Turning natural wealth into national growth – Pakistan & Gulf Economist

• Unlocking Pakistan’s mineral potential will create jobs enhance exports strengthen local industries and growth

Pakistan stands at a critical junction in its economic journey, where tapping into its vast natural resources oil, minerals, and rare earth elements could redefine the country’s future. While much attention has focused on oil partnerships, the real opportunity may lie beneath the surface, in the country’s immense mineral wealth spread across Balochistan, Khyber Pakhtunkhwa, Sindh, and Punjab. While oil exploration remains vital, the real turning point for Pakistan’s economy could come from rare earth elements. These minerals are indispensable to the modern world used in electric vehicles, renewable energy systems, smart phones, and defense technologies. Pakistan’s deposits, particularly in Chaghi, Makran Coast, and Gilgit-Baltistan, hold enormous potential. Chaghi alone contains more than a dozen identified types of rare earth elements, while the coastal belt along Makran remains largely unexplored.

Unlocking Pakistan’s mineral potential will require a coordinated approach that connects governments, investors, and industries. Clear investment frameworks, fair tax incentives, and transparent policies would make Pakistan more attractive to responsible investors. Equally important is building domestic value chains so that Pakistan processes more of its minerals at home instead of exporting them in raw form.

Establishing specialized industrial zones for mineral processing across the provinces would not only attract investment but also create jobs, enhance exports, and strengthen local industries. Alongside this, research hubs and technology centers can help develop smarter mining methods and ensure environmental responsibility. If managed wisely, this shift could reduce the country’s dependence on imported fuel, diversify its exports, and create thousands of skilled jobs. By moving from raw extraction to value addition, Pakistan can become a meaningful contributor to the global rare earth and mineral supply chain, a sector that powers the industries of the future.

Globally, REEs have become a new frontier in geopolitics. China controls more than 80 per cent of global refining capacity, a dominance that gives it enormous leverage in world trade. The United States, the European Union and Japan have all declared REEs critical raw materials essential for defense, renewable energy and the digital economy. In this context, Pakistan’s reserves could provide not just economic opportunity, but also strategic strength. If developed systematically, these reserves could position Pakistan as a regional hub for REE production and processing, generating billions in export earnings, reducing dependence on imports, and supporting the growth of local industries. Pakistan has a chance to turn its REE potential into a driver of economic development if decisive steps are taken. The first is to create a national REE policy that sets a clear roadmap for exploration, processing, and sustainable mining. Investment in geophysical surveys and drilling, particularly in Balochistan and GB, must be prioritized.

Being rich in minerals, rare-earth metals, as well as oil and gas, and that too in a geostrategic location, makes Pakistan an attractive investment destination. However, despite the government’s claims about stability and establishment of SIFC, we haven’t seen any major inflows in FDI. A major boost in FDI amounting $27 billion was witnessed during 2013-18 under CPEC (China’s One Belt, One Road Initiative) but that also left the economy reeling with an account deficit of $18 billion. Reko Diq has recently become the economic buzzword for Pakistan as it is navigating regional challenges and the involvement of multiple global powers, including China and the US.

Reko Diq mining has the potential to be a flagship investment for Pakistan’s economy. With an estimated $74 billion in free cash flow expected over the next 37 years, this project could bring significant economic benefits to the country. The project, owned 50% by Barrick Gold and 25% each by the governments of Pakistan and Balochistan, is expected to start production by 2028. This could lead to substantial job creation, infrastructure development, and increased foreign investment in Pakistan. Reko Diq is an opportunity for Pakistan to demonstrate that we are an investable country with long term sanctity for contracts.

Pakistan has the 7th largest copper reserves (approx. 16,000 million tonnes) in the world. Since semiconductor industry is dependent on the supply of copper, Pakistan has decided to use these reserves to its advantage by inviting FDI in Reko Diq projects under SIFC. As the biggest mining project advances, external financing up to $6 billion has been secured from 11 international banks from the US, Sweden, Canada and Japan with International Finance Corp. (IFC) in the lead. If the project starts delivering in the early part of 2029, the first year of operation is expected to generate nearly 10 percent ($2.8 billion) of Pakistan’s stagnant export base today i.e. $30 billion.

Reko Diq’s development is seen as a major test case for Pakistan’s ability to manage large scale foreign investments, diversify exports and improve stability in resource dependent regions. If completed on schedule, the mine is expected to become one of the largest sources of foreign exchange in Pakistan.