80 years.

Rising Costs and World Bank's Long-Term Plan

The estimated cost of the project's first phase has also increased, now reaching $5.6 billion, up from the initial $4 billion. Meanwhile, the World Bank has announced a long-term plan to invest $2 billion annually in Pakistan’s infrastructure development over the next ten years.

What is the Reko Diq Project?

Located in Pakistan's Chagai District, Reko Diq is home to one of the world’s largest undeveloped copper and gold reserves. The project is jointly owned by Barrick Gold, Pakistan's federal government, and the Balochistan provincial government.

The first phase, expected to begin production in 2028, aims to produce 240,000 tons of copper and 300,000 ounces of gold per year. In the second phase, production is planned to increase to 400,000 tons of copper and 500,000 ounces of gold annually.

A study estimates the Reko Diq mine holds 15 million tons of copper and 26 million ounces of gold, positioning it to become one of the lowest-cost copper-producing mines in the world. The total project cost is estimated at $6.6 billion, with $5.6 billion allocated for the first phase and the remaining for subsequent phases.

How Will the Loan Help?

The $700 million loan from the World Bank and IFC is crucial for the project, as it is expected to attract an additional $2.5 billion in private investment. The Reko Diq project could prove to be a game-changer for Pakistan's economy.

Estimates suggest it could generate $70 billion in free cash flow and $90 billion in operational cash flow, offering a substantial boost to the country's financial and development prospects.