Minister informs NA: Reko Diq project to generate over $75bn in free cash flows
In written reply to a question to the National Assembly on Thursday, the minister said that total volume and estimated value of Reko Diq (RD) is; Phase-I production starting 2028: Targeting 300,000 oz/annum of gold and 200,000 tons/annum of copper. He said that Phase-2 production is starting 2034: 500,000 oz/annum of gold and 400,000 tons/annum of copper.
He said that these numbers are based on real cash flows, which are conservative. He said the nominal free-cash flows assuming a standard commodity price escalation may yield to more than $100 billion of cash flows.
Barrick's Reko Diq project in Pakistan aims new financing
The minister said that project structure with 25 per cent share of Balochistan besides taxes and royalty provisions, ensures that a significant share of the economic benefits of the project will flow to Pakistan, with the majority of those amounts paid to the Government of Balochistan.
He said the key fiscal terms for the project include (among others) are: - five per cent royalty payable to the Government of Balochistan, one per cent net smelter return payable to the Government of Pakistan. He said that 0.5 per cent export processing zone surcharge.
To ensure that Balochistan is receiving benefits during the development and construction phases, the minister said that advance royalty payments to the Government of Balochistan were made by the Project Company in year 1 ($5 million) and year 2 ($7.5 million) and will be made in year 3 and thereafter until commercial production ($10 million per year), for a maximum total amount of advance payments of $50 million.
The minister said that according to the bankable Feasibility Report, the key development phases are: Phase-1 construction: 2025 – 2028, Phase-1 Production: 2028, Phase-2 construction: 2028 – 2033, Phase-2 production: 2034
He said that adequate measures and steps have been ensured and taken for environmental safeguards, community development and employment opportunities besides local business opportunities. He said that $5.3 million has been spent in education, health, skills training, and clean water access since 2022.
He said that construction phase: one per cent of all construction capital (estimated at approximately $57 million for Phase 1 and $33 million for Phase 2 based on the updated feasibility study); $10 million has already been paid toward this commitment in advance to Government of Balochistan.
About the operating phase of the project, the minister said that 0.4 per cent of annual revenue during every fiscal year commercial production estimated at approximately $25 million per year. He said that major local employment: 7,500 jobs during peak construction; 4,000 jobs in the long term. Currently, 77 per cent of RDMC employees are from Balochistan.
He said that various steps taken to ensure maximum possible benefit to the people of Balochistan include royalty at five per cent of revenue (net smelter revenue) goes to the Government of Balochistan. He said that an advance royalty arrangement has been made, providing total of $50 million until production commences in 2028, after which regular royalty payments will begin.
The minister said that 75 per cent of employees in the project are from Balochistan. 4,000+ long term jobs and 7,500+ people during peak construction will be employed. He said Reko Diq Mining Company (RDMC) is governed by a board chaired by the chief secretary of Balochistan, with the secretary Mines and Minerals as a member, alongside representatives from federal state-owned enterprises (SOEs) and Barrick. The board meets quarterly to oversee project progress and ensure transparency, he said.
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