$3.55bn financing deal finalized for Reko Diq Project with six donor agencies

ISLAMABAD (Mudasar Ali Rana) – In a major development for Pakistan’s mining sector, a $3.5 billion financing agreement has been finalized for the Reko Diq copper and gold mining project.

According to reliable sources, six prominent international donor agencies, including the US EXIM Bank, Asian Development Bank (ADB), International Financial Institutions (IFIs), International Development Association (IDA), and the European Bank, have committed financing.

The agreement involves a total of 11 lenders. The financing comes with a 4- to 5-year grace period and a 12-year repayment plan, with interest rates expected to remain in the single digits.

Disbursement of funds will begin within 45 to 90 days, subject to the fulfillment of lenders' conditions. The first tranche of the loan could be received within two months if all terms are met promptly. Total revised cost of the Reko Diq project now stands at approximately $7.7 billion, up from the earlier estimate of $4.8 billion.

The increase in cost is attributed to inflation, rising operational expenses, and an extended construction timeline by six months. Earlier estimates had pegged external financing at $3 billion, but with the revision, this has increased by about $460 million.

The financing and equity responsibilities are shared among Barrick Gold, the Government of Balochistan, and state-owned entities such as Oil & Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL). Barrick Gold holds a 55% equity stake, while OGDCL and PPL jointly hold 27.7%. The Government of Balochistan owns the remaining 16.6% equity.

Once operational, the project is expected to have a life span of 37 years, generating an estimated $90 billion in operating cash flow and $70 billion in free cash flow. Pakistan is projected to earn approximately $53 billion over the life of the project.

Reko Diq's first production is expected by the end of 2028. During the construction phase (2025–2028) the project will create around 7,500 jobs. In the operational phase, approximately 3,500 permanent jobs will be created for employees and contractors. In addition to economic benefits, the project has already started delivering social development in surrounding areas such as Humai, Mushki Chah, Nok Chah, and Durban Chah. Safe drinking water facilities have been provided, and seven primary schools are now offering quality education, improving educational opportunities for local children. Once financial close is achieved for the first block of the Reko Diq project, Pakistan is expected to witness a significant increase in foreign investment, marking a turning point for the country's mining and economic landscape.