Saudi Arabia Buys 15% Stake in Reko Diq Mines

The Pakistani government has approved the sale of a 15% stake in the Reko Diq project, valued at $540 million, to Saudi Arabia (KSA) under the Inter-Governmental Commercial Transactions Act (IGCTA).

Local media reports citing a senior official at the Petroleum Division, said that the Federal cabinet has given a go-ahead to the much-awaited sale of 15% stake of the federal government in the Reko Diq project.

“Saudi Arabia will make payment in two instalments. In the first phase, the Kingdom will acquire a 10% stake in the project, for which $330 million will be transferred to Pakistan. The remaining 5% stake will be purchased in the second phase for $210 million,” the reports said.

With the Federal cabinet’s approval, all necessary formalities for the transaction will be expedited, and the first tranche of $330 million is anticipated shortly after the transfer of initial 10% stake. The deal marks a new era of collaboration between Pakistan and Saudi Arabia, with both countries poised to reap significant benefits from this partnership, the official added.

Apart from purchasing 15% shares, the Saudi Fund for Development has pledged $150 million to support the development of mineral resources in Balochistan. Furthermore, Saudi Arabia has shown keen interest in investing in mineral exploration activities in Chagai, where Reko Diq is located.

The Reko Diq project is among the world’s largest undeveloped copper-gold mines. The Reko Diq Mine is a planned mining operation, located near the Reko Diq town of Chagai. Reko Diq has estimated reserves of 5.9 billion tonnes of ore grading 0.41% copper and gold reserves amounting to 41.5 million oz, and a mining life of at least 40 years.

Canada’s Barrick Gold owns a 50 % stake in the Reko Diq mine, whereas the Federal and Balochistan governments collectively own the remaining 50% shares, ensuring substantial benefits for the region.

Reko Diq’s development is expected to unlock significant economic potential for Pakistan. The project’s successful implementation will not only boost the mining sector but also create job opportunities, enhance infrastructure, and provide long-term revenue streams for both federal and provincial governments.

This partnership with Saudi Arabia reflects growing international confidence in Pakistan’s mining sector. Saudi Arabia’s participation in the project aligns with its broader strategy to diversify investments and collaborate with strategic partners.

Relief to Pakistan

The sale of minor stake in Reko Diq project provides a major relief to Pakistan, which needs an estimated $25 billion for the 2023–2024 fiscal year and the country has been looking at traditional allies such as Saudi Arabia, the UAE and China to seek additional financial support, debt restructuring and foreign direct investment (FDI).

Pakistan aims to re-profile $12 billion in bilateral debt, with $3 billion owed to the UAE, $4 billion to China and $5 billion to Saudi Arabia. The goal is to extend the repayment of these loans over the next three to five years, providing Pakistan with a more stable financial foundation.

Pakistan has called upon investors from the GCC countries through Special Investment Facilitation Council (SIFC), a platform to attract FDI in sectors including agriculture, mining, energy and infrastructure.