Amid growing global competition for critical resources essential to the transition toward clean energy and high-tech manufacturing, Pakistan is emerging as a potentially vital player. Possessing untapped mineral reserves estimated to be worth as much as $6 trillion, including lithium, copper, cobalt, nickel, zircon, beryllium, and rare earths, Pakistan is positioning itself not just as a major mineral supplier but as a new geoeconomic partner in the evolving global landscape.
The significance of Pakistan’s mineral wealth isn’t lost on world powers. What was once a security-centric U.S.-Pakistan relationship, overshadowed by distrust and allegations of duplicity, has been reshaped into a cooperation model centered around mineral diplomacy. As U.S. Secretary of State Marco Rubio noted in his July meeting with Pakistani Deputy Prime Minister Ishaq Dar, critical minerals are a strategic imperative not only for U.S. supply chain resilience but for powering technologies that define the 21st-century energy landscape, such as electric vehicles, wind turbines, and semiconductors.
On September 8, a high-profile signing ceremony between Missouri-based U.S. Strategic Metals (USSM) and Pakistan’s Frontier Works Organization (FWO) marked a key moment in the evolution of U.S.-Pakistan ties. Attended by Prime Minister Shehbaz Sharif and Army Chief Field Marshal Asim Munir, the memorandum of understanding (MoU) sets in motion a $500 million initiative centered on critical minerals exports and future mineral refining in Pakistan.
This MoU is part of a broader pivot in U.S.-Pakistan relations. In a controversial but calculated shift, President Donald Trump, in his second term, has openly embraced closer economic engagement with Islamabad. This thaw has materialized in sizable policy shifts, including the reduction of tariffs on Pakistani exports from 29% to 19%, the lowest in South Asia. In return, the Trump administration seeks to strengthen its critical minerals supply chain, which remains heavily dependent on rival China.
For Pakistan, burdened by external debt exceeding $130 billion and thirsting for non-aid-based strategic relevance, the minerals push offers a rare opportunity to remake its global image. This is more than a resource story; it is a strategic recalibration, offering bilateral leverage anchored in economic promise rather than military dependence.
The high-stakes game for critical minerals spans global powers, with the U.S., China, the EU, and Gulf nations vying for access to key resources. China dominates the refining and supply chains for most critical minerals and rare earths and has leveraged its stronghold for geopolitical ends, including restricting supplies in response to U.S. semiconductor sanctions.
To counterbalance China’s dominance, the U.S. has focused on diversifying supply sources through domestic initiatives and international deals. Pakistan, with its significant unexplored reserves, especially in key provinces like Balochistan, Khyber Pakhtunkhwa, and Gilgit-Baltistan, represents a frontier opportunity for Western engagement. Washington’s mineral deal with Islamabad not only broadens U.S. supply options but also further legitimizes Pakistan as a player in the clean energy supply chain. At the April 2025 Pakistan Mineral Investment Forum, both Chinese and American delegations demonstrated clear intent to secure a foothold in the country’s emerging mining sector. While China remains the predominant partner in the China-Pakistan Economic Corridor (CPEC), including projects like the Saindak Copper and Gold Mine, U.S. interest could help balance what has become a deeply unipolar economic presence.
Yet, translating mineral potential into meaningful progress is easier said than done. Structural, political, and security hurdles remain formidable. Balochistan, where some of the richest resources lie, continues to be mired in insurgency and distrust of federal intentions. Passed in March, a new provincial mining law developed in coordination with the military-backed Special Investment Facilitation Council (SIFC) has stoked fears of further centralization of authority, reducing provincial autonomy and sowing renewed tensions.
Security concerns are just as real. Chinese personnel have repeatedly been targeted in Balochistan by separatist rebels, and U.S. companies may face similar risks. The U.S. government’s recent designation of the Balochistan National Army and its Majeed Brigade as terrorist organizations reflects a growing recognition of the risks that threaten mineral development. Beyond security, institutional limitations compound the challenge. Antiquated laws, inconsistent provincial regulations, and poor governance add to investor uncertainty. The high-profile $5.84 billion penalty Pakistan paid for reneging on an agreement with Tethyan Copper Company (Reko Diq) is a stark warning for future engagements.
Experts agree that if Pakistan seeks sustainable transformation through its mineral wealth, inclusivity is key. "This isn’t just about rocks in the ground, it’s about who controls the future’s building blocks," observed a retired Pakistani general recently. True success lies not in expanding extraction alone, but in linking national pride with inclusive development.
This means local communities, particularly in Balochistan, must be front and center in project planning and benefit-sharing arrangements. Transparent royalty frameworks, quotas for local employment, and community development trusts could help turn historically marginalized populations into stakeholders rather than adversaries. There are also institutional remedies at play. Rather than relying heavily on opaque bodies like the SIFC, Pakistan needs a constitutionally anchored national minerals council that balances provincial rights with streamlined investor engagement. Coordination, not coercion, must become the foundation of Pakistan’s mineral governance.
While U.S. interest is a boon, Pakistan must tread carefully to avoid triggering great power competition on its soil. China’s deep entrenchment through CPEC and its strategic interests in mineral transportation and refining sectors mean that U.S. deals, especially in Balochistan, could raise complex geopolitical questions.
However, analysts like Uzair Younus from The Asia Group see U.S. entry as a stabilizing force rather than a threat. If the U.S., China, and Pakistan simultaneously uphold investments, the shared goal of securing mineral outputs could act as a deterrent to violence underpinned by local and regional actors. While recent MoUs create excitement, they remain preliminary. The USSM deal, for instance, is not a binding mining license. Rather, it is an intention-setting instrument aimed at early mineral exports and mid-term establishment of refining and processing facilities. Pakistan must now demonstrate clarity of purpose, legal reforms, and execution capacity to convert these beginnings into sustainable ventures.
Geologists and analysts alike remain cautiously optimistic, noting that beyond Reko Diq, few sites have undergone comprehensive reserve studies. The minerals sector in Pakistan is still nascent; the journey from exploration to extraction to downstream value addition could take five to 15 years.
Pakistan stands at a pivotal moment. With a global race underway for minerals that will shape the future of energy, technology, and defense, Islamabad has in its hands not just economic lifelines but geopolitical leverage. Harnessing that opportunity, however, requires profound structural reforms, regional harmonization, transparent governance, and community empowerment.
The minerals beneath Pakistan’s rugged terrain won’t transform its fate alone. Leadership above ground, enlightened, inclusive, and farsighted, must do the heavy lifting. If successful, Pakistan’s pivot from a security partner to a resource partner could be one of this decade’s most compelling stories of strategic reinvention.