Pakistan and Saudi Arabia have reached an agreement in principle for Islamabad to sell 15% of its shares in the Reko Diq mining project to Saudi investors. This decision comes after Barrick Gold Corporation, a key stakeholder, declined to sell its shares in the multibillion-dollar venture.
As a result of this development, Pakistan’s overall stake in the Reko Diq project is projected to decrease from 50% to 35%. The Balochistan government will maintain its 25% share, while the federal government’s State-Owned Enterprises (SOEs) will see their share reduced from 25% to 10%.
“With this development, Pakistan will become a minority shareholder in this project,” an official source informed the publication. A senior government official emphasized that Pakistan has considerable experience in joint ventures with international entities, citing PTCL and the banking sector as examples. Therefore, the government believes that becoming a minority shareholder in the Reko Diq project will not pose practical issues.
An official highlighted existing clauses in the Reko Diq agreement that restrict Barrick Gold from making unilateral decisions on significant investments. “Pakistan will be able to invoke such clauses in case of any urgent needs,” the source added.
This deal arrives amid a historically low investment-to-GDP ratio, which reached its lowest level in 50 years during the fiscal year 2023-24. The involvement of Saudi Arabia in the Reko Diq project is anticipated to enhance the investment climate significantly.
Two top officials confirmed to The News that the agreement had made substantial progress and a formal announcement is expected within weeks. “Saudi Arabia will be involved in the Reko Diq project and they intend to increase their stakes in more blocks of the Reko Diq in future,” they stated.
The Special Investment Facilitation Council (SIFC) facilitated this deal by hiring a consultant who provided a valuation report for the sale of stakes in the Reko Diq project. Furthermore, the Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) will play a crucial role, incorporating a Bilateral Investment Treaty (BIT) that allows for international arbitration.
“The federal cabinet, during the tenure of the caretaker government, approved and ratified the FTA and BIT with the GCC,” an official noted. Recent high-level interactions, including visits by Pakistan’s Chief of Army Staff General Asim Munir to Saudi Arabia and a subsequent visit by a Saudi minister to Pakistan, have significantly advanced these multibillion-dollar investments.
Under the FTA and BIT, Pakistan agreed to permit recourse to the Permanent Court of Arbitration (PCA) or the International Centre for Settlement of Investment Disputes (ICSID) in case of disputes over major investments.
The negotiation of terms and valuation was conducted with the involvement of the Manara Minerals Investment Company, a joint venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF). This company aims to invest in mining assets globally and support the development of resilient supply chains.
The Reko Diq Mining Company (RMDC) has been tasked with hiring local levies and defining payment mechanisms for Balochistan. The agreement includes a graduated approach for settling investment disputes, allowing an eight-month period for resolution at domestic forums before recourse to international arbitration.
The finalized investment chapter will be annexed to the FTA with the GCC, detailing the process for investor-state dispute settlement through ICSID, as agreed with Saudi Arabia and Qatar, and shared with the GCC Secretariat. The GCC will provide a legally cleansed draft for review by Pakistan in due course.
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