WB approves $700m Reko Diq loan
The IFC loan represents its first mining investment in Pakistan, helping to lay the foundation for further investment in mining and to support resilience in a fragile economic region. Photo (file)
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Finance Minister Muhammad Aurangzeb said on Friday that the World Bank Group had approved a $700 million loan for the Reko Diq mining project, despite strong opposition from India, which attempted to block the investment required to meet the project's overall $3 billion financing needs.
The World Bank Group approved the concessional package by rejecting Indian objections, Aurangzeb said while speaking during a meeting of the Senate Standing Committee on Finance.
Of the total, $300 million will be provided by the International Finance Corporation (IFC), and $400 million will be extended by the International Development Association (IDA), both part of the World Bank Group. This marks the third instance in the past month where India has failed to block lending.
India attempted to block the board meeting of the World Bank Group from approving the $700 million loan for the Reko Diq project but was once again unsuccessful, he added.
The minister further said that India was lobbying against Pakistan in international financial institutions but had failed to create any problems.
All three major global lenders — the International Monetary Fund (IMF), the World Bank Group, and the Asian Development Bank (ADB) — have refused to pay heed to Indian propaganda against Pakistan and have approved separate lending packages since May 9.
The IFC is also acting as the lenders' coordinator for the $6.6 billion Reko Diq gold and copper mining project. Of the total cost, $3.7 billion will be arranged by the three shareholders: Barrick Gold, the federal government, and the provincial government of Balochistan.
The IFC's lending will help lay the foundation for further investment in the mining sector and support resilience in an economically fragile region like Balochistan. The IFC will provide $300 million from its own account, while another $400 million will be issued as a blended finance loan under the World Bank Group's IDA-20 package.
The World Bank stated that the project is expected to generate a peak of up to 10,000 jobs during the construction stage, with the Reko Diq Mining Company's local recruitment policy prioritising residents of Balochistan for both skilled and low-skilled positions. This will provide a stable source of income for households, which is expected to include a substantial number of women.
The mining company plans to contribute 1% of construction costs and 0.4% of annual revenue to projects identified by local Community Development Committees throughout the project's life. Additionally, through blended finance loans structured as sustainability-linked financing, the IDA will set key performance indicators focused on efficiency in water abstraction, female employment, local jobs, and local procurement.
In March this year, Pakistan revised upward the total cost of the first phase of the Reko Diq copper and gold mine project to $6.6 billion — a 56% increaseby expanding the scope of the strategically important scheme and accounting for inflationary impact and higher production requirements.
Pakistan's three government-owned companies — Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings (Private) Limited (GHPL) — each hold 8.33%, making up a collective 25% federal government stake.
Of the remaining Pakistani share, 25% is held by the government of Balochistan, and 50% is held by Barrick Gold Corporation, which operates the project.
The project is on track to begin production by the end of 2028, starting with 200,000 tonnes of copper annually in its first phase, which is expected to cost $5.7 billion. Completion of this phase is projected by 2029.
In Phase II, expected to be completed by 2034, another $3.3 billion will be invested to increase production capacity to 90 million tonnes per annum. This will bring the total project cost to nearly $9 billion.
The Reko Diq deposit is one of the largest untapped copper deposits in the world. The IFC loan represents its first mining investment in Pakistan, helping to lay the foundation for further investment in mining and to support resilience in a fragile economic region.
Global demand for metals is rising due to growth in energy, digital technologies, and infrastructure. Copper is a critical mineral essential for renewable energy technologies, electric vehicles, and efficient electrical grids. However, existing supply will not meet growing demand, and new mines such as Reko Diq must come online to bridge the gap.
Once fully developed, Reko Diq will be one of the world's largest copper mines. Pakistan's mining industry has the potential to play a key role in meeting rising global copper demand.
The project will also generate export and foreign currency earnings, with 100% of its revenue in foreign currency.
The World Bank Group has estimated that, depending on copper and gold prices, the project could contribute a gross value added of around $2 billion annually to Pakistan's economy.
The WBG is currently working on a scoping study expected to further demonstrate the benefits of developing a mining district around Reko Diq. The area is home to other prospective copper deposits. Once the project is successfully developed, it could pave the way for additional mining ventures in the region, positively impacting local economic development.
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