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Mining industry

Reko-Diq Copper and Gold Mining Project Seeks International Financing

Strategic Insights

— 2 min read

The Reko-Diq Copper and Gold Mining project, located in Balochistan Province, is moving forward with international financing. Lending institutions have shown interest in financing the project, with a potential quantum of almost $4.5 billion. The government has secured concept clearance for a Partial Credit Guarantee (PCG) from the Asian Development Bank (ADB), which will backstop the equity obligation of the Government of Balochistan and its State-Owned Entity, Balochistan Mineral Resource Limited (BMRL). The project's total revenue is expected to be $147.644 billion until 2065, with the government of Pakistan and Balochistan province expected to fetch $14.855 billion in royalty and tax revenue.

Key Takeaways:

  • The Reko-Diq Copper and Gold Mining project has attracted international lending institutions with a potential financing quantum of almost $4.5 billion.
  • The Asian Development Bank (ADB) has been approached for a Partial Credit Guarantee (PCG) to backstop the equity obligation of the Government of Balochistan and its State-Owned Entity, Balochistan Mineral Resource Limited (BMRL).
  • The project's total revenue is expected to be $147.644 billion until 2065, with the government of Pakistan and Balochistan province expected to fetch $14.855 billion in royalty and tax revenue.
  • The government has secured concept clearance for the PCG from the ADB, with the goal of securing debt financing for the project by October 2025.
  • The Reko-Diq Joint Venture Agreement requires a third-party equity guarantee from a AA-rated guarantor to backstop the equity obligation of the Government of Balochistan and BMRL.
  • The total project cost of Phase-I is estimated to be $6.765 billion, with a 45:55 debt-to-equity financing ratio.
  • The financiers of the project have shown confidence in the success of the project by committing to provide almost $5 billion in Foreign Direct Investment (FDI) to the country.

Statistics:

  • Total revenue of the project till life of mine (i.e. 2065) is expected to be $147.644 billion.
  • The government of Pakistan and Balochistan province are expected to fetch $14.855 billion in royalty and tax revenue.
  • The potential financing quantum from international lending institutions is almost $4.5 billion.
  • The total project cost of Phase-I is estimated to be $6.765 billion.
  • The equity contribution of the project involves Federal Government's capital commitment of approximately $628 million in the form of annual equity contribution for a period of six years.

Sources:

  • The Nation
  • Asian Development Bank (ADB)
  • Government of Balochistan
  • Government of Pakistan
  • Balochistan Mineral Resource Limited (BMRL)

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