From the Ground Up: Pakistan’s Rare Earth Moment
- by: Adina Wajid
- Date: August 22, 2025
- Array
It has almost become a cliché to call rare earths and critical minerals the oil of the 21st century, but the comparison is not without merit. It is a turn hinged on the ascendancy of electronics at the core of every domain in modern life: automotive, defence, energy, and the Internet of Things (IOT). Even as rare earths increasingly dominate headlines, their specifics remain shrouded in the technical language of geologists and strategists. Simply put, rare earths are a group of 17 chemically similar elements that, despite the name, are relatively abundant in the Earth’s crust. Some, like cerium, are as common as copper, while others, such as thulium, are more uncommon. Pakistan, for its part, sits atop an enviable share of this wealth. With more than 90 identified mineral types and reserves estimated to be worth $6 and $8 trillion, it holds significant deposits of copper, gold, lithium, and rare earths. The measure for Pakistan, now at the centre of a conversation it long stood on the margins of, is whether it can turn its geological advantage into durable growth that reaches beyond company ledgers.
For a country like Pakistan, where young people stream into the workforce faster than jobs can keep up, the case for smarter use of its minerals writes itself. The labour force now tops 83 million people, yet unemployment remains stubborn at 5.5 per cent, leaving 4.5 million people out of work. Every year, the economy needs to accommodate another 4 million young entrants, a target that has grown harder to meet as foreign investment has slowed. Few sectors offer Pakistan the ability to quickly mobilise domestic resources, attract capital tied to tangible output, and feed industrial value chains, and mining is one of them. As it stands, mining contributes just 3.2 per cent to Pakistan’s GDP and accounts for 0.1 per cent of global mineral exports. Around the world, low-income and resource-constrained countries are trying to harness mining as a path to stability. In Burkina Faso, which is ranked below Pakistan on the Human Development Index, artisanal and small-scale gold mining (ASGM) is the primary source of income for hundreds of thousands of people. More than 430,000 people work across 440 mine sites, most with no formal education or access to alternative employment. The country is now Africa’s fourth-largest gold producer, with output exceeding 57 metric tons in 2023. Following a 27 per cent surge in global gold prices, the government is now advancing nationalisation plans to retain more value.
More developed economies show how the returns from structured investment are even more pronounced: In Chile, home to the world’s largest copper reserves, at 21.3 per cent and significant lithium, mining contributed to 13.6 per cent of GDP in 2022, helping sustain one of Latin America’s more stable economies. Australia is another good example: having invested heavily in governance and beneficiation, it has become the world’s largest exporter of iron ore and lithium, with mining and related industries accounting for nearly 12.2 per cent of GDP and employing 303,000 people in 2023-24. While the scale may differ, even a modest claim on this kind of promise could help Pakistan incrementally absorb parts of its young labour force.
Three developments, more coordinated than what the sector has seen in years, suggest that Pakistan’s mineral sector is entering a more deliberate phase. First, the Pakistan Minerals Investment Forum 2025, which brought together over 300 foreign delegates from the U.S., Saudi Arabia, China, Europe, and Africa, reflected strong international interest in the sector. Second, at the same forum, the government unveiled the National Minerals Harmonisation Framework 2025, developed with input from provinces, mining companies, and civil society, as a step toward standardising regulation and attracting investment. Finally, at the centre of this momentum is Reko Diq: one of the world’s largest underdeveloped copper-gold deposits, now moving forward with broad institutional and investor backing. The greenfield project is jointly owned by Barrick Gold, the federal government, and the Balochistan provincial government in a 50:25:25 split, with the provincial share structured as a free-carry interest requiring no direct investment. Over its lifespan, Reqo Diq is expected to generate more than $60 billion in value, with construction beginning in 2025 and first production targeted for 2028.
As the economic value of critical minerals grows, so does the global race to secure them, and Pakistan finds itself in the middle of an intensifying contest of supply chains. China currently controls between 80 to 90 per cent of global rare earth refining, as well as significant shares of lithium, cobalt, and nickel supply chains. The United States, by comparison, produces around 12 per cent of global rare earths. The Pentagon and Department of Energy have formally deemed critical minerals a national security priority. Just this month, the U.S. Department of Defence acquired a 15% position in the MP Materials mine (the U.S.’s only fully integrated rare earth producer), making it the largest single shareholder of the resource. The centrality of rare earths to U.S. interests became clear at the height of the 2025 trade war, when Washington and Beijing ultimately struck an unlikely deal: China would keep the rare earths flowing, and in return, the U.S. would reopen its doors to Chinese students – a reminder of how supply chains can bend even the stiffest of postures.
In recent months, senior U.S. officials, including State Department envoy Eric Meyer and members of Congress, have visited Pakistan to discuss mineral investments. At Reko Diq, the American engineering giant Fluor has been tapped as lead Engineering, Procurement, and Construction Management (EPCM) partner alongside Barrick Gold, while Saudi Arabia has also signalled its own ambitions: Manara Minerals, a joint venture of Ma’aden and the Public Investment Fund, is negotiating a 20 per cent stake and future offtake rights. China, for its part, has maintained a significant presence in Pakistan’s mining and infrastructure landscape since 2002 through operations at Saindak, a copper and gold mine in Balochistan, where revenues are split between Metallurgical Construction Corp (MCC), the federal government, and the Balochistan provincial government, as well as through projects linked to the China-Pakistan Economic Corridor (CPEC).
Pakistan has no shortage of cautionary tales when it comes to resource wealth, and the challenges of transforming it into broad-based growth are well-documented. Like many other mineral-rich economies, it has too often grappled with the absence of strong regulatory mechanisms, equitable contracts, and sufficient environmental safeguards, leaving long-term development unrealised. Reqo Diq spent nearly a decade mired in legal limbo after Pakistan’s Supreme Court cancelledthe original agreement in 2013, triggering an $11 billion penalty in international arbitration. Following a negotiated settlement on the arbitration claim, the revived Reko Diq project is now projected to yield over 13 million tonnes of copper and nearly 17.9 million ounces of gold over its lifespan and has already paid the Balochistan government more than $28 million in royalties, taxes, and community investments as of mid-2025. These gains will count most if they lay the groundwork for stronger governance and wider social dividends. Export routes for Reqo Diq’s mineral outputs are still being refined, with early plans exploring road transport to both Gwadar and Port Qasim. The first phase of the project, already underway, is expected to create around10,000 construction jobs and around 3,500 direct long-term jobs. Barrick Gold’s “local-first” hiring policy signals progress in this direction, with 75 per cent of the workforce being hired from Balochistan. In the end, the push for such practices to become standard across the sector will inevitably shape just how much leverage Pakistan can extract from its own resources.
Beyond equitable employment, there is also scope to strengthen downstream capacity and generate more value from Pakistan’s domestic resources. Exporting semi-finished rather than raw materials, in line with the government’s stated intention to discourage unprocessed ore exports, would generate higher revenues, in addition to developing specialised skills among the workforce. This hinges on embedding technology transfers and training provisions into contracts, so that domestic expertise can grow and reliance on external contractors gradually declines. As Reqo Diq project manager, Tim Cribb recently noted, the lack of locally available large-scale mining equipment remains a major challenge, one reason for bringing major suppliers into Pakistan. Companies like Japan’s Komatsu are supplying Reqo Diq under a $440 million deal, and setting up a local training subsidiary along with Metso, Caterpillar and Weir to fill this gap. The involvement of multinationals is a reminder of just how much capacity Pakistan still needs to build in mining technology if it is to realise the sector’s promise.
On the flipside, Balochistan holds most of Pakistan’s mineral wealth, but water is in short supply, and groundwater depletion is accelerating in key districts. Over 60 per cent of the populationlacks access to safe drinking water. Locals point to places like Talaap, a small town in Balochistan that has supplied water to the Saindak project for years, as evidence that extractive technologies can drain reserves without benefit to nearby communities. Companies have clarifiedthat newer ventures will rely on saline aquifers with no competing users, but concerns persist in a region where development indicators remain low. Balochistan has the country’s highest poverty rate, with 70 per cent of the population living below the poverty line, a provincial literacy rate of just 54.5 per cent, and healthcare systems lagging, with only 0.3 hospitals per 1,000 people. Security is a further concern in the area, and while mining firms are accustomed to operating in challenging environments, Pakistan has promised to provide security to mineral investors.
Given the complex environment of the operating areas in these provinces, it is all the more important that development benefits accrue among local communities. Some CSR initiatives undertaken by the Reqo Diq Mining Company (RDMC) suggest that focused local engagement can help lay the groundwork for improving conditions on the ground. In Nok Kundi, for example, RDMC has established a 10-bed mother and child healthcare unit – the first facility in the area to offer dedicated maternal services. Mobile health units and dispensaries visit nearby settlements weekly, and four reverse osmosis plants have been installed to provide clean drinking water to over 30,925 households. Vocational training centres in Humai and Nok Kundi have trained more than 144 young people in masonry, computer use, and vehicle operation, with more than 40 already hired by RMDC or its contractors. Scaling up such progress will depend on similar commitments from other investors and steady government support to embed these practices more widely across the sector.
The environmental dimension is hard to ignore. Pakistan, already ranked among the most climate-vulnerable countries, must also reckon with risks to fragile ecosystems through land degradation, water contamination and habitat disruption. Many mineral-rich regions, including Balochistan and KP, already face acute water stress, raising questions about whether the industry’s water- and energy-intensive processes could make a bad problem worse. To its credit, Pakistan does have a regulatory framework in place: mining projects are required to file an Initial Environmental Examination (IEE) or a full Environmental Impact Assessment (EIA) with the relevant provincial agency before operations can begin. These assessments include mitigation plans and monitoring plans under an Environmental Management Plan (EMP), and provinces are bound to review them within four months, or 90 days, in the case of Balochistan. In protected forest areas, developers must also give a 30-day notice to the Forest Officer and stick to tight land-use rules. But enforcement is where the cracks show, and there are numerous instances where regulatory provisions exist, but fail to translate into action on the ground; the 2023 Punjab State of the Environment Report notes poor compliance across brick kilns and pharmaceutical plants, and banned polythene bags still make up over 60 per cent of household waste in Islamabad. If environmental oversight struggles at this scale, it is difficult to see how frameworks on mineral extraction might fare much better. The recent proposal to dissolve the Pakistan Environmental Protection Agency (Pak-EPA), citing bureaucratic inefficiency and limited impact, raises further concern about Pakistan’s regulatory capacity at a time when stronger environmental governance, not retrenchment, is critical.
As Pakistan sets clearer standards for its mining sector, there are lessons to draw from economies that have managed to grow without exhausting their environments. Rio Tinto’s “Mine of the Future” in Western Australia, for example, has cut emissions and fuel use through automation, remote operations, and smarter resource management, lowering its environmental footprint even as production grows. Its approach shows that economic growth and responsible use of land, water and energy can go hand in hand when supported by investment in technology and planning. This is especially relevant as global demand for critical minerals continues to rise, driven by electric vehicles, batteries and renewable energy systems. According to theInternational Energy Agency, demand could climb by 60 per cent by 2040 if climate goals are met. For Pakistan, with reserves estimated to be spread across 230,000 square miles, this is a rare opportunity to secure a meaningful place in global supply chains, if it can invest early in greener practices.
The governance of Pakistan’s mineral wealth cannot be separated from questions of global demand, strategic dependencies, and economic leverage. As the outcome of the recent trade tensions between the U.S. and China has shown, countries that fail to align their domestic extraction policies with international market realities risk becoming passive exporters rather than active players. In Pakistan’s case, this means maintaining vigilance and balance in designing mining frameworks that attract investment without compromising either operational agility or sovereign interests. Islamabad also needs to ensure that resource governance and predictable investment ecosystems are responsive to both global power shifts and local development needs. The policy drift and project slowdowns that have bogged prior ambitions should all be part of the lessons-learned toolkit. Building new infrastructure, connecting complex institutional dots, and driving momentum will need the intervention of government and other stakeholders. Ultimately, the sustainability and success of such large greenfield initiatives in any region or province of Pakistan will depend on a clear-eyed commitment to inclusive development that benefits the economy and communities alike.
