Barrick delays Reko Diq, cites Iran war

Barrick Mining (TSX: ABX, NYSE: B) said Thursday it will slow development of the giant Reko Diq project in Pakistan because of security concerns in the Middle East.

The decision to extend the review period by 12 months from July adds further uncertainty to the $8-billion buildout of what is considered to be one of the world’s largest copper-gold projects.

“Development activity will be slowed but remain under active management,” Barrick said in a statement. “It is anticipated that the extended review and reduced pace of development is likely to impact previously stated budgets and timelines.”

Shares in Barrick Mining fell 3.7% to close at C$51.91 on Thursday in Toronto, valuing the company at C$89.7 billion ($64.8 billion).

Review findings

The extended timeline will allow the miner to further assess potential risks and refine its delivery strategy for the project, the Toronto-based miner said.

The delay follows preliminary findings from a review announced by Barrick last month to examine all aspects of the project, including capital allocation. The extended review is coupled with “the more recent escalation in security issues in Pakistan and the Middle East,” the company said.

Barrick, which has been developing the project in partnership with the governments of Pakistan and Balochistan province for years, initially planned for the project to come online in 2028, subject to financing. Its first stage alone is projected to cost more than $5.6 billion.

Copper push 

Starting construction on Reko Diq was a milestone for former CEO Mark Bristow, who viewed the development as key for Barrick to add more copper production as the world electrifies.

After a decade of arbitration, Bristow negotiated a deal that gives the Pakistani government levels half the profit, following a similar agreement to restart Porgera in Papua New Guinea in 2024.  

Once operational, Reko Diq is forecast to generate over $70 billion in free cash flow and $90 billion in operating cash flow across a 37-year lifespan. The deposit holds an estimated 15 million tonnes in reserves of the red metal.