28-07-2025
Balochistan's rare earths: Pakistan's gamble in the great power race
China and Pakistan are reportedly advancing plans to create a new regional bloc to replace the long-standing but functionally ineffective South Asian Association for Regional Cooperation (SAARC). A trilateral meeting in Kunming on June 19, 2025—between China, Pakistan, and Bangladesh—marked the first step toward formalising this China-led initiative, with Sri Lanka, Maldives, and Afghanistan also being courted to join. This raises a crucial question: Why is such an initiative being pursued now? A security personnel stands guard along a street near the site of a school bus bombing in the Khuzdar district of Balochistan province.(AFP/File)
At the heart of this renewed regional alignment lies a game-changing revelation: Pakistan—particularly its restive province of Balochistan—is estimated to hold between $6 to $8 trillion worth of untapped mineral wealth, including strategically vital rare earth elements (REEs) like dysprosium, terbium, and yttrium. These elements are indispensable to the global green transition, as they are used in electric vehicles, renewable energy systems, advanced defence technologies, and next-generation electronics. Balochistan's ophiolite-rich terrain, especially in the Muslim Bagh and Khuzdar regions, is believed to harbour significant deposits of heavy rare earth elements (HREEs), now in intense international demand. However, despite the immense resource potential, Pakistan's capacity to extract and process these minerals remains severely constrained.
According to Abdul Bashir, chief geologist at Koh-e-Daleel Minerals, Pakistan currently lacks the sophisticated extraction technology, skilled expertise, and financial resources needed to process these critical minerals domestically. Without proper laboratory testing and beneficiation, the continued export of raw ore could result in the loss of billions in potential national revenue in the years to come.
This gap between mineral abundance and extraction capability has triggered a fresh race among global powers to partner with Islamabad. At the Pakistan Minerals Investment Forum held in Islamabad in April 2025, delegations from the US, China, Saudi Arabia, and the European Union expressed strong interest in large-scale mining partnerships. For Washington, this was not just about investment—it marked a strategic shift aimed at diversifying away from China, which currently controls about 90% of the global REE supply chain. Led by Eric Meyer from the US Bureau of South and Central Asian Affairs, the US delegation sought to position Pakistan as a new critical minerals partner.
To accelerate this mineral pivot, Pakistan has signed lobbying contracts worth $450,000 a month with US firms linked to key figures from former President Trump's administration, such as his former bodyguard Keith Schiller, compliance chief George Sorial, and economic adviser Everett Eissenstat. Their mandate spans both economic and defence cooperation—promoting rare earth investments while also seeking military support.
Meanwhile, China, with its $60 billion footprint in Pakistan through the China-Pakistan Economic Corridor (CPEC), is moving to consolidate its own position. For Beijing, Balochistan is a linchpin in its broader strategy to secure long-term access to critical minerals. However, the path to extraction is fraught with security risks. In 2024 alone, over 800 people were killed in nearly 500 militant attacks in Balochistan and Khyber Pakhtunkhwa—the very provinces that hold most of Pakistan's high-value mineral deposits. To reassure investors, Pakistan's military has stepped in forcefully. Army chief and field marshal Asim Munir has declared that 'economic security is now a pillar of national security,' promising full-scale military protection for mining zones.
But the growing militarisation of mineral development is not without social and political costs. In 2025, two controversial laws—the Balochistan Mines and Minerals Act and the Mines and Minerals Harmonization Act—were passed with limited public debate These laws effectively centralised control under the federal government through the creation of a Mineral Investment Facilitation Authority (MIFA) reporting to the Special Investment Facilitation Council (SIFC). This federal architecture undermines the country's 18th Amendment, which gives provinces authority over natural resources. In effect, Balochistan has been sidelined in the decision-making over its own resources. Equally troubling is the absence of any requirement for community consultation or profit-sharing with tribal populations, repeating the exclusionary patterns that have historically fuelled discontent in the region.
The Reko Diq project is a prime example. Once stalled by legal battles over exploitative contracts, it is now being revived under Canadian firm Barrick Gold, with a projected output of $74 billion over 37 years. While it could reshape Pakistan's economy, serious concerns remain: Will Balochistan's impoverished residents benefit? And how will the water-intensive copper and lithium mining impact one of the world's most water-stressed regions? Some estimates warn extraction could consume up to 40% of local water supplies, worsening ecological strain and community tensions.
Pakistan's mineral moment has clearly arrived—but whether it leads to equitable development or replicates extractive and exclusionary practices of the past will depend on policy choices made now. With external debt over $130 billion and the mining and sector contributing just 3.2% to GDP, Islamabad needs urgent foreign investment. But that capital must be aligned with transparent governance, environmental safeguards, and local benefit-sharing—not with attempts to recreate a regional stability institution that lacks legitimacy and inclusive representation.
This article authored by Hriday Sarma, senior fellow, South Asia Democratic Forum, Brussels.
