Reko Diq and the Geopolitics of Rare Earth Metals

Amid the global transition towards a geo-economic world order, rare earth metals (REMs) have emerged as a new determinant in shaping foreign policies, defence strategies, and weapon production. These 17 REMs underpin high-tech applications in modern electronics, clean energy systems, aerospace engineering, and precision-guided defence systems[1]. In this race for dominance, China remains unmatched, as it is the world’s largest producer with an estimated 240,000 tonnes of mined REMs accounting for 70% of global mined production and 87% of global refined production[2]. Beijing’s recent export restrictions reflect the intent to weaponize its dominance to counter trade competition with Washington.

The recent Trump-Xi meetings revolved around the control over the supply chain vulnerability of REMs by proposing that the two biggest economies pause export control [3]. Against this backdrop, Pakistan has stepped into this arena as a rising REM contender, particularly with developments in Reko Diq. The recently signed $500 million  [4] agreement between Islamabad and the United States Strategic Metals (USSM) [5] has placed Pakistan in the geopolitical spotlight, drawing attention from both giants for opposite reasons. Though this opportunity helps stabilize Pakistan’s struggling economic and technology sectors, it hides serious security risks if viewed only through a narrow economic lens.

The signing of a rare earth MoU with the U.S. will help Pakistan develop Pasni through a proposed, U.S.-funded, $1.2 billion investment, while diversifying export corridors [6]. However, the message from Beijing is clear that any U.S. foothold in Pakistan’s mineral corridors, especially in the areas adjacent to the CPEC and its SEZs, will lead to a mineral cold war [7]. Beijing has invested more than $62 billion to connect Xinjiang to the Arabian Sea as a solution to its Malacca dilemma [8]. These CPEC routes lie close to Pakistan’s mineral reserves of Reko Diq, Kohlu, and Chagai. It raises two major concerns for China, as the U.S. involvement in Reko Diq will undermine China’s economic hegemony in CPEC and give an opportunity to a U.S.-based company to observe and leverage China’s infrastructural network[9]. Moreover, Pakistan’s mere suggestion to host a U.S.-funded seaport at Pasni, less than 100 km away from Gwadar, has immediately received negative attention from Beijing [10]. If Pakistan decides to sign the project, it would fuel tensions, as China will not accept any U.S. involvement in its maritime security chain [11].

Washington is showing keen interest because it wants to expand its REM supply for military and technology purposes[12]. For Pakistan, tapping into this opportunity will help move the wheel of economic stagnation, but Pakistan needs to be cautious. A glance at history shows how the U.S. has always been an actor of strategic self-interest.

The Pressler amendments  [13], estrangement over Afghanistan, abandonment after the war of terror, the U.S.-India civil nuclear agreement of 2008 [14], and the present pro-Indian tilt to contain China are lessons for Pakistan that the U.S. can never be an ally to be trusted blindly[15]. On 31st October 2025, Washington and Delhi signed a ten-year defence pact amid tariff turmoil [16]. Under this agreement, Washington will be increasing military equipment sales to India by billions, equipping Delhi with F-35 stealth warplanes, and conducting joint military exercises. This deal has put tremendous pressure on Pakistan’s national security [17]. There is a real possibility that Pakistan’s REM will be used by the U.S. to manufacture weapons that will be sold to India in the upcoming years.

Amidst these rising tensions, Pakistan cannot bear to lose the support of its ironclad friend, who equipped Pakistan with J-10C and JF-17 fighter jets, satellite technologies, resonance capabilities, economic assistance, and blueprints for missile development[18].The discovery of REMs is a great strategic advantage for Pakistan, as well as a peril if not leveraged wisely. Pakistan’s entry into this arena is crucial as two powers are negotiating their strategic interests around these metals. However, Pakistan must not treat these REMs as ordinary commodities to be traded off, as they will determine Pakistan’s strategic position in the global arena in the upcoming years.

Pakistan must learn from its past mistakes. The poorly negotiated agreement with TCC ended with a $5.9 billion award [19] that was set aside, with Barrick Gold now holding a 50% share [20]. This mishap is a stark reminder of what happens when such important agreements are signed with proper institutional support and legal due diligence. These strategic mistakes must be avoided, as any mishandling now can ignite a mineral cold war in Pakistan that is neither prepared for nor capable of recovering from. Therefore, our REM policy must be based exclusively on the “Pakistan First” approach.

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