In a significant move towards advancing Pakistan’s mineral resources, Oil and Gas Development Company (OGDC) has approved an increase in its funding commitment to $627 million for the Reko Diq copper and gold mining project. This decision follows the completion of an updated feasibility study, reinforcing Pakistan’s efforts to unlock one of the world’s largest copper and gold reserves.
Reko Diq Project Overview
Located in Chagai, Balochistan, the Reko Diq project is a multibillion-dollar mining initiative with enormous potential. The updated feasibility study estimates a mine life of 37 years, divided into two operational phases. Phase-I, requiring a capital outlay of $5.6 billion (excluding financing costs and inflation), is set to commence operations in 2028. By 2034, Phase-II will double the processing capacity to 90 million tonnes annually.
OGDC’s Enhanced Commitment
OGDC’s board approved the $627 million investment, which includes the company’s share of project financing costs. This revised commitment reflects the anticipated increase in copper and gold prices, which will contribute to offsetting the project’s higher costs. The company’s proportional equity contribution is expected to be $349 million, subject to adjustments for actual financing costs and inflation.
Collaborative Stakeholders
OGDC holds an 8.33% stake in Reko Diq, as part of a collective 25% share held by three Pakistani state-owned enterprises, including Pakistan Petroleum Limited and Government Holdings (Private) Limited. The project’s primary operator, Barrick Gold Corporation, holds a 50% stake, while the Balochistan government has a 25% interest, divided into a 15% fully funded stake and a 10% free carried stake.
Financing and Growth Potential
A limited-recourse financing facility of up to $3 billion is being negotiated to support the project’s initial phase, supplemented by shareholder contributions. The feasibility study also highlights the potential for future growth, with the project targeting five of the 15 identified porphyry surface expressions under the current mining lease.
Economic and Social Impact
The Reko Diq project is expected to produce 13.1 million tonnes of copper and 17.9 million ounces of gold over its lifespan. It will contribute significantly to Pakistan’s economy through job creation, local community development, and increased revenue streams. Additionally, the project will pave the way for technological advancements and infrastructure improvements in Balochistan.
Conclusion
OGDC’s commitment to the Reko Diq project marks a pivotal moment in Pakistan’s energy and mining landscape. By leveraging its strategic investments, the company is set to play a crucial role in unlocking the full potential of Pakistan’s mineral wealth, driving economic growth, and enhancing national prosperity.
