Reko Diq: Value of Pakistan's Copper Deposits Soars Amid Surging Demand

[Riaz Haq]

The value of copper assets has surged 31.7% in the last six months, significantly surpassing the rise in tech stocks (20.2%) and gold (20%) in the same period. Growing demand for copper is mainly driven by increasing adoption of green technologies such as electric vehicles and growth in AI (artificial intelligence) data centers using the latest Nvidia chips. At current prices, the value of copper and gold deposits at Reko Diq in Balochistan province is nearly $200 billion.

Comparing Asset Price Appreciation Over Last Six Months. Source: Wa...

Interest in developing Pakistan's Reko Diq copper and gold mines has also grown with widening gap between demand and supply of the metals. Dennis Mark Bristow, CEO of the Canadian mining giant Barrick Gold Corporation, has said the Reko Diq mining project in Balochistan province is “absolutely on track” and would be able to begin production by 2028, according to news reports. Bristow said Reko Diq is an “enormous project” in which the company would be investing $10 billion.

Growing Copper Supply-Demand Gap

Clean Energy Driving Global Copper Demand. Source: IEA Via Nikkei

New infrastructure development is underway to connect Reko Diq with the national highway network. Barrick is building a link road to connect the mining project site with N-40 Quetta-Taftan national highway. Barrick chief says the company looks at the project as a “multi-generational investment,” adding that it wants all children under the age of 10 in the Reko Diq region to be in school by the end of 2024.  Similar infrastructure projects to support coal mining in Thar desert have brought socioeconomic improvements and human development for the local villagers. 

Reko Diq project is expected to employ thousands of workers during and after completion. Barrick has interviewed over 3,000 applicants from universities across Pakistan and selected 9 Baloch citizens, four women and five men, according to Bristow. “And they are now working on our mines in Argentina and they will go through a program of development and gaining experience from all our different operations around the world,” Bristow said, saying 30 such graduates would be employed in training programs with the company by the end of the year.  By Jan-Feb next year (2025), he said, 1,200 people would be employed, which would increase to 6,000 by 2026. “By the time we peak production, we will have employed 10,000 people,” Bristow told Arab News. 

Canadian mining giant Barrick Gold Corporation and the governments of Pakistan and Balochistan reached a deal to restart the Reko Diq mining project back in March 2022 on former Prime Minister Imran Khan's watch. Reko Diq is the world's 4th largest undeveloped copper-gold porphyry deposit with over 14 million tons of copper (worth $142 billion at $9,464 per ton) and 21 million ounces  (worth $50 billion at $2,367 per ounce) of gold. 

The project was abandoned in 2011 after a Pakistan Supreme Court bench headed by former Chief Justice Iftikhar Chaudhry canceled the mining license granted to Tethyan Copper Company (TCC), a joint venture between Canada's Barrick Gold and Antofagasta Minerals of Chile. TCC challenged the cancellation in the International Centre for Settlement of Investment Dispute (ICSID). On July 12, 2019, the ICSID Tribunal awarded TCC $5.894 billion plus interest of  $700,000 per day in damages against Pakistan. As of 1 March 2022, the award stood at $6.5 billion. The new agreement between Barrick Gold Corporation  and the governments of Pakistan and Balochistan does away with this award. It also increases the share of the project owned by Pakistan from 25% to 50%, brings in $10 billion investment, the largest single investment in the country, and creates 8,000 jobs. Reko Diq is part of the Tethyan metallogenic belt (TMB) that extends from the Balkans in Europe to Pakistan including Serbo-Macedonian, Anatolian, Takab, Kerman and Chagai metallogenic belts. It is believed to be rich in copper and gold deposits.

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[Riaz Haq]

Copper prices stay firm after hitting all-time high on AI demand, China recovery - Nikkei Asia



https://asia.nikkei.com/Spotlight/Market-Spotlight/Copper-prices-st...


Copper prices are expected to remain elevated for some time as traders and investors assess whether strong demand from data centers to power artificial intelligence, and from clean energy projects, materializes.

"Doctor Copper," as it is sometimes called, is seen an indicator of the health of the global economy. Consumption of the nonferrous metal often rises along with demand for infrastructure, which in turn increases as economies grow.



The benchmark three-month forward contract for copper rose to $11,104.5 per tonne on the London Metal Exchange (LME) on May 20, the highest level ever. It traded above $10,000 on Friday.

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Prices are also being buoyed by predictions of a global push for renewable energy and electric vehicles, as well as more data centers to support the development of artificial intelligence, all of which will require copper.

Industry sources and analysts say the market has been tight in North America and Europe, partly due to demand from the renewable energy industry and electric vehicle manufacturers. In terms of supply, the LME barred the trading of newly smelted Russian copper in April. Miners have struggled to meet production targets and bring on new projects onstream, such as with the Cobre Panama mine, which halted operations due to protests in the Central American country over environmental damage and land sales to foreign companies.

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With China's economy slow to take off, the Asian market is not as tight as in the West. "We are seeing current demand from China softer than anticipated," said Joannides. End-use buyers are "taking a wait-and-see attitude by delaying placing orders with the currently elevated copper prices," she said.

Copper prices are widely expected to stay elevated. Wood Mackenzie expects a supply shortfall in the market this year. Australia's Macquarie Group forecasts an average price of $10,500 per tonne in the October to December quarter, after easing to $9,800 in July to September. Goldman Sachs forecasts a surge to $12,000 per tonne by the end of the year.

Demand arising from the "green transformation" and electrification, especially in emerging markets, is "offsetting the negative impact of China's economic slowdown," said Norinobu Ozawa, general manager of the nonferrous metal and ores trading department at Japanese trading house Marubeni. In 2024, "There are limited factors that can ease the supply-demand tightness in the short-term," in the face of a potential increase in Chinese demand, he said.

Over the longer term, Japanese trading houses expect demand growth to outpace supply. While copper demand from China is not as strong as in the past, "it is likely to continue growth at annual rates of about 2.5% to 3% over the medium and long-term," said a trader at Mitsui & Co., a Japanese trading house.

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Macquarie predicts global demand for refined copper will rise 19% between 2023 and 2030, with China's own demand rising at 16% and the country remaining the world's largest copper market. India's demand will rise the fastest, at 61%, while demand from the rest of Asia is expected to grow by 25%. This takes into account demand related to data centers, the financial services company said.

Copper demand for data centers is estimated as about 200,000 tonnes, out of a total demand of about 25 million tonnes, according to Marubeni's Ozawa. "While this sounds like a small volume, it could be equivalent to one refinery" by 2030 onward, impacting the market, he said.

According to the International Energy Agency, clean energy will be a key driver of copper demand if the global energy sector is to reach carbon neutrality by 2050. The agency predicts copper demand for other uses will stay more or less flat until 2040.

[Riaz Haq]

Reko Diq Company inaugurates third RO plant in Chagai

https://www.dawn.com/news/1841588


The Reko Diq Mining Company (RDMC), which is developing the copper and gold project in the Chagai district, has inaugurated another reverse osmosis (RO) plant in Nok Chah village as part of its efforts to provide potable water to local communities.

A spokesman for RDMC said on Sunday that this is the third RO plant the company has established in the district, with the first two located in the villages of Humai and Mashki Chah.

He noted that all RDMC-installed RO plants are powered by solar energy, ensuring sustainability despite the region’s power distribution challenges.

The newly inaugurated plant in Nok Chah uses cutting-edge technology to produce 5,000 gallons of safe, clean drinking water daily.


Before the installation of the Nok Chah plant, the total dissolved solids (TDS) levels in local water wells exceeded 5,200, making the water unsafe for consumption.

The RO plants have reduced TDS levels to a safe range of 200 to 230, meeting health standards for human consumption.

Residents of Nok Chah village and nearby hamlets previously faced significant challenges in accessing potable water and were forced to use water with unsafe TDS levels, exposing them to various health risks.

[Riaz Haq]

Barrick Gold to Use Fleet Space’s Mineral Exploration Tech at Reko Diq Project - Via Satellite

https://www.satellitetoday.com/connectivity/2024/07/10/barrick-gold...


International mining company Barrick Goldis using a Fleet Space Technologies solution for copper exploration at its Reko Diq project in Pakistan.

Barrick Gold is using Fleet Space’s ExoSphere product to generate 3D subsurface maps to find zones of interest for copper mining. ExoSphere combines Fleet Space’s satellite network in Low-Earth Orbit and seismic sensors and rapid data processing to improve mineral exploration.

The Reko Diq project, located in the Chagai mountain range, is one of the largest undeveloped copper-gold projects in the world. Barrick Gold plans to begin production there in 2028. Fleet Space said this solution will support ESG objectives at the site.

“By applying the latest innovations in space, AI, and 3D multiphysics to copper exploration, we demonstrate a more sustainable, scalable path to achieve the copper supply needed for our clean energy future, in alignment with the United Nations’ Sustainable Development Goals (SDGs),” commented Flavia Tata Nardini, co-founder and CEO of Fleet Space Technologies.

[Riaz Haq]

Why No Major Oil Company Is Rushing To Drill Pakistan's Huge Oil Reserves | OilPrice.com

Pakistan has discovered potentially massive oil and gas reserves, but experts caution that exploitation will take years and significant investment.
Security concerns and high costs are deterring international oil companies from pursuing exploration in Pakistan, leaving China as the most likely partner for future development.
Despite the discovery, Pakistan continues to face an energy crisis, with Iran reportedly smuggling fuel into the country, further complicating the situation.

https://oilprice.com/Energy/Energy-General/Why-No-Major-Oil-Company...

A long exploration effort has led to the reportedly massive discovery of oil and gas reserves in Pakistan’s territorial waters, a cache so large that it is said it could change the economic trajectory of the beleaguered country. But no one is rushing to drill in Pakistan, and experts are concerned about jumping the gun.

According to DawnNewsTV, the three-year survey was undertaken to verify the presence of the oil and gas reserves. “If this is a gas reserve, it can replace LNG imports and if these are oil reserves, we can substitute imported oil,’’ former Ogra (Oil and Gas Regulatory Authority) member Muhammad Arif told DawnTv.

However, Arif has cautioned that it would take years before the country could be able to exploit its newfound fossil fuel resources, adding that exploration alone required a hefty investment of around $5 billion and it might take four to five years to extract reserves from an offshore location.

Pakistan covers 29% of gas, 85% of oil, 50% of liquefied petroleum gas (LPG), and 20% of coal requirements through imports, according to the Economic Times. Pakistan's total energy import bill in 2023 clocked in at $17.5 billion, a figure projected to rise to $31 billion in seven years, as per an Express Tribune report. The new discovery is no doubt a big boon for the struggling economy.

Since 2021, Pakistan has been hit with mounting debt and skyrocketing inflation, with inflation hitting nearly 30%. Meanwhile, the economy only expanded 2.4% in 2023, missing the 3.5% target. This has forced the country to rely heavily on foreign aid, which is often elusive. In January this year, Pakistan sought $30 billion for gas production to cut its fuel import bill.

According to Pakistan’s Energy Minister Mohammad Ali, Pakistan has 235 trillion cubic feet (tcf) of gas reserves, and an investment of $25 billion to $30 billion would be enough to extract 10% of those reserves over the next decade to reverse the current declining gas production and replace the import of energy.

The persistently high inflation could push Pakistan over the edge, "There is no precedent in Pakistan’s history of such a long and intense spell of inflation gripping the country," columnist Khurram Husain has written in Dawn.

A Game-Changer? Maybe.

Although Pakistan's hydrocarbon resources are yet to be quantified, some estimates suggest that this discovery constitutes the fourth-largest oil and gas reserves in the world. This could be a potential game-changer in the region’s energy flows.

Back in July, S&P Global Commodity Insights reported that four largely unexplored sedimentary basins in India could hold up to 22 billion barrels of oil. In effect, lesser-known Category-II and III basins namely Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan contain more oil than the Permian Basin which has already produced 14 billion of its 34 billion barrels of recoverable oil reserves.

[Riaz Haq]

Why No Major Oil Company Is Rushing To Drill Pakistan's Huge Oil Reserves | OilPrice.com
https://oilprice.com/Energy/Energy-General/Why-No-Major-Oil-Company...
Rahul Chauhan, an upstream analyst at Commodity Insights, emphasized the potential of India’s unexplored Oil & Gas sector, "ONGC and Oil India hold acreages in the Andaman waters under the Open Acreage Licensing Program (OALP) and have planned a few significant projects. However, India still awaits the entry of an international oil company with deepwater and ultra-deepwater exploration expertise to participate in current and upcoming OALP bidding rounds and explore these frontier regions," he has declared.

Currently, only 10% of India’s 3.36 million sq km wide sedimentary basin is under exploration. However, Petroleum Minister Hardeep Singh Puri says that that figure will jump to 16% in 2024 following the award of blocks under the Open Acreage Licensing Policy (OALP) rounds. So far, OALP has resulted in the award of 144 blocks covering about 244,007 sq km. Under OALP, India allows upstream exploration companies to carve out areas for oil and gas exploration and put in an expression of interest for any area throughout the year. The interests are accumulated thrice a year following which they are put on auction. According to Puri, India’s Exploration and Production (E&P) activities in the oil and gas sector offer investment opportunities worth $100 billion by 2030.

So why is no one rushing to Pakistan to drill?

Shell announced it was selling its Pakistan business stake to Saudi Aramco in June last year, and an auction for 18 oil and gas blocks at the same time last year got a muted response from international bidders, at best. No international companies even bid on 15 of the blocks, according to The Nation.

In July, the country’s Petroleum Minister, Musadik Malik, told a parliamentary committee that no international companies were interested in offshore oil and gas exploration in Pakistan,and those in the country largely had the exit door in view.

It comes down to security, and risk versus reward with Malik explaining to the committee that the cost of security is a major deal-breaker because “in areas where companies search for oil and gas, they have to spend a significant amount to maintain security for their employees and assets”. And security is provided by Pakistan, which has not been up to the task.

In March this year, five Chinese engineers were killed in a suicide attack in Pakistan’s northest, when a vehicle rigged with explosives rammed into a bus transporting staff from Islamabad to the giant Dasu dam project in the Khyber Pakhtunkhwa province. The project is part of the $62-billion China-Pakistan Economic Corridor (CPEC). This incident sparked a series of temporary shut-downs across other projects, as well.

Earlier that same month, insurgents attacked Chinese assets in Pakistan’s southwest, storming the Gwadar Port Authority complex, which is run by China. The attacks were perpetrated by the Balochistan Liberation Army (BLA), separatists fighting for an independent Balochistan, as reported by the Lowy Institute.

Essentially, what this means is that it will be China or bust for Pakistan, as state-owned or state-controlled Chinese explorers have a vastly different appetite for risk. And these massive reserves are not likely to get out of the ground without Aramco showing more desire or the Chinese stepping in, for which discussions are already underway, according to Malik.

In the meantime, Iran is said to be smuggling a billion dollars in fuel into Pakistan every year, as the country’s oil and gas crisis emboldens the black market trade.

[Riaz Haq]

Saudi Arabia offers 15% investment in Pakistan’s Reko Diq mining venture

https://www.arabnews.com/node/2571377/pakistan

Reko Diq in Pakistan’s southwest is considered one of the world’s largest undeveloped copper and gold resources
State-owned media says Pakistan expects up to $5 billion of Saudi investment in mining, agriculture by June 2025
ISLAMABAD: Saudi Arabia has offered a 15 percent investment in the Reko Diq copper and gold mine project in Pakistan’s southwestern Balochistan province, according to Pakistani state-owned media on Saturday.
Reko Diq is considered one of the world’s largest undeveloped copper and gold resources, primarily operated by Canada’s Barrick Gold, which holds a 50 percent stake in it.
The remaining stake is owned by three federal state-owned enterprises and the Balochistan provincial government, though Pakistan has also invited Saudi Arabia to invest in the project.
“Saudi Arabia has offered fifteen percent investment in Reko Diq Mining project,” the Radio Pakistan said in one of its reports. “The Kingdom has also offered grants to build road infrastructure around the Reko Diq project.”
“Special Investment Facilitation Council (SIFC) has approved the structure of the offer but the final decision has been left to the Cabinet Committee on Intergovernmental Transactions,” it added.
Pakistan set up the SIFC, a civil-military hybrid body, last year in June with the sole purpose of reviving the frail national economy, dented by low foreign exchange reserves, currency depreciation and record inflation.
Barrick Gold’s top official, Mark Bristow, has also acknowledged the Saudi interest in the project, saying his company would not dilute its equity.
However, he added that Barrick Gold would not oppose any decision by the Pakistan government to sell part of its stake to Saudia Arabia.
Radio Pakistan said the government in Islamabad expects up to $5 billion investment in the mining and agriculture sector by June next year.