Govt to issue bonds for financing railway track project to transport copper, gold from Balochistan

The government has decided to float bonds to secure financing for a key railway track project aimed at transporting copper and gold from the Reko Diq mines in Balochistan, The Express Tribune reported.  

The rail link will facilitate the transportation of copper-gold concentrate from the mines to Karachi Port for export. The Ministry of Railways has emphasised the necessity of upgrading the existing Mainline-III (ML-III) railway section, which currently cannot handle the freight load. 

To address this, a $390 million bridge financing deal with RDMC has been finalised to support the upgrade and construction of the rail section.

The financing deal, which will be extended at Secured Overnight Financing Rate (SOFR) + 250 basis points, is guaranteed by the government of Pakistan. The loan principal and interest will be repaid in a bullet payment after three years. 

The agreements have been vetted by the Ministry of Law and Justice and received clearance from the Cabinet Division and the Ministry of Foreign Affairs.

The Ministry of Railways presented the proposal to the Economic Coordination Committee (ECC), which has now approved it, marking an important step in developing infrastructure to support the Reko Diq project and its associated mineral exports.

The ECC emphasized the importance of the rail line, which will be crucial for the commercial stability of the Reko Diq project. The project, expected to last 37 years, will rely on bridge financing provided by Barrick Group and Reko Diq Mining Company (RDMC), and the government will fund the remaining portion.

The ECC directed the Finance Division to start planning for the project in the fourth quarter of the current financial year. It also called on the Ministry of Railways and the Finance Division to present a comprehensive execution plan, along with a refinancing strategy, by the end of March 2026. 

While reviewing the project, the Finance Division noted that the Railways Division had not shared the Rail Development Agreement and asked for its submission to ensure alignment with the financing structure.