The world’s economy is in a period of major transformation. Whilst securing oil and gas reserves was a central element of energy security, controlling access to critical minerals, such as copper, lithium, cobalt, and rare earths, is becoming a greater part of the struggle for dominance in the twenty-first century. China has established near-monopoly control of mineral refining and processing, leaving the United States and its allies as vulnerable as they were to Middle Eastern petroleum in the past. Long considered a backseat player in terms of geopolitical significance in US policy calculations, Pakistan has now become a game-changer in this minerals game. Mineral reserves valued at $6-$8 trillion, containing world-class deposits of copper, lithium, cobalt, nickel, and rare earth elements.
The Mineral Cooperation Agreement between Pakistan and the United States of America, signed in February 2026, is more than a mere commercial treaty; it is a testament to the potential for the growth of bilateral relations and represents a significant milestone in the development of economic ties between the two nations. It marks a shift in the United States-Pakistan strategic relationship, from security cooperation built in the wake of the War on Terror to economic statecraft based on resource security and industrial resilience. If done in a disciplined way, it has the potential to transform Pakistan. In the intense international struggle for supremacy over minerals, it is a source of opportunity and danger for the United States.
The February 2026 Agreement: Specifics and Strategic Architecture
The centrepiece of renewed US-Pakistan minerals cooperation is the $1.25 billion to $1.3 billion financing package, authorised by the US Export-Import Bank in February 2026 and announced during the inaugural Critical Minerals Ministerial in Washington. The funding is earmarked primarily for the Reko Diq project in Balochistan Province, a 50-50 joint venture between Canada’s Barrick Gold and Pakistani stakeholders (federal and provincial governments), valued at approximately $3.2 billion to $7 billion in total capital expenditure. The financing package is expected to unlock an additional $2 billion in US equipment and service exports to the project, reflecting a comprehensive commitment to technology transfer and industrial participation.
Reko Diq projections are ambitious. First commercial production is scheduled for late 2028. Once operational at full capacity, the mine is projected to yield approximately 200,000 metric tons of copper annually in its initial phase, scaling to 400,000 tons or more in subsequent phases, positioning it within the world’s top ten copper producers. Annual gold production is estimated at significant yields, with total revenue projections reaching $4 to $5 billion per annum once the mine reaches mature operations. These are not speculative figures; they reflect comprehensive geological surveys, metallurgical studies, and market analyses conducted by world-leading mining expertise.
The US motive is clear: diversify supply chains away from China. Under Project Vault, a $10 billion US initiative to rebuild critical‑minerals supply chains, Pakistan offers an alternative source, Gwadar port access, and proximity to Central Asia.
Economic Catalyst: From Extraction to Shared Prosperity
Pakistan’s mining sector contributes just 3% of GDP despite an estimated $8 trillion in mineral wealth. Direct fiscal gains could be substantial: Reko Diq alone is projected to add about $1.2 billion to GDP annually, and national mining revenues could rise from $2 billion today to $6–8 billion by 2030 if lithium, rare earths, and cobalt are aggressively developed. That growth would boost government receipts via royalties (5–10% of gross revenues), corporate taxes, customs on equipment, and state equity returns, giving Balochistan a route to greater fiscal autonomy.
Beyond extraction, the real economic prize is downstream processing. Building smelting, refining, and advanced-materials plants (copper cathodes, lithium hydroxide, rare-earth separation) can multiply value 3–5x, create higher‑paid skilled jobs, and raise export earnings mirroring the missed opportunity in gemstones (reserves ~$450 billion vs. $5.8 million annual exports). Pakistan’s gemstones policy aims for $1 billion in exports in five years by promoting certification, value addition, and entrepreneurship; critical minerals need a similar strategy.
Employment and skills: With 64% of the population under 30 and manufacturing at only 11.9% of GDP, Pakistan needs labor‑intensive, skill‑upgrading industries. Reko Diq could create 5,000–15,000 construction and operational jobs; sector-wide employment might rise from ~300,000 now to 600,000–800,000 by 2030, and downstream industries could add millions of skilled positions. Linking mining expansion to vocational training, STEM reforms, and entrepreneurship in logistics, equipment services, and environmental monitoring will maximise local benefits.
Technology and governance: modern mining’s automation with AI predictive maintenance, autonomous haulage, and drone surveying lets Pakistan deploy world-class, capital‑intensive operations while creating technical roles. Strategic partnerships with institutions in the US, Canada, and allied countries, plus targeted capacity‑building funds and local content rules, can speed technology transfer and industrialisation.
Security: The Persistent Shadow
The Indo–Afghan nexus, backed by hostile intelligence networks, actively foments instability in Balochistan to undermine Pakistan’s economic development. By coordinating cross‑border proxy operations and sustaining friction along the western frontier, this alignment prolongs security burdens, deters foreign investment, and stalls Pakistan’s rising geoeconomic influence.
Balochistan’s mineral potential faces acute security risks that threaten investment and operations. Since 2018, there have been 50+ attacks on mining and critical infrastructure; in January 2026, coordinated BLA assaults killed 36 civilians and 22 security personnel, triggering military operations that reportedly killed 200+ insurgents. Barrick Gold has already delayed Reko Diq from mid‑2027 to late‑2028. Risks extend beyond attacks to espionage, technology theft, and sabotage of roads, power lines, and water pipelines. Operating a single site can require 700+ security staff at an annual cost of $13–14 million, raising investor risk premiums, insurance costs, and financing hurdles.
Global powers view Pakistan’s mineral wealth differently; China sees it as a beneficial supplement; its vast domestic reserves and refining base give Beijing structural independence, whereas Western industries are materially dependent on external supplies. That asymmetry raises the strategic value of Balochistan’s resources for the West and demands a proactive policy to secure access. Unlike rivals who can tolerate prolonged regional friction, Western economies risk supply bottlenecks that would erode long-term technological competitiveness. Allowing adverse actors to deter investment or monopolise access would leave Western markets permanently more vulnerable.
Governance, Environmental, and Social Architecture
Success depends on institutional governance, not geology. Pakistan’s Reko Diq arbitration shows that opaque contracts and regulatory volatility destroy investor confidence. Mitigation requires five concrete measures:
Community revenue sharing: legally binding local development funds (5–10% of net profits), community hiring quotas, local procurement rules, and transparent royalty reporting.
Environmental and water safeguards: compulsory EIAs, mandatory water‑recycling, independent compliance audits, and an autonomous regulator with authority to suspend operations.
Local content and skills: binding localisation targets (60–70% within 10 years) and funded technical‑vocational programs tied to projects.
Transparent public reporting: quarterly publication of royalties, equity returns, and taxes in standard formats, plus independent international audits.
Regulatory stability and legal predictability: adopt a stable Mining Code with fiscal stabilisation clauses, clear environmental enforcement, and enforceable international arbitration clauses to reduce political‑risk perceptions.
Pakistan’s Balancing Act: Between Dragon and Eagle
Pakistan sits between China and the US as competition for critical minerals intensifies. Chinese firms already hold equity in four of the six active critical-minerals projects and take most of Pakistan’s copper for processing through BRI-linked supply chains. Rather than forcing a binary choice, Pakistan can expand partnerships: welcome US and allied capital into Reko Diq and downstream processing while keeping Chinese stakes in other projects; negotiate with China to build local processing and value‑addition facilities instead of exporting raw ore; use investor competition to secure better fiscal terms and technology transfer; and position Pakistan as an independent node serving multiple buyers to protect strategic autonomy.
This requires careful diplomacy and consistent national policy framing minerals as nation‑building, not as choosing patrons. The US should avoid exclusionary pressure; a stable, diversified Pakistani minerals sector serving multiple markets better advances both Pakistan’s and the US’s interests.
How Critical Minerals Could Transform Pakistan’s Economy
The world’s economy is in a period of major transformation. Whilst securing oil and gas reserves was a central element of energy security, controlling access to critical minerals, such as copper, lithium, cobalt, and rare earths, is becoming a greater part of the struggle for dominance in the twenty-first century. China has established near-monopoly control of mineral refining and processing, leaving the United States and its allies as vulnerable as they were to Middle Eastern petroleum in the past. Long considered a backseat player in terms of geopolitical significance in US policy calculations, Pakistan has now become a game-changer in this minerals game. Mineral reserves valued at $6-$8 trillion, containing world-class deposits of copper, lithium, cobalt, nickel, and rare earth elements.
The Mineral Cooperation Agreement between Pakistan and the United States of America, signed in February 2026, is more than a mere commercial treaty; it is a testament to the potential for the growth of bilateral relations and represents a significant milestone in the development of economic ties between the two nations. It marks a shift in the United States-Pakistan strategic relationship, from security cooperation built in the wake of the War on Terror to economic statecraft based on resource security and industrial resilience. If done in a disciplined way, it has the potential to transform Pakistan. In the intense international struggle for supremacy over minerals, it is a source of opportunity and danger for the United States.
The February 2026 Agreement: Specifics and Strategic Architecture
The centrepiece of renewed US-Pakistan minerals cooperation is the $1.25 billion to $1.3 billion financing package, authorised by the US Export-Import Bank in February 2026 and announced during the inaugural Critical Minerals Ministerial in Washington. The funding is earmarked primarily for the Reko Diq project in Balochistan Province, a 50-50 joint venture between Canada’s Barrick Gold and Pakistani stakeholders (federal and provincial governments), valued at approximately $3.2 billion to $7 billion in total capital expenditure. The financing package is expected to unlock an additional $2 billion in US equipment and service exports to the project, reflecting a comprehensive commitment to technology transfer and industrial participation.
Reko Diq projections are ambitious. First commercial production is scheduled for late 2028. Once operational at full capacity, the mine is projected to yield approximately 200,000 metric tons of copper annually in its initial phase, scaling to 400,000 tons or more in subsequent phases, positioning it within the world’s top ten copper producers. Annual gold production is estimated at significant yields, with total revenue projections reaching $4 to $5 billion per annum once the mine reaches mature operations. These are not speculative figures; they reflect comprehensive geological surveys, metallurgical studies, and market analyses conducted by world-leading mining expertise.
The US motive is clear: diversify supply chains away from China. Under Project Vault, a $10 billion US initiative to rebuild critical‑minerals supply chains, Pakistan offers an alternative source, Gwadar port access, and proximity to Central Asia.
Economic Catalyst: From Extraction to Shared Prosperity
Pakistan’s mining sector contributes just 3% of GDP despite an estimated $8 trillion in mineral wealth. Direct fiscal gains could be substantial: Reko Diq alone is projected to add about $1.2 billion to GDP annually, and national mining revenues could rise from $2 billion today to $6–8 billion by 2030 if lithium, rare earths, and cobalt are aggressively developed. That growth would boost government receipts via royalties (5–10% of gross revenues), corporate taxes, customs on equipment, and state equity returns, giving Balochistan a route to greater fiscal autonomy.
Beyond extraction, the real economic prize is downstream processing. Building smelting, refining, and advanced-materials plants (copper cathodes, lithium hydroxide, rare-earth separation) can multiply value 3–5x, create higher‑paid skilled jobs, and raise export earnings mirroring the missed opportunity in gemstones (reserves ~$450 billion vs. $5.8 million annual exports). Pakistan’s gemstones policy aims for $1 billion in exports in five years by promoting certification, value addition, and entrepreneurship; critical minerals need a similar strategy.
Employment and skills: With 64% of the population under 30 and manufacturing at only 11.9% of GDP, Pakistan needs labor‑intensive, skill‑upgrading industries. Reko Diq could create 5,000–15,000 construction and operational jobs; sector-wide employment might rise from ~300,000 now to 600,000–800,000 by 2030, and downstream industries could add millions of skilled positions. Linking mining expansion to vocational training, STEM reforms, and entrepreneurship in logistics, equipment services, and environmental monitoring will maximise local benefits.
Technology and governance: modern mining’s automation with AI predictive maintenance, autonomous haulage, and drone surveying lets Pakistan deploy world-class, capital‑intensive operations while creating technical roles. Strategic partnerships with institutions in the US, Canada, and allied countries, plus targeted capacity‑building funds and local content rules, can speed technology transfer and industrialisation.
Security: The Persistent Shadow
The Indo–Afghan nexus, backed by hostile intelligence networks, actively foments instability in Balochistan to undermine Pakistan’s economic development. By coordinating cross‑border proxy operations and sustaining friction along the western frontier, this alignment prolongs security burdens, deters foreign investment, and stalls Pakistan’s rising geoeconomic influence.
Balochistan’s mineral potential faces acute security risks that threaten investment and operations. Since 2018, there have been 50+ attacks on mining and critical infrastructure; in January 2026, coordinated BLA assaults killed 36 civilians and 22 security personnel, triggering military operations that reportedly killed 200+ insurgents. Barrick Gold has already delayed Reko Diq from mid‑2027 to late‑2028. Risks extend beyond attacks to espionage, technology theft, and sabotage of roads, power lines, and water pipelines. Operating a single site can require 700+ security staff at an annual cost of $13–14 million, raising investor risk premiums, insurance costs, and financing hurdles.
Global powers view Pakistan’s mineral wealth differently; China sees it as a beneficial supplement; its vast domestic reserves and refining base give Beijing structural independence, whereas Western industries are materially dependent on external supplies. That asymmetry raises the strategic value of Balochistan’s resources for the West and demands a proactive policy to secure access. Unlike rivals who can tolerate prolonged regional friction, Western economies risk supply bottlenecks that would erode long-term technological competitiveness. Allowing adverse actors to deter investment or monopolise access would leave Western markets permanently more vulnerable.
Governance, Environmental, and Social Architecture
Success depends on institutional governance, not geology. Pakistan’s Reko Diq arbitration shows that opaque contracts and regulatory volatility destroy investor confidence. Mitigation requires five concrete measures:
Community revenue sharing: legally binding local development funds (5–10% of net profits), community hiring quotas, local procurement rules, and transparent royalty reporting.
Environmental and water safeguards: compulsory EIAs, mandatory water‑recycling, independent compliance audits, and an autonomous regulator with authority to suspend operations.
Local content and skills: binding localisation targets (60–70% within 10 years) and funded technical‑vocational programs tied to projects.
Transparent public reporting: quarterly publication of royalties, equity returns, and taxes in standard formats, plus independent international audits.
Regulatory stability and legal predictability: adopt a stable Mining Code with fiscal stabilisation clauses, clear environmental enforcement, and enforceable international arbitration clauses to reduce political‑risk perceptions.
Pakistan’s Balancing Act: Between Dragon and Eagle
Pakistan sits between China and the US as competition for critical minerals intensifies. Chinese firms already hold equity in four of the six active critical-minerals projects and take most of Pakistan’s copper for processing through BRI-linked supply chains. Rather than forcing a binary choice, Pakistan can expand partnerships: welcome US and allied capital into Reko Diq and downstream processing while keeping Chinese stakes in other projects; negotiate with China to build local processing and value‑addition facilities instead of exporting raw ore; use investor competition to secure better fiscal terms and technology transfer; and position Pakistan as an independent node serving multiple buyers to protect strategic autonomy.
This requires careful diplomacy and consistent national policy framing minerals as nation‑building, not as choosing patrons. The US should avoid exclusionary pressure; a stable, diversified Pakistani minerals sector serving multiple markets better advances both Pakistan’s and the US’s interests.
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