Pakistan Approves Revised Cost for Reko Diq Copper-Gold Project

Strategic Insights -

The government of Pakistan has cleared the way for the formal signing of agreements for the revised cost of $7.723 billion for the first phase of the Reko Diq Copper-Gold Project, the country's largest mining venture. The revised cost is a 14% increase from the estimated $6.765 billion in March, mainly due to higher financing costs and the inclusion of cost contingencies.

The Reko Diq project, expected to deliver first concentrate by end-2028, is projected to have an estimated life of 37 years with operating cash flows of $90 billion, including $70 billion in free cash flows. About $53 billion of revenue is expected to remain in Pakistan, including $11 billion in fiscal revenue for the federation, $11 billion for Balochistan, and $6 billion in free carry interest to the provincial government.

Key Takeaways:

  • The revised cost for the first phase of the Reko Diq Copper-Gold Project is $7.723 billion, a 14% increase from the estimated $6.765 billion in March.
  • The project's financing debt has been revised from $3 billion to $3.5 billion, with total shareholders' financial commitments projected to rise by $458 million.
  • The government has authorized state-owned entities (SOEs) to repatriate funds through Pakistan Minerals Pvt Ltd (PMPL) over seven years to meet their $2.145 billion commitment.
  • The Reko Diq project is expected to deliver first concentrate by end-2028 and has a projected life of 37 years with operating cash flows of $90 billion.
  • About $53 billion of revenue is expected to remain in Pakistan, including $11 billion in fiscal revenue for the federation and $11 billion for Balochistan.
  • The project will employ 7,500 people during peak construction and 3,500 during operations, with 27 Baloch graduates being sent to Barrick's overseas sites for training.
  • The ECC also approved a $390 million bridge financing arrangement with RDMC to construct a 1,350km railway track to transport ore concentrate from Balochistan to Port Qasim.

Statistics:

  • Revised cost for the first phase of the Reko Diq Copper-Gold Project: $7.723 billion
  • Estimated cost increase from March: 14%
  • Revisions to project financing debt: from $3 billion to $3.5 billion
  • Projected increase in shareholders' financial commitments: $458 million
  • Projected operating cash flows: $90 billion
  • Estimated revenue remaining in Pakistan: $53 billion
  • Employment during peak construction: 7,500 people
  • Employment during operations: 3,500 people
  • Number of Baloch graduates sent to Barrick's overseas sites for training: 27
  • Number of students from Chagai district enrolled in Hunar Foundation programmes: 300

Sources:

  • Economic Coordination Committee (ECC) of the cabinet, chaired by Finance Minister MuhaAmmad Aurangzeb
  • Pakistan's Ministry of Finance
  • Pakistan's Ministry of Railways
  • Ministry of Foreign Affairs
  • Attorney General's Office
  • Prime Minister of Pakistan's Office
  • Pakistan Minerals Pvt Ltd (PMPL)
  • Balochistan Mineral Resource Ltd (BMRL)
  • Reko Diq Mining Company (RDMC)
  • Barrick Gold Corporation
  • Hunar Foundation