In a momentous turn of events, the United States has expressed a keen interest in providing debt funding for the Reko Diq gold and mines project, a move that could potentially mark a significant investment by Washington in Pakistan after a long hiatus.
Government and diplomatic sources have revealed that the Export-Import (Exim) Bank of the United States, the US government’s sovereign export credit agency, is actively considering supporting the Reko Diq project with financing. The final feasibility study for the project is yet to be completed, but the estimated cost is projected to be between $6 billion and $6.5 billion.
Sources revealed that the project necessitates $3 billion to $3.5 billion in debt financing, with discussions ongoing regarding the allocation of funding between the US Exim Bank and other potential creditors, such as the International Finance Corporation (IFC).
The proposed loan is reportedly linked to the procurement of earth-moving machinery from the US, and it is contingent upon granting preferred creditor status to the Exim Bank. Qamar Abbasi, the spokesman of the finance ministry, acknowledged that various financial institutions are exploring the possibility of financing the Reko Diq project, with ongoing discussions between project authorities and these institutions.
The matter has been raised at the level of Finance Minister Muhammad Aurangzeb and the US Ambassador to Islamabad, Donald Blome, as per the sources. However, the US embassy neither confirmed nor denied the reported development.
In response to inquiries, a spokesperson for the US embassy emphasized the United States’ commitment to fostering trade, investment, and economic relations with Pakistan. If a deal is reached, it would represent the first major US investment in Pakistan in decades, potentially revitalizing economic ties between the two nations.
The Reko Diq project, in which Barrick Gold holds a 50% stake and management control, holds immense potential for the economic development of the region. With the feasibility study set to conclude by December 2024 and initial production scheduled for 2028, the project is poised to create significant opportunities and impact for Pakistan’s economy.
As discussions progress, stakeholders are actively considering various options to secure financing and support the project’s successful development, including potential involvement from the US Exim Bank and the implications of granting preferred creditor status to foreign sovereign banks. This engagement underscores the potential for transformative investment and collaboration in the Reko Diq project, signalling a new chapter in economic relations between the United States and Pakistan.
