PAKISTAN is finally turning geology into geography – and geography into cash flow.
Multi-billion-dollar financing — which once sounded like a story — has become real. The lender group includes IFC/IDA with up to $700 million, ADB with a $410 million package, DFC with up to $600 million, and US EXIM with $1.25 billion. Canada’s EDC is linked to a combined US EXIM–EDC tranche of $1.4 billion, while Germany’s KfW/Euler Hermes and Sweden’s EKN are reported as part of a combined $900 million European financing package. Finnvera of Finland is named in the lender group, though its individual dollar amount has not been publicly disclosed.
Reuters reported that Reko Diq could generate up to $74 billion in free cash flow over 37 years. The first phase is expected to produce 200,000 tons of copper per year. A second phase could double that output. Production is expected by 2028.
On a simple equity basis, the projected $74 billion in free cash flow would be shared as follows: Barrick Gold, with a 50 percent stake, would receive approximately $37 billion; the federal government (Pakistani SOEs), with a 25 percent stake, would receive approximately $18.5 billion; and the Government of Balochistan, with a 25 percent stake, would receive approximately $18.5 billion.
Five facts: It is geology. It is copper. It is gold. It is Balochistan. It is exportable value. Reko Diq matters both to Pakistan and the world because the world is entering a copper age. Copper is the metal of electrification. Power grids need copper. Electric vehicles need copper. Renewable energy systems need copper. Data centres need copper.
This is the good news: Pakistan has a world-scale asset at the exact moment the world needs copper. The reality: In the old energy economy, Pakistan imported oil, LNG and coal. In the new energy economy, Pakistan can export copper. Remember: Buried wealth is not national wealth – buried wealth becomes national wealth only when governance digs deeper than geology. Yes, the mountain is rich. The question is whether the state will be wise.
Pakistan must treat Reko Diq not as a mine, but as a national development corridor. Pakistan must build rail. Pakistan must build power. Pakistan must build water systems. Pakistan must build local training institutes. Pakistan must build supplier networks. Pakistan must build a copper services industry. Pakistan must build transparency around royalties and provincial revenues. And Pakistan must build trust before distrust becomes more expensive than infrastructure.
The good news is not that Pakistan has minerals. Pakistan has always had minerals. The good news is that Pakistan may finally be moving from possession to production. That is the difference. Reko Diq is not a loan. Reko Diq is not aid. Reko Diq is not a deposit. Reko Diq is an asset. If governed well, it can become a long-term stream of dollars, dividends, royalties, procurement, jobs and provincial income. Reko Diq will change Pakistan’s balance sheet. Pakistan must change the way it manages its assets.
—The writer is a journalist and
political analyst.
