Reko Diq to add 4,000 long term jobs, $3-4bn in exports

April 13, 2022 (MLN): With an unlock of the enormous value of Reko Diq, one of the world’s largest undeveloped copper and gold deposits, located in Balochistan, the country could reap significant economic benefits that would be reflected in augmented foreign direct investment and exports.

Reko Diq, being a catalyst to unravel economic development gains, will make Balochistan the largest recipient of foreign investment in Pakistan while providing significant benefits, including upfront social development spend, job creation and skills development, and local investment opportunities.

The project is expected to employ 7,500 people during peak construction periods, and once in production will create about 4,000 long-term jobs, the latest report titled Reko Diq- New Frontier, Next Tier One Asset in the Making’ by Barrick Gold Corporation, an international mining firm.

Furthermore, the project is expected to add $3-4bn to the country’s total exports from 2026-27, supporting diversification of exports which should cushion the current account and help stabilize the Pak Rupee against external pressures, a research note by Arif Habib stated.

Settling a long-running dispute, Pakistan had reached an out-of-court deal with Barrick in March 2022 that agreed to waive the $11 billion penalties slapped against Pakistan by a World Bank arbitration court.

To note, the Reko Diq project in southwestern Pakistan, was suspended in 2011 after Pakistan denied Barrick Gold and Chile's Antofagasta a license to develop the project, leading to a decadelong legal battle.

In the groundbreaking partnership agreement, Barrick would retain a 50% share while Pakistani state-owned enterprises would get a 25% stake and the rest 25% will be reserved for the government of Balochistan.

If the project is reconstituted, Antofagasta has separately agreed in principle to exit the project through a $900mn payment funded from the Pakistani parties.

Speaking on a unique mining opportunity, president and chief executive Mark Bristow said that the project would be a major addition to Barrick’s Tier One asset base, while also bringing significant economic and social benefits to Pakistan and Balochistan.

The report is of the view the project will have cascading effects on skills development for the local workforce.

CEO Bristow said following the finalization of the underlying agreements, legalization and closing, Barrick would update the 2010 feasibility study, the press release noted.

“Reko Diq’s fundamentals have not changed materially since then. Subject to the updated feasibility, it is still envisaged as a conventional open pit and milling operation producing a high-quality copper-gold concentrate. We are planning a two-phase construction approach, starting with an approximately 40 million tonne per annum plant, which could be doubled within five years. The staged development will optimize returns, manage upfront capital, lower execution risk and bring forward production and cash flows in the long run. If all goes according to plan, we anticipate the first production in five to six years’ time,” he said.

“Offering a unique combination of large scale, low strip and good grade, Reko Diq will be a multi-generational mine, with a life of at least 40 years. The contemplated mine plan is based on four porphyry deposits within our land package and our exploration licence area holds additional deposits with future upside potential.”

Noting that since 2010 there had been game-changing technological advances in renewable energy alternatives, some of which are particularly well-suited to the area, the report noted that the Barrick team was already assessing various solar, wind and battery configurations to maximize the mine’s renewable power generation. This could also deliver a range of economic and operational benefits.

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