Recent reports of security concerns raised by Reko Diq Mining Company (RDMC), following the perceived slowdown of the China-Pakistan Economic Corridor (CPEC) projects in the region, underscore the risks of investing in Balochistan’s mineral-rich yet volatile landscape.

“Mark my words, regardless of whether the additional security budget is justified, even if the government fulfils the Frontier Corps’ (FC) financial demands for guarding the Reko Diq Project, the security challenges will persist. In my view, the issue is fundamentally political and beyond the mandate of any security force,” remarked an executive from a local mining company with experience in Balochistan.

“Lasting peace and a truly investor-friendly environment will only be achieved by respecting the aspiration of the local people, addressing their grievances with empathy and taking meaningful steps to earn their trust,” he added.

Independent experts share this view. “While involving the Balochistan government in key mineral projects is necessary, it has proven insufficient. Gaining the trust of the province’s people is essential. Heavy-handed tactics and suppression of dissent have failed, and despite expensive security operations, Pakistan’s least developed province remains inhospitable to investors.

Stakeholders maintain positive outlook as alleged reports of project delays and financial slowdown surface

Security measures alone have not created a business-friendly environment. It’s time to reassess the strategy for Balochistan, if not for its alienated people, then at least for investors counting on stability,“ noted a keen observer, referring to the provincial government’s 25 per cent stake in the gold and copper project.

Citing the sensitivity of the matter, key stakeholders, including the company involved, the Special Investment Facilitation Council (SIFC), and the federal and Balochistan government officials and experts were reluctant to comment on record. Senior government functionaries and SIFC leadership expressed unease over media reports on the issue, dismissing concerns about investor discomfort, whether from China or Canada’s Barrick Gold, as unfounded.

“If you’re interested in writing about Pakistan’s mining potential, the government is organising a major investors’ conference to showcase opportunities and attract both local and foreign mining companies. We are happy to share details on participants and session agendas.

“There’s no need to make an issue out of routine matters, such challenges arise and are resolved through normal back and forth. I can assure you that Barrick Gold, which holds a commanding stake in the Reko Diq Mining Company, remains perfectly confident in our commitment to facilitating the project in every possible way,” remarked a senior source familiar with the Reko Diq gold and copper project. The comment came in response to a query regarding delays in the federal government’s pledged fund transfers for the project’s security arrangements.“

Barrick Gold and the Ministry of Interior had not responded to queries regarding the current status of security arrangements with the FC and Levies by the time this report was filed.

The government is organising a major investors’ conference to showcase opportunities and attract both local and foreign mining companies

Earlier last week, alleged reports surfaced that RDMC had conveyed serious concerns to the Prime Minister’s office over the federal government’s failure to transfer pledged funds under the Security Services Framework Agreement (SSFA). Sources familiar with the matter revealed that, according to RDMC, this delay has led to an additional security cost of $390,000.

Under the terms of the SSFA and the memorandum of understanding, the mining company was required to provide a one-time grant to the FC for security enhancements. After the grant was deposited, a summary was submitted to the Finance Division requesting the disbursement of Rs2.8 billion for additional security expenses. However, the Finance Division approved only Rs1.9m for essential procurement, leaving an outstanding payment of Rs848.6 million to the FC.

Senior sources in Islamabad revealed that the Interior Division requested a technical supplementary grant of Rs1.8bn to cover the cost of enhanced security arrangements for the critical mining project. However, the Finance Division approved only Rs257m, a fraction of the requested amount, citing the FC’s existing budget. Insiders noted that the Finance Division sought further deliberations and demanded a detailed breakdown of the intended expenses before approving additional funds.

Sources in the SIFC criticised the Finance Division’s delay in disbursing funds and defended the need for additional resources to ensure foolproof security for foreign investors. “A dedicated force of 700 personnel has been deployed to secure the Reko Diq mining site, along with its professionals, staff and labour. Operating in Balochistan’s challenging terrain is a specialised task that entails additional cost,” explained a security official, dismissing the argument that providing security to people and businesses falls within the FC’s standard mandate.

Published in Dawn, The Business and Finance Weekly, February 24th, 2025