Pakistan sits atop one of the most diverse geological endowments in Asia. More than 90 commercially identified minerals lie beneath its territory, spanning base metals, precious metals, industrial minerals and a growing suite of critical minerals, including copper, gold, lithium, cobalt and rare earth elements (REEs) that underpin the modern digital, energy and defence economy. Various conservative and optimistic estimates place the in-situ value of Pakistan’s mineral resources between USD 50 trillion and USD 68 trillion. Yet mining contributes only 3.2 per cent to national GDP and less than 0.1 per cent to global mineral exports. This sharp divergence between geological abundance and economic outcome defines Pakistan’s mineral paradox.
Historically, control over strategic resources has shaped global power hierarchies. Oil structured the industrial and geopolitical order of the 20th century. In the 21st century, critical minerals, particularly rare earth elements, are emerging as comparable strategic assets. REEs comprise 17 chemically similar elements essential for wind turbines, electric vehicle motors, advanced batteries, semiconductors, fibre-optic networks, satellites, robotics, precision-guided munitions and next-generation defence systems.
As the energy transition accelerates, demand is rising rapidly. According to estimates by the International Energy Agency, global rare earth demand is projected to increase from approximately 140,000 tons in 2019 to over 220,000 tons by 2025, implying a compound annual growth rate of around 7 per cent, driven largely by Asia-Pacific industrialisation and clean-energy deployment. This surge in demand is unfolding within an extremely concentrated supply structure. China dominates the global rare earth ecosystem, holding approximately 44 million tons of REE reserves, accounting for around 70 per cent of global extraction and over 85 per cent of refining and separation capacity.
This dominance is not accidental. It rests on three mutually reinforcing pillars: deep vertical integration from mining to advanced manufacturing, systematic overseas acquisition of mineral concessions across Africa, Latin America and Central Asia, and sustained state-backed investment into refining technologies, recycling, and thorium-linked nuclear research. Beijing has demonstrated a willingness to leverage this control. During diplomatic disputes with Japan and the United States, China tightened export controls, signalling that critical mineral chokepoints can be weaponised.
Today, the United States imports over 80 per cent of its REE inputs from China, highlighting a structural vulnerability that Washington is actively seeking to reduce through domestic processing, recycling and supply-chain alliances with Australia and Canada. However, replacing Chinese capacity remains a medium-to-long-term challenge. It is within this global realignment that Pakistan’s rare earth potential acquires strategic significance.
Geological assessments conducted by the Geological Survey of Pakistan (GSP) and the Pakistan Atomic Energy Commission (PAEC) have identified REE occurrences in the granitic and pegmatite complexes of Chagas, REE-bearing granites in Dir, Swat and Kohistan, and coastal placer sands of Sindh and Baluchistan comparable to monazite-rich deposits in India and Sri Lanka. On an in-situ basis, Pakistan’s rare earth resources alone are estimated at over USD 6 trillion. Beyond REEs, Pakistan hosts world-class copper-gold deposits along the Tethyan metallogenic belt, lithium occurrences in Gilgit-Baltistan, and some of the largest rock salt reserves globally, including commercially branded Himalayan pink salt.
The gap between trillions underground and trillions in national GDP is not a geological constraint. It is a governance choice
The government has recently claimed the discovery of gold reserves valued at approximately USD 636 billion near Tarbela. If independently verified and proven extractable at scale, such reserves could theoretically offset Pakistan’s entire external debt stock, which currently stands below that valuation. However, in-situ value does not automatically translate into fiscal relief; extraction feasibility, processing capacity and governance determine real outcomes.
Despite this abundance, Pakistan remains effectively absent from the global critical mineral value chain. Structural constraints explain this exclusion. Mining regulation remains weak and fragmented; concession frameworks are outdated; no domestic refining or separation capacity exists for REEs; fiscal authority is divided between federal and provincial governments; infrastructure deficits persist in mineral-rich regions; and security risks, particularly in Balochistan, elevate project costs. Compounding these factors is a legacy of contractual instability and arbitration disputes, which have eroded investor confidence among major international mining houses.
Recent developments suggest a tentative strategic opening. In 2025, the Frontier Works Organization (FWO) signed a USD 500 million memorandum of understanding with US-based Strategic Metals (USSM). For Washington, interest in Pakistan is structural: The United States urgently needs alternative, cost-competitive critical mineral supply chains outside Chinese control. For Islamabad, the incentives are equally structural: access to capital, technology transfer, processing expertise and geopolitical leverage.
The establishment of the Special Investment Facilitation Council (SIFC) reflects an attempt to fast-track mining approvals, while proposals for a National Minerals Harmonisation Framework aim to standardise regulation across provinces. Yet domestic scepticism persists. New mining legislation has been criticised as externally driven, while China remains deeply embedded through CPEC-linked investments, with Chinese firms expressing interest in copper, gold and REEs.
Pakistan is attempting a delicate hedge: attracting Western capital without alienating Beijing. What remains conspicuously absent is institutional credibility. Regulation is inconsistent, taxation unpredictable, dispute resolution mechanisms are weak, and environmental governance is increasingly diluted. Proposals to weaken or abolish the Pakistan Environmental Protection Agency are particularly counterproductive. Pakistan’s mineral belts, especially in Balochistan and the northern regions, are water-stressed and ecologically fragile. Poorly regulated mining risks entrenching poverty, inflaming local grievances and reproducing classic resource-curse dynamics. Nigeria, which holds the 11th-largest oil reserves globally, offers a cautionary parallel: despite resource wealth, around 40 per cent of its population lives below the poverty line. Resource endowment without governance amplifies inequality rather than alleviating it.
From a technical and policy standpoint, Pakistan’s pathway is well defined. The country must shift decisively from raw extraction to value addition. This requires transparent concession policies, enforceable environmental and social safeguards, independent regulatory oversight, and a skilled workforce in geology, mineral economics and advanced metallurgy. Joint ventures must mandate technology transfer and domestic processing capacity, not merely extraction rights. Local communities should be treated as economic stakeholders, with royalty sharing, employment guarantees and institutionalised grievance mechanisms.
At the macro level, a sovereign wealth fund dedicated to mineral revenues could ensure inter-generational equity, drawing lessons from Norway’s Government Pension Fund Global, which now exceeds USD 1.6 trillion. Externally, Pakistan must pursue multipolar mineral diplomacy, engaging China, the United States, Gulf sovereign funds and mineral-technology leaders such as Australia, Canada and South Korea. The objective is not alignment but leverage. Pakistan stands at the intersection of a once-in-a-generation reordering of power around critical minerals.
With regulatory predictability, environmental responsibility and strategic autonomy, it can transform geological abundance into export revenues, fiscal stability, industrial upgrading and geopolitical relevance. The opportunity, however, is finite. Global supply chains are already being re-engineered. Energy transitions do not wait, and technology cycles do not pause. If Islamabad delays, alternative sources will simply be developed elsewhere. The gap between trillions underground and trillions in national GDP is not a geological constraint. It is a governance choice.