Pakistan’s Next Big Mistake: Selling Reko Diq Stake to Saudi Arabia

Pakistan wants to sell a big chunk of its 25 percent stake in the Reko Diq mine in exchange for $1 billion cash. Saudis are fetching and look like serious contenders to get it in the next few months. Are we so cheap?

‘This is a big mistake. Our national interests are being subjected to arguably Asia’s biggest highway robbery since the Mughal Empire sold the subcontinent to the British in the 19th century. Soon, foreign players will start excavating rare metal reserves like Cobalt, Silica, and Lithium in the region. Those are crucial for kickstarting the semiconductor industry. China did it in Guangdong and Sichuan and then in Pakistan’s Saindak mines, but unfortunately, the Special Investment Facilitation Council (SIFC) is cute and blind,’ a policy expert told ProPakistani.

Notably, the Metallurgy Corporation of China (MCC) has pocketed nearly 80 percent of the profits from the Saindak Copper-Gold Project in Chagai since COVID-19. Beijing expects to continue until the reserve depletes by 2037.

The Reko Di
q Treasure And Who’s Ripping Us off

The Reko Diq mine alone possesses almost $6 trillion worth of precious rare-earth reserves besides gold and copper, which are projected to yield at least $350 billion in annual revenue based on projected commodity prices on a 10-year average. By 2032, average annual production is expected to yield 710 million tons of copper and gold, and looks like Pakistan won’t see much of it.

Global players like Barrick Gold and (maybe) Saudi venture Manara Minerals Investment Company are getting it for peanuts.

Rek Diq is one of the largest undeveloped copper-gold projects in the world, owned 50 percent by Barrick Gold, 25 percent by three federal state-owned enterprises, 15 percent by the Province of Balochistan on a fully funded basis, and 10 percent by the Province of Balochistan on a free carried basis.

As expected, over 70 percent of the total project capital expenditure and profits will be foreign-denominated. Meanwhile, the federal government will source 30 percent of the min
e’s development cost and keep a small share of the fortune.

Riyadh’s Trick

Saudis are trying to offload what little dollars they have to end dollar dominance. Riyadh’s interest in buying into Reko Diq is seen as advantageous. The value of gold and copper is expected to rise in the coming decades while most analysts across the globe tip the dollar to crash. This will also improve the value of the Reko Diq mine significantly. Can’t we common folk agree that selling off such a valuable national asset for a relatively small sum is a big mistake that makes us poorer?

A $1 billion stake could actually be worth $40-50 billion to Riyadh. Saudis might as well invest then mine $100 billion worth of copper and gold in just 2 years, while Pakistan gets nothing.

The mine can contribute significantly to Pakistan’s overall exports if foreign players are phased out of control. Barrick Gold has it too easy, other players like Saudis will get it easier too.

Finance Ministry sources told ProPakistani that if a deal is agre
ed, Saudi Arabia will buy shares of Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings (Private) Limited – all listed entities – in the Reko Diq mine.

In this analyst’s view, the listed companies should re-evaluate their position on how to proceed in terms of expected profitability and multiple re-ratings as a result of the upcoming Reko Diq sale. The mine has a life of at least 40 years as a truck-and-shovel open pit operation with processing facilities producing a high-quality copper-gold concentrate. Authorities are giving it up for cheap and the local economy deserves better.

Source: Pro Pakistani

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