Saudi Arabia has proposed acquiring a 15% stake in the Reko Diq mining project, coupled with a substantial grant to develop infrastructure around the Reko Diq mining area. This significant investment marks the first major contribution under the Special Investment Facilitation Council (SIFC).
The Saudi offer includes both cash for the 15% stake purchase and a grant for infrastructure development around Reko Diq. In response, Pakistan has formed a negotiation committee to review the offer and recommend the final price to the federal cabinet for approval.
Saudi Arabia’s Public Investment Fund (PIF) plans to acquire the 15% stake in Reko Diq through Manara Minerals. The federal government, which currently holds a 25% stake in Reko Diq, will divest 15% of its shares to Saudi Arabia. Despite repeated attempts, SIFC Division Secretary Jameel Qureshi was unavailable for comment.
A Petroleum Division official confirmed that the Saudi offer would be discussed by the newly established negotiation committee. If finalized, this deal will strengthen Pakistan-Saudi Arabia economic ties and create employment opportunities in the region. Pakistan is also negotiating a $5 billion Saudi cash deposit rollover and a $1.2 billion new oil financing facility.
In addition to acquiring a stake, Saudi Arabia has pledged a grant to build road infrastructure around Reko Diq, specifically the Mashkhel-Panjoor road, ensuring smooth movement in the mining area. The Ministry of Economic Affairs has engaged with the Saudi Fund for Development (SFD) to finalize this project.
Anonymously, a cabinet member mentioned that the SIFC has endorsed the offer’s structure, leaving the final decision to the Cabinet Committee on Inter-Government Transactions (CCIGT). The CCIGT will approve the negotiation committee that will review the pricing mechanism and negotiate with Manara Minerals.
The Reko Diq project is 50% owned by Barrick Gold, 25% by federal government entities, and 25% by Balochistan. Barrick Gold is updating the feasibility studies, which are expected to be completed by December 2024, with production starting in 2028.
The Reko Diq project is highly capital-intensive. The government aims to develop adjacent blocks through joint investments by Reko Diq, Saudi Arabia, Balochistan, and the federal government, targeting a $5 billion Saudi investment by June 2025 in the mining and agriculture sectors.
Army Chief General Asim Munir is personally overseeing the timely realization of Saudi investments. Pakistan has addressed Saudi concerns regarding profit repatriation and assured that Saudi investors will receive priority. Prime Minister Shehbaz Sharif has instructed the State Bank of Pakistan (SBP) to prioritize profit repatriation for Saudi Arabian companies.
Additionally, the US Export-Import (Exim) Bank has expressed interest in providing a loan for the Reko Diq project, though it seeks preferential creditor status. The project, estimated to cost between $6 billion and $6.5 billion, requires $3 billion to $3.5 billion in debt financing. The Exim Bank is considering lending $1.5 billion to $2 billion, subject to securing preferential creditor status.
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Once the price is finalized, the three federal government-owned companies holding shares in Reko Diq will begin the divestment process and seek board approvals. Pakistan is also working to maximize the offer price by encouraging Saudi Arabia to make upfront payments to Pakistani companies that have already invested in the project.
