Japan has signaled its intent to invest in Pakistan’s massive Reko Diq copper and gold mining venture, marking a potential expansion of its economic footprint beyond the auto sector where its presence has traditionally been concentrated.
The Economic Coordination Committee (ECC) of the cabinet was recently briefed on Japan’s interest in joining the multibillion-dollar project alongside local and international stakeholders. The Finance Division welcomed the proposal, assuring the committee that the investment would not lead to capital flight through dollar remittances.
The Reko Diq project, located in Balochistan, has already attracted attention from Saudi Arabia, which earlier expressed interest in acquiring a 15 percent stake. Now, Japan’s potential involvement adds further momentum to what is being described as a transformative initiative for the region.
According to officials, the investment framework includes two key guarantees. One is a sovereign guarantee from the government of Pakistan, ensuring project completion. The other comes from the Asian Development Bank (ADB) to support the equity of Balochistan Mineral Resource Limited (BMRL).
The Petroleum Division outlined the financial structure of the project, noting that $900 million in equity is involved, with half funded by sponsors and the other half by agencies. State-owned enterprises (SOEs) are expected to repatriate funds through Pakistan Minerals Private Limited (PMPL) over a seven-year period to fulfill their $2.145 billion commitment, either as equity or shareholder loans.
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During the ECC meeting, the Petroleum Division emphasized that $3.5 billion in financing is being raised, with a strong focus on healthcare, safety, security, and community welfare. A bank representative also highlighted the strategic importance of the project and shared updates on the financial closure process.
The ECC acknowledged the potential of the Reko Diq mine to reshape Balochistan’s economy and deliver substantial benefits to Pakistan. The Petroleum Division requested approval for final terms and definitive agreements, seeking authorization for SOEs to begin repatriating funds from January 2023, in line with a cabinet decision made in December 2022.
To meet foreign exchange requirements, Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) will initially use their own resources. Should a shortfall arise, the government will step in to provide the necessary foreign exchange. This practice will continue for Government Holdings Private Limited’s (GHPL) share contribution.
Additionally, the Petroleum Division asked for permission for BMRL to repatriate funds over seven years or more, starting January 2023, to meet its $1.287 billion shareholder funding obligation. This may be fulfilled through equity or shareholder loans in either local currency or foreign exchange.
The ECC was also requested to authorize the secretaries of the Petroleum and Finance Divisions to finalize and sign the Government Development Agreement (GDA) and the sovereign guarantee under Rule 7(2) of the Rules of Business, 1973.
With Japan’s interest now on the table, the Reko Diq project continues to gain traction as a cornerstone of Pakistan’s mineral development strategy.
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