Pakistan's mineral wealth attracts growing U.S. interest amid supply chain diversification efforts

American interest in Pakistan's critical minerals is rapidly moving beyond speculation, with U.S. diplomats confirming that American companies are actively evaluating several mineral projects. This engagement is part of a broader U.S. strategy to diversify mineral supply chains and reduce reliance on China.

The growing U.S. focus has already resulted in a $500 million bilateral agreement and the approval of $1.3 billion in U.S. financing for the Reko Diq project. For Pakistan, this influx of interest presents opportunities beyond capital, including the adoption of new technologies, diversification of exports, and job creation. However, realizing these benefits hinges on Pakistan treating its mineral wealth as a long-term national asset rather than a commodity to be quickly divested.

The Reko Diq experience serves as a cautionary tale. Years of legal disputes and policy reversals incurred substantial costs for Pakistan, underscoring the risks associated with weak governance, a lack of transparency, and poor contract management. Future agreements concerning critical minerals must undergo rigorous legal, financial, and technical scrutiny, with transparency as a guiding principle. Contract terms, fiscal implications, and obligations should be presented to parliament to bolster investor confidence and ensure political legitimacy.

Furthermore, the role of local communities is paramount. Many mineral deposits are located in underdeveloped regions where residents often face persistent poverty despite resource extraction. Investment frameworks must prioritize local stakeholders through employment, skills development, infrastructure improvements, and social investments. Without local buy-in, even commercially viable projects may falter. Pakistan should also actively seek partnerships with Chinese firms, known for their expertise across the critical minerals value chain, to foster competition and secure better terms, technology transfer, and value addition.