The Oil and Gas Development Company (OGDC) has approved an increase in its financial commitment to the Reko Diq copper and gold mining project, raising its investment to $627 million. This revised figure includes project financing costs and reflects OGDC’s proportional stake in the large-scale mining venture.
This decision follows the completion of an updated feasibility study on the Reko Diq project, located in Chagai, Balochistan. The increased investment takes into account rising copper and gold prices, which are expected to counterbalance escalating project costs. The company’s equity contribution, post-project financing considerations, is estimated to be $349 million, with potential adjustments for actual financing expenses and inflation.
On Tuesday, OGDC formally announced the completion of the updated feasibility study, marking a crucial step in Pakistan’s efforts to harness one of the world’s most significant copper and gold deposits.
OGDC holds an 8.33% share in the Reko Diq project as part of a collective 25% stake owned by three Pakistani state-run enterprises, including Pakistan Petroleum Limited and Government Holdings (Private) Limited. This collective interest is managed through Pakistan Minerals (Private) Limited. The remaining ownership is split between the Balochistan government, which holds a 25% share (15% fully funded via Balochistan Mineral Resources Limited and 10% as a free-carried stake), and Barrick Gold Corporation, the primary project operator, holding a 50% interest.
The updated feasibility study projects a mine life of 37 years, divided into two operational phases. The first phase, with an estimated capital expenditure of $5.6 billion (excluding financing costs and inflation), is set to commence in 2028. The financing strategy includes a limited-recourse loan facility of up to $3 billion, with the remaining funds to be sourced from shareholder contributions. Negotiations for securing project financing are currently in progress.
The project will initially develop five of the 15 identified porphyry surface expressions under the current mining lease, highlighting strong future expansion potential. Phase-II is expected to be financed through a mix of revenue from mining operations, additional financing, and potential shareholder investments.
Under the updated plan, Phase-I will process 45 million tonnes of mill feed annually starting in 2028. By 2034, Phase-II aims to double this capacity to 90 million tonnes per year. The mine is projected to produce approximately 13.1 million tonnes of copper and 17.9 million ounces of gold over its lifespan (on a 100% basis).
The completion of the feasibility study underscores the Reko Diq project’s economic significance, promising substantial job creation, revenue generation, and long-term financial benefits for Pakistan.
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Frequently Asked Questions (FAQs)
- What is OGDC’s new investment commitment to the Reko Diq project?
OGDC has increased its investment to $627 million, which includes financing costs and its proportional stake in the mining project. - When is the Reko Diq project expected to start operations?
The first phase of operations is scheduled to commence in 2028, with plans to expand in 2034. - Who are the main stakeholders in the Reko Diq project?
The project is jointly owned by OGDC, Pakistan Petroleum Limited, Government Holdings (Private) Limited, the Balochistan government, and Barrick Gold Corporation. - How will the project be financed?
The financing includes a $3 billion limited-recourse loan facility, along with contributions from shareholders. - What are the expected outputs of the Reko Diq mine?
Over its lifespan, the mine is projected to produce 13.1 million tonnes of copper and 17.9 million ounces of gold.
