Reko Diq project secures over $5.5bn commitments from IFIs

ISLAMABAD: In a major breakthrough for Pakistan’s mining sector, Reko Diq Mining Company (RDMC) has secured over $5.5 billion in financing commitments from international financial institutions (IFIs), surpassing its actual funding requirement of $3.74 billion.

The $7.48 billion project located in Balochistan’s Chagai district is being developed under a 50:50 debt-to-equity model and is expected to commence construction in December 2025, with commercial operations targeted for 2028.

The US Export-Import Bank (EXIM) has committed approximately $1 billion, while the Japan Bank for International Cooperation (JBIC) has agreed to provide $300 million. Denmark’s export credit agency has also offered guarantees to support commercial bank financing or equipment procurement for the project.

According to senior relevant officials, only the most favourable loan terms will be selected from the $5.5 billion in commitments, which are said to be significantly more lenient than standard commercial loans. Financial closure is expected by the end of September or early October 2025.

The RDMC has also expressed readiness to provide bridge financing of $400 million to support the construction of railway infrastructure linking the mine site to Port Qasim via Main Line-2 (ML-2) and Main Line-3 (ML-3). The timely completion of these railway lines is seen as critical for the efficient transport of extracted minerals. The railway upgrade is expected to be completed before the mine becomes operational in 2028.

The Reko Diq project is projected to generate $74 billion in free cash flows over its 37-year operational life, positioning it as a cornerstone of Pakistan’s long-term economic strategy.

The Boards of Directors and Annual General Meetings of three state-owned entities--Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings (Private) Limited (GHPL)—have already formally approved $715 million in project costs. This brings the total project valuation to $7.48 billion, an upward revision reflecting inflation, commodity price volatility, and contingency planning by lenders.

However, officials remain confident in executing the project within the original cost estimate of $6.765 billion, citing tight cost controls and operational efficiencies.

RDMC is a special-purpose vehicle formed to execute the project. It represents a partnership between Barrick Gold Corporation (50 per cent ownership) and the governments of Pakistan and Balochistan (the remaining 50 per cent). Balochistan holds a 25 per cent stake, which includes a 10 per cent free-carried interest and a 15 per cent fully funded share guaranteed by the federal government. This arrangement ensures Balochistan’s participation without financial liability and provides it with a share in future revenues.

In addition, the project has attracted unprecedented interest from global financial institutions. The International Finance Corporation (IFC), a member of the World Bank Group, has pledged $700 million, including a $400 million subordinated loan backed solely by the balance sheets of Pakistani SOEs, without any sovereign guarantees--a significant achievement in structuring risk-sharing mechanisms.

The Asian Development Bank (ADB) has approved $300 million in financing, marking its first mining-sector investment in over four decades. In addition, the ADB has extended a $110 million credit guarantee to the Government of Balochistan to enhance its equity position and manage project-related risks. “This isn’t just a mining project—it’s a transformational economic engine for Pakistan,” said a senior official involved in the financing process. “Reko Diq will redefine large-scale resource development, both in financial innovation and socio-economic impact.”

Following financial closure, RDMC is set to begin contractor mobilisation, equipment procurement, and site development, paving the way for what could become Pakistan’s most successful public-private partnership to date.