The global demand for copper is expected to surge on the back of the electrification of mobility, the surge in renewable energy projects, and an insatiable demand for electricity to meet the growing demand for computing power. All such advancement remains contingent on the availability and supply of copper, which is expected to remain constrained in the near term.

In an exclusive interview with the President and CEO of Barrick Gold, Mark Bristow suggests that Rekodiq remains the largest untapped resource of copper in the world. The history of Rekodiq has been marred by political turmoil, and judicial overreach, but as things are put in motion, as work progresses, the mine may start producing copper and gold by 2028 — right when the market for copper is at its tightest.

Barrick Gold estimates that an initial capital expenditure of $5.5 billion will be incurred to develop the first phase of the mine, which may be referred to as a starter mine, that can produce 200,000 tonnes of copper concentrate, and 250,000 ounces of gold annually. A subsequent expansion may call for capital expenditure of another $3.5bn, which would double the size of the mine to 400,000 tonnes of copper and 500,000 ounces of gold.

Rekodiq has one of the better grades of copper globally at 0.53 per cent, meaning that for every tonne of ore (or raw rock) that is mined, five kilograms of copper is extracted. Following the expansion of the subsequent phase, the mine would provide over 90 million tonnes of ore annually.

The mine may start producing copper and gold by 2028 — right when the market for copper is at its tightest

The output of a copper mine is copper concentrate, which has to be refined to attain usable copper. It is estimated that 90pc of the price for refined copper accounts for the copper concentrate, while the remaining is effectively the cost of energy. So, the lower the cost of energy, the more competitive a refinery can be.

In the case of Rekodiq, the mine would effectively be exporting all of its output, as copper refineries do not exist in the country. At current prices of roughly $7,000 per tonne of copper concentrate, this would result in exports of $2.8bn annually for a mine producing 400,000 tonnes of copper.

Similarly, assuming a gold price of $1,800 per ounce, this would be an additional export of $450m. Cumulative exports from the first phase of the project would be in excess of $3bn annually. However, this is potentially just the beginning.

As the mines scale up, so does overall production and the ability to benefit from economies of scale. At around 600,000 tonnes of production, it will make sense to establish copper refineries in the region to further add value to produce and export value-added output. More importantly, a carefully calibrated industrial policy would double down on forward integration by establishing downstream industries that utilise copper as a raw material.

A transition from exporting low-value-added raw material in the form of copper to an industry exporting high-value-added goods remains critical to avoid the resource curse. The inability to have a coherent industrial policy and being comfortable with inefficient utilisation and pricing of natural resources has resulted in criminal wastage of natural gas, which could have been converted into an exportable surplus. A similar strategy of inaction in the copper industry can further compound the resource curse.

Given the remote location, logistics for the mine would be managed through a railway track that is being established in partnership with Pak­istan Railway. Important to note here is that railway tracks have been in place for more than a century, and the inability to use them for economic benefit is yet another illustration of a resource or infrastructure curse. The railway tracks would essentially entail moving mining supplies to Rekodiq from Karachi and eventually exporting copper concentrate and gold from the mine to Karachi for export.

Pakistan is on the verge of doing something that was done more than 150 years ago in other countries: the act of moving bulk goods via rail for efficient logistics. The recent development of railway tracks connecting Thar to Chhor will unlock the potential of Thar Coal to be used within the country and potentially for exports.

Similarly, the tracks can also be utilised to move copper. Effectively, this creates an environment where, through some policy interventions, we may start moving more goods through rail rather than through an inefficient and expensive trucking network.

The electricity requirements of the mine are expected to exceed 300MW and are only expected to grow as the area scales up. Initially, the mine is expected to be powered by a mix of 150MW power plants fired by residual fuel oil (RFO) and solar, with the potential for adding wind to the mix as well. The country already has surplus power, and not many takers (at current prices) — and there exists a case of connecting the mine to the transmission grid for evacuation of power.

However, at this scale, it may not be economically feasible. Once mines scale up and power demand increases, there exists a strong case for connecting to the national grid (after hoping that the stability of the grid will improve by that time).

Another option is to use indigenous Thar Coal to fire up power plants, utilising indigenous resources in the process and avoiding imported RFO. The same can be transported through railway tracks, which would eventually be in place once commercial production begins.

However, it is important to have concrete plans regarding how value will be added at different stages. We may start excavating and exporting copper within a few years, but that should only be the beginning.

Establishing an industrial base that utilises indigenous resources for industrial growth and competitive exports is what any mid- to long-term plan should envision. The country needs an industrial policy, broken down into tactical, mid-term, and long-term goals. Winging may not be a strategy that works for long anymore.

The writer is the CEO of National Credit Guarantee Company Ltd, a member of the Thar Coal Energy Board and an assistant professor of practice at IBA, Karachi

Published in Dawn, The Business and Finance Weekly, January 20th, 2025