ISLAMABAD — The federal government has once again revised the cost of the Reko Diq copper and gold mining project, with the first-phase estimate now climbing to $7.7 billion a sharp 79% increase compared to earlier projections.
The latest revision was approved on Thursday by the Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Muhammad Aurangzeb. Officials said the hike stems from more expensive borrowing, contingency provisions to absorb possible price shocks, and higher construction-related expenses.
This marks the second upward revision in just six months. Back in March, the ECC had pushed the cost from $4.3 billion to $6.8 billion, but fresh calculations have now raised the figure further.
Loan guarantees and rail financing
Alongside the revised mining cost, the ECC also cleared sovereign guarantees for a $390 million loan to finance Pakistan Railways. The funds will help build a new 880-kilometer freight line from Reko Diq to Karachi port, critical for transporting copper concentrate to global markets.
The finance ministry said the revised project cost includes $5.8 billion in capital expenditure, while the overall borrowing component has risen from $3 billion to $3.5 billion, adding $180 million in additional interest.
Why the costs keep rising
Officials briefed the ECC that inflation, pre-2025 expenses, and higher operating costs during construction were key drivers behind the ballooning estimates. The project partners including Barrick Gold (operator with 50% stake), the Balochistan government (25%), and three federal SOEs (25% combined) will also increase their equity contributions, though efforts are underway to keep shareholder commitments below $3.5 billion.
Finance Minister Aurangzeb noted that the inclusion of contingency costs shows the company’s concern over risks in implementation. He urged authorities to avoid delays and ensure the project remains on track for completion.
A project of global interest
The Reko Diq project is regarded as one of the world’s largest untapped copper and gold deposits. Production from Phase I is targeted by end-2028, with output of around 200,000 tonnes of copper annually. A second phase, due in 2034, will further expand capacity at an additional cost of $3.3 billion, bringing the total investment close to $10 billion.
The project has attracted interest from both U.S. and Chinese investors, given its projected net cash flow of $70 billion over 37 years nearly ten times Pakistan’s current foreign exchange reserves.
Rail link seen as lifeline
Officials emphasized that the rail link is vital for the project’s success. The $390 million bridge financing approved last month carries a three-year tenor at about 7% interest. Without upgrades, the existing ML-III track cannot handle the heavy cargo expected from Reko Diq.
Petroleum Minister Ali Pervaiz Malik stressed that close monitoring will be needed to ensure Pakistan Railways repays the loan with interest within three years.
Finance Minister Aurangzeb concluded that the ECC’s decisions reflect the government’s strong commitment to seeing Reko Diq through. “This project has the potential to transform Balochistan’s economy and generate benefits for the entire country,” he said.
