ISLAMABAD: Japan has expressed a strong interest in investing in Pakistan’s multibillion dollar Reko Diq copper and gold mining project, marking a shift from its traditional focus on the country’s auto sector.
The Economic Coordination Committee (ECC) was recently informed that Japanese investors are keen to join local and global partners in the massive mining venture. The Finance Division backed the proposal, assuring that the deal would not cause capital flight and that dollar remittances would remain safeguarded.
Officials explained that the plan carries two key guarantees: a sovereign completion guarantee from the Government of Pakistan and an Asian Development Bank (ADB) guarantee for Balochistan Mineral Resource Limited’s (BMRL) equity share.
The Petroleum Division reported that the project involves $900 million in equity, half funded by sponsors and the rest by agencies. State-owned enterprises (SOEs), through Pakistan Minerals Private Limited (PMPL), are set to repatriate $2.1 billion over seven years to honor their funding commitments, either as equity or shareholder loans.
Overall financing of $3.5 billion is being arranged, with priority given to health care, safety, security, and community development in Balochistan. Lenders and creditors are directly managing the financing, with banks highlighting the project’s economic importance and its progress toward financial close.
The ECC recognized the Reko Diq project as a potential game-changer for Balochistan’s economy and Pakistan at large, with significant revenue, job creation, and community welfare benefits.
The Petroleum Division sought approval for final terms and definitive agreements, including permissions for SOEs and BMRL to repatriate funds from January 2023 onward. Contributions from Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) will initially meet foreign exchange needs, while the government will step in to cover any shortfall, especially for Government Holdings Private Limited (GHPL).
The ECC was also asked to authorize the secretaries of Finance and Petroleum to finalize and sign the Government Development Agreement (GDA) and guarantee documents under existing cabinet rules.
