PIF May Buy 15% Stake in Reko Diq Mining Project

Saudi Arabia’s sovereign wealth fund – Public Investment Fund (PIF) – through Manara Minerals, has made an offer to buy 15% stakes in the Reko Diq mining project in Pakistan and would also give a substantial grant to build infrastructure around the mining area in a development that will mark the first investment under the umbrella of the Special Investment Facilitation Council (SIFC).

Reko Diq is nestled in the Chagai district of Balochistan with close proximity to the Afghanistan and Iran borders. The district is characterised by arid and semi-arid terrain with vast deserts, mountain ranges, and sparse vegetation.

The desert includes the Ras Koh Hills and the Chagai Hills. The district has a sparse population due to its harsh living conditions and majority of the inhabitants are Baloch, with a mix of other ethnic groups.

Chagai faces numerous challenges, including underdevelopment, lack of infrastructure, and limited access to basic services such as education, healthcare, and clean water.

According to Pakistani media reports, the total offer involves both cash for the purchase of 15% shares and grant to build infrastructure around the mining area.

In response to the Saudi offer, Pakistan has decided to constitute a negotiation committee that will review the Saudi offer and recommend the final negotiated price to the federal cabinet for approval, the government functionaries involved in the discussions told Pakistan’s newspaper The Express Tribune said in a report.

Underdeveloped Project

One of the largest undeveloped copper-gold projects in the world, Reko Diq is owned 50% by Barrick, 25% by three federal state-owned enterprises, and 25% by the Government of Balochistan of which 15% is on a fully funded basis and 10% is on a free carried basis.

Barrick Gold is in the process of updating the feasibility studies of the project. The feasibility study would be completed by December and the first production is likely by 2028.

However, Pakistan’s Petroleum Division official said that the Saudi offer will be discussed by a negotiation committee that will be set up for finalising the deal.

If the deal materialises, it would cement Pakistan-Saudi Arabia economic relations and create employment opportunities for the people of the region. Pakistan was also in the process of securing rollover of a $5 billion Saudi cash deposit and has also requested a $1.2 billion new oil financing facility.

In addition to acquiring 15% shares, Saudi Arabia has also offered to give grant for the construction of road infrastructure around the Reko Diq mining project. The government wants to construct the Mashkhel-Panjoor road for smooth movement around the mining area.

The Ministry of Economic Affairs has taken up a grant offer with the Saudi Fund for Development (SFD) for finalising the road scheme, an official of the ministry confirmed to The Express Tribune. Once the talks make some progress, both the sides would work on finalising the feasibility study for the road project.

The reconstitution of the Reko Diq project was completed in December 2022 — a key step in progressing the development of Reko Diq into a world-class, long-life mine which would substantially expand Barrick’s strategically significant copper portfolio and benefit its Pakistani stakeholders for generations to come.