The troubled history of Pakistan's Reko Diq copper mine in Balochistan

The Asian Development Bank has approved a $300 million loan for Pakistan’s Reko Diq copper and gold mine, marking its first mining sector investment in over 40 years, according to a Financial Times report.

The decision signals renewed international confidence in a project that has had a troubled history — long mired in legal disputes and governance challenges — and is now seen as key to meeting the growing global demand for critical minerals.

Jointly developed by Barrick Gold, the federal government, and the Balochistan provincial administration, the $9 billion Reko Diq mine is one of the world’s largest undeveloped copper-gold deposits.

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The ADB last financed a mining project in 1983, when it provided a $19.2 million loan for a venture in Thailand.

Earlier this month, Barrick CEO Mark Bristow told the Financial Times that the company is aiming to raise up to $3.5 billion for the project.

Apart from the $300 million loan, the ADB will also extend a $110 million credit guarantee to the government of Balochistan, which holds a 25% equity stake in Reko Diq. Production is expected to begin in 2028, reported Financial Times.

The deal underscores the growing geopolitical importance of critical minerals amid Western efforts to reduce reliance on China for key resources like rare earths and lithium.

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The ADB is revising its energy policy to support such projects for the first time, while the World Bank, through the IFC, is also ramping up its involvement in the sector.

Pakistan’s Army Chief, Asim Munir, regarded as the country’s most powerful figure, has said the Reko Diq mine could help the country tackle its debt burden of over $130 billion.

Officials are hoping to attract Western investors to tap into what they claim are trillions of dollars’ worth of critical and rare earth minerals.

The ADB is exploring other potential mining investments but has yet to allocate a specific amount to the sector, according to Cathy Marsh, deputy director-general of private sector operations.

“We very much see this transaction as part of that overall energy transition story,” Financial Times quoted Marsh as saying, adding that the bank wouldn’t rule out financing projects in China, despite its dominance in global mineral supply chains.

“We would always examine any opportunity that came to us entirely on its own merits . . . We are apolitical,” Marsh added.

Troubled past

Balochistan province, which houses the Reko Diq copper and gold mine, is suffering from a brutal separatist insurgency, partly fueled by local backlash against foreign involvement in resource extraction. This opposition led authorities in 2011 to block progress on the Reko Diq mine project.

The project began in 1993 with an agreement between the Pakistani government and Australian company BHP, granting BHP a 75% stake. The deal sparked public outrage in one of Pakistan’s poorest regions, where locals feared exploitation and exclusion from potential benefits.

In the early 2000s, Tethyan Copper Company (TCC) — a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold — acquired BHP’s obligations in the project. The legality of the original agreement was challenged in the Balochistan High Court in 2006, but the court ruled it was valid.  

However, tensions escalated in 2011 when the provincial government denied TCC’s mining lease, citing concerns such as the lack of local smelting and refining, insufficient royalty rates, and inadequate community involvement. TCC responded by filing a claim with the International Centre for Settlement of Investment Disputes (ICSID), which in 2019 ruled in the company’s favour and imposed a nearly $6 billion penalty on Pakistan for unlawfully rejecting the licence.

Despite efforts to revive the project, Reko Diq remains controversial. Critics argue that large-scale resource extraction risks deepening poverty and conflict in the region, especially due to land displacement, water scarcity, and limited local employment opportunities. There are also logistical and governance concerns, including disagreements over the use of Gwadar Port for transportation and questions about the project’s transparency and infrastructure dependencies, such as power supply.

In an attempt to reset the trajectory, a new agreement was signed in 2023 between Pakistan, Barrick Gold, and other stakeholders.

The revised deal includes advance royalty payments and dedicated social development funds for Balochistan to ensure local communities benefit even before operations begin.

International backing has followed, with the International Finance Corporation disbursing funding in 2025. Production is now expected to start in 2028, with the mine projected to operate for at least 40 years.

With inputs from agencies