Saudi Arabian investment mining fund Manara Minerals is planning to buy 10% to 20% stake in Pakistan’s Reko Diq copper and gold project, which is being developed by Barrick Gold, the Financial Times reported on Tuesday.
The investment mining fund plans to buy between 10% to 20% stake from the government of Pakistan, which owns 25% of the mine, for about $500 million to $1 billion, the publication said, citing people close to the discussions.
Manara, a joint venture between state-controlled Ma’aden and the $925 billion Public Investment Fund (PIF), was set up as part of the kingdom’s efforts to diversify its economy away from oil, including by buying minority stakes in assets overseas.
Executives from Manara visited Pakistan in May last year for talks about buying a stake in the Reko Diq mine, considered one of the world’s largest underdeveloped copper-gold areas by global mining company Barrick Gold, which owns the project jointly with Pakistan.
Last week, Saudi Arabia Mining Minister Bandar Alkhorayef also confirmed the development, saying that the fund was looking at investing in the project while the Saudi Development Fund could contribute over $100 million to Pakistan’s mining infrastructure.
“Part of what we are looking at is how we can help Pakistan also in some infrastructure,” Alkhorayef said in an interview on the sidelines of the Future Minerals Forum in Riyadh.
“Without that infrastructure, the economics of the deal are not attractive, so through the Saudi Development Fund we are thinking about how we can finance it.”
According to the FT report published today, Manara Minerals plans to buy between “10-20% of the $9bn complex and secure an offtake agreement for future output”.
Barrick Gold owns a 50% stake in the mine, whereas federal and Balochistan governments collectively own the remaining 50% shares, ensuring substantial benefits for the region.
“This is a massive project, it will change the Pakistan economy. It’s very big,” Barrick’s chief executive Mark Bristow said in an interview in Riyadh on the sidelines of a mining summit there last week.
An investment by Saudi Arabia would be “good for the whole project because it brings a heavyweight regional partner into the mix”, he added.
It is nearing the finishing line after a high-level delegation from Pakistan last week visited Riyadh, where Petroleum Minister Musadik Malik told journalists he expected a deal within the next six months, as per the report.
Furthermore, the report stated, Saudi Arabia is one of the biggest external creditors to Pakistan, which it has lavished with loan rollovers, central bank deposits and oil facilities to help service the $9.2bn of debt.
Reko Diq, which is in western Balochistan near the Afghan and Iranian borders, will produce as much as 400,000 tonnes of copper and 500,000 ounces of gold once both phases of the project are complete, according to Barrick.
The initial phase of the mine would cost $4.5bn, and be funded by $1.5bn from Barrick, a similar but slightly lower amount from Pakistan, and the remainder from a debt consortium that would include the World Bank, the Asian Development Bank and other western lenders, according to Bristow.
A second phase of the mine, estimated to cost a further $4.5bn, would be funded by the revenues generated during the first phase, Bristow said.
Some infrastructure is already being developed at the site, including an airstrip and housing for 1,000 workers, in anticipation of the mine construction beginning soon.
