OGDC raises funding for Reko Diq project
The board of directors of Oil and Gas Development Company (OGDC) has approved an increase in the firm's funding commitment to $627 million, including the project financing cost, which reflects its proportional share of total capital investment in the multibillion-dollar Reko Diq copper and gold mining project.
The approval came in the wake of completion of an updated feasibility study on the Reko Diq project, located in Chagai, Balochistan.
The increase in investment takes into account the estimated rise in copper and gold prices, which will help offset higher project costs. Equity contribution by company shareholders, after considering project financing, is expected to be $349 million (to be adjusted for actual project financing costs and inflation).
OGDC on Tuesday announced the completion of the updated feasibility study, marking a significant milestone in Pakistan's journey towards unlocking one of the world's largest copper and gold reserves.
OGDC holds an 8.33% shareholding in the Reko Diq project as part of a collective 25% stake held by three Pakistani state-owned enterprises, which also include Pakistan Petroleum Limited and Government Holdings (Private) Limited. The interest of state units is managed through Pakistan Minerals (Private) Limited. Out of the remaining 75% stake, 25% is held by the government of Balochistan (15% on a fully funded basis through Balochistan Mineral Resources Limited and 10% on a free carried basis) and 50% is with Barrick Gold Corporation – the operator of the project.
The updated feasibility study outlines a mine life of 37 years, divided into two phases. Phase-I entails an estimated capital outlay of $5.6 billion (excluding financing costs and inflation) and is expected to commence operations in 2028.
A limited-recourse financing facility of up to $3 billion is being pursued, with the remaining funding to be provided through shareholder contribution. Negotiations for project financing are ongoing.
The project will leverage five of the 15 currently identified porphyry surface expressions under the current mining lease, which highlights a substantial future growth potential.
Phase-II is planned to be funded through a mix of revenue generation from the project, additional financing and shareholder contribution (if required).
Under the updated feasibility study, phase-I is planned to process 45 million tonnes of mill feed annually from 2028. By 2034, phase-II is planned to double the processing capacity to 90 million tonnes per annum.
Based on the existing reserves, the Reko Diq project is expected to churn out 13.1 million tonnes of copper and 17.9 million ounces of gold over the life span of the mine (on a 100% basis).
The completion of the feasibility study represents a major achievement for the Reko Diq project, reinforcing its potential to generate long-term economic benefits, create jobs and ensure enhanced revenue streams for Pakistan.
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