ISLAMABAD: The Economic Coordination Committee (ECC) has directed the Petroleum Division to reassess the federal government’s financial commitment to Balochistan Mineral Resources Limited (BMRL) in the Reko Diq mining project.
The decision was taken in view of the significant revenue the project is expected to generate for Balochistan and its share in the National Finance Commission (NFC) Award, according to sources cited by Business Recorder.
The multi-billion-dollar Reko Diq project, one of the world’s largest undeveloped copper-gold mines, is planned in two phases. The first phase will require an estimated $6.765 billion, which includes $5.566 billion in capital expenditure and $1.199 billion for interest on project financing and inflation costs during construction.
The second phase is expected to be self-funded through project-generated revenue.
The ECC meeting, chaired by Finance Minister Senator Muhammad Aurangzeb on March 25, 2025, reviewed the project’s financial and operational details. The discussion followed a series of agreements finalized in December 2022 between the Government of Pakistan, the Government of Balochistan, BMRL, state-owned enterprises (SOEs), and Barrick Gold Corporation.
Under the terms of the agreement, Barrick holds a 50% stake in the project, while the Government of Balochistan owns 25%, with 10% as a free carried interest and 15% through BMRL. The remaining 25% is held collectively by the SOEs through Pakistan Minerals (Private) Limited (PMPL).
Initially, the financial obligations for BMRL were set at $717 million and for PMPL at $1.194 billion, based on a total project cost of $4.297 billion. However, after the completion of the final feasibility study in January 2025, the project cost was revised to $6.765 billion, increasing BMRL’s funding obligation to $1.128 billion and PMPL’s to $1.879 billion.
These figures may be further adjusted depending on the availability of external project financing.
To secure partial financing, the project stakeholders have formulated a Long Form Term Sheet (LFTS) and are engaged in discussions with international lenders, export credit agencies, and commercial banks. The financing structure involves multiple agreements, including Completion Agreements, Transfer Agreements, a Government Direct Agreement, a Government of Pakistan Guarantee, and an Asian Development Bank Guarantee.
The necessary approvals from the provincial government of Balochistan are also required before these agreements are finalized.
During the meeting, the Petroleum Division highlighted that an expansion in project scope and capacity has led to increased costs but has also improved the internal rate of return, making the investment more attractive. The division expressed confidence that the renewed interest from institutional investors would facilitate a successful financial close.
The ECC was also assured that debt negotiations with the financing consortium were progressing, and the project was set to secure one of the largest mining-related financing arrangements globally.
Given the scale of the investment, the ECC emphasized the need to review the federal government’s funding responsibility for BMRL, considering the substantial financial benefits expected for Balochistan. The committee instructed the Petroleum Division to present the finalized agreements for formal approval in due course.
Additionally, the Finance Division, in coordination with the State Bank of Pakistan, will determine the operational modalities for fund repatriation and financial commitments.
