Pakistan

Pakistan Sells 15% Stake in Reko Diq Project to Saudi Arabia Following Barrick Gold’s Refusal

Pakistan has decided to sell a 15% stake in the Reko Diq project to Saudi Arabia. This decision follows Barrick Gold Corporation's refusal to divest its stakes in the project, necessitating a shift in ownership dynamics.

As a consequence of this deal, Pakistan's overall shares in the Reko Diq project are set to decrease from 50% to 35%. Notably, Balochistan's share remains unchanged at 25%, emphasizing the province's continued significance in the venture. However, the federal government's State-Owned Enterprises (SOEs) stakes will be reduced from 25% to 10%, reflecting a move towards increased private sector participation.

Despite becoming a minority shareholder, Pakistani officials express confidence in the country's ability to manage joint ventures with international partners, drawing parallels with past successful ventures such as PTCL and the banking sector. Moreover, existing clauses in the Reko Diq arrangement provide assurances against unilateral decisions by Barrick Gold, safeguarding Pakistan's interests in the project.

Amidst a challenging economic climate characterized by a declining investment-to-GDP ratio, the involvement of Saudi Arabia in the Reko Diq project is anticipated to inject optimism into Pakistan's investment climate. This partnership holds the potential to attract additional foreign investment and stimulate economic growth.

The negotiation process between Pakistan and Saudi Arabia has not only focused on the sale of shares but also on establishing a robust legal framework and dispute resolution mechanisms for the Reko Diq project. The signing of the Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) plays a pivotal role in this regard, providing avenues for international arbitration in case of investment disputes.

Saudi Arabia's involvement in the Reko Diq project signifies its growing interest in Pakistan's mining sector and underscores the strategic importance of the venture for both countries. Additionally, discussions indicate the potential for Saudi Arabia to increase its stakes in additional blocks of the project in the future, promising further economic benefits for Pakistan.

The sale of shares to Saudi Arabia represents an important milestone in the Reko Diq project, offering promising prospects for Pakistan's economic development and reinforcing its position as an attractive destination for foreign investment.

By welcoming Saudi Arabia as a key investor, Pakistan not only diversifies its investment portfolio but also enhances its reputation as a favorable destination for foreign investment. Moreover, this partnership is expected to foster knowledge exchange, technological advancements, and job creation, thereby contributing to the socioeconomic progress of Pakistan.

Overall, the sale of shares to Saudi Arabia holds immense promise for the Reko Diq project and underscores Pakistan's commitment to fostering mutually beneficial partnerships for sustainable development.

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