Pakistan’s Green Mining Dilemma: Unearthing the Truth

Nabeeha is an International Relations graduate with First Class Honors. She is interested in climate policy, climate diplomacy, and sustainable development, building on her thesis comparing China and South Korea’s use of climate diplomacy as a tool of power. (linkedin.com/in/nabeehawafa)

Introduction

With global demand for critical minerals peaking in 2025, Pakistan's mines and minerals sector surged to the forefront of national ambition. The Special Investment Facilitation Council’s creation of a dedicated Mines and Minerals Division, coupled with the two-day National Minerals Investment Forum in April, signaled the government’s aspirations to spotlight Balochistan’s untapped wealth.

Yet this mining push underscores diplomatic and climate trade-offs: Pakistan can either set an example for green, just mineral development, or risk reputational damage by practicing climate hypocrisy.

Critical Minerals in Global Rivalry

Critical minerals have become central to both clean energy transitions and great-power rivalry. They power wind turbines, batteries, EVs, and advanced defense systems. The supply chains thus far remain fragile: China controls about 60% of global rare earth production and has reinforced exports controls underscoring its leverage over industries worldwide [1]. This dependence has pushed the United States and its allies to diversify sources.

In 2025, Pakistan entered this global race. A $500 million agreement saw Pakistan dispatch its first shipment of enriched rare earth minerals, including neodymium and praseodymium, to U.S. Strategic Metals [2]. While this partnership strengthens Washington’s supply chain security beyond China’s orbit, it also delivers Islamabad investment, technology transfer, and geopolitical relevance. Pakistan’s role illustrates how resource diplomacy now bridges climate ambitions with strategic rivalry, situating its mining sector at the intersection of global energy and security debates.

Institutional Reforms and Strategic Shifts

Pakistan has accelerated its mining agenda through new institutional reforms, marking a decisive shift from fragmented regulations to a coordinated national mining strategy. In 2025, the federal government established a dedicated Mines and Minerals Division under the Special Investment Facilitation Council (SIFC) [3], primarily tasked with streamlining investment and regulation. Alongside this, the National Minerals Harmonization Framework was introduced to unify provincial and federal laws, providing a “one-stop shop” for investors and signaling environmental safeguards [4].

At the provincial level, Khyber Pakhtunkhwa passed the Mines and Minerals Bill 2025 [5], modernizing licensing and aligning its regulatory framework with the national priorities. Meanwhile, financing developments at Reko Diq marked a significant turning point with the U.S. Export-Import bank approving $1.25 billion to support copper-gold mining, bringing it up to $2 billion in U.S. equipment and services [6].

Together, these reforms and investments demonstrate Pakistan’s intent to position its mineral wealth as a driver of growth. Yet they also raise questions about governance capacity and environmental safeguards, paving the way for debates on “green mining.”

Policy Instruments for Sustainability

Pakistan has introduced several institutional tools to align mining with sustainability. The Pakistan Green Taxonomy (2025) provides a science-based classification system for identifying environmentally sustainable activities [7], offering a framework to guide banks, investors, and public finance towards projects that align with climate goals. Building on this, the Securities and Exchange Commission Pakistan’s updated ESG disclosure framework creates a standardized reporting baseline for listed firms, requiring companies to report climate risks, governance practices, and social impacts, aligning their practices with national standards [8]. These domestic instruments sit alongside Pakistan's updated Nationally Determined Contribution (NDC), which pledges emission reductions and resilience measures under the Paris Agreement [9]. Yet while the NDC outlines climate ambition, its integration with extractive sector governance remains limited, leaving a gap between international commitments and mining realities.” At the international level, Pakistan reinforced this narrative at COP30, calling for urgent, grant-based climate finance to support vulnerable economies [10], linking its domestic reforms to a broader climate justice appeal.

These instruments signal a shift toward embedding sustainability to economic policy but face limitations. The PGT offers definitions and guidelines, not enforcement; ESG framework improves transparency but relies on voluntary compliance; and COP30 appeals highlight Pakistan's diplomatic stance rather than binding commitments. In practice, these tools can guide investment and reporting, but they cannot alone guarantee “green mining.” Their effectiveness depends on regulatory enforcement, investor accountability, and integration with community-level safeguards.

Environmental and Social Faultlines

Despite ambitious policy frameworks, mining projects in Pakistan continue to face pressing environmental and social risks. Water stress in arid regions like Balochistan pits extraction against agriculture and household needs, intensifying local grievances. Communities often experience displacement, limited benefit‑sharing, and weak grievance mechanisms, while governance gaps persist: enforcement capacity remains low, overlapping jurisdictions complicate regulation, and protected areas risk encroachment. Security and political unrest in resource‑rich provinces further heighten uncertainty for all stakeholders.

The Reko Diq project illustrates these tensions. Environmental and Social Impact Assessments point to risks for groundwater, biodiversity, and fragile cryosphere systems [11]. Financing promises jobs and infrastructure, yet communities remain wary of uneven benefits and ecological damage. This gap between policy ambition and ground realities underscores the fragility of Pakistan’s mining expansion. Without robust monitoring and meaningful community engagement, extraction could deepen environmental degradation and social tensions, eroding both domestic stability and Pakistan’s credibility in climate diplomacy.

Climate Diplomacy and the Hypocrisy Question

Pakistan’s mining push intersects with its climate diplomacy. At COP30, Islamabad urged urgent, grant-based climate finance for vulnerable countries, warning that repeated disasters deepen debt and strain recovery. Yet at the same time, Pakistan had advanced rare earth partnerships with the U.S. and secured financing for Reko Diq. This dual track raises the concerns of “climate hypocrisy”, questioning Pakistan’s credibility when demanding climate justice while expanding extractive industries with foreign partners. Pakistan’s updated Nationally Determined Contribution (NDC) pledges emission reductions and resilience measures under the Paris Agreement, but unchecked mining risks undermining those very commitments. On one hand, mining revenues could fund adaptation and resilience. On the other, extractive expansion that contradicts NDC targets risks reputational damage and weakens Pakistan’s climate justice narrative. The test lies in whether Pakistan embeds sustainability into its mining agenda, aligning resource diplomacy with the commitments it has pledged internationally.

Policy Recommendations

Pakistan’s mining agenda requires tailored reforms that respond to its governance and environmental context. First, embedding binding ESG clauses directly into contracts under the Special Investment Facilitation Council would ensure that fast‑tracked approvals translate into projects meeting enforceable sustainability standards, reducing reputational risk and strengthening investor confidence. Second, mandating transparent revenue‑sharing formulas for provinces such as Balochistan and Khyber Pakhtunkhwa would guarantee that local communities see tangible benefits, easing mistrust and lowering the risk of conflict. Third, publishing detailed MOUs with foreign partners like U.S. EXIM Bank would clarify environmental obligations and technology transfer terms, securing accountability while enhancing Pakistan’s bargaining power. Fourth, channeling a share of Reko Diq revenues into provincial climate resilience funds would link extraction directly to adaptation, turning resource wealth into protection against disasters. Finally, integrating the Pakistan Green Taxonomy into mining finance would ensure that “green” capital flows only to projects meeting credible sustainability criteria, aligning investment with climate justice.

Conclusion

Pakistan’s mining sector exemplifies the paradox at the heart of the global green transition: minerals essential for decarbonization can themselves generate environmental and social crises if extraction is poorly governed. The country’s recent reforms and international partnerships have positioned it as a potential player in resource diplomacy, yet credibility will depend on whether sustainability is embedded beyond rhetoric. Without robust governance, ethical sourcing, and meaningful community engagement, Pakistan risks trading short‑term economic gains for long‑term ecological damage and social unrest, undermining both domestic stability and its climate justice narrative. Conversely, proactive strategies that leverage renewable energy, binding regulatory frameworks, transparent benefit‑sharing, and technological partnerships could transform mineral wealth into a cornerstone of a sustainable, inclusive, and climate‑resilient economy. The test for Pakistan lies not in whether it can mine, but in whether it can mine responsibly, setting an example of green, just development in an era of climate urgency.

Works Cited

[1] Martin, N. (2025). How China wields rare earths as a strategic weapon. [online] dw.com. Available at: https://www.dw.com/en/how-china-wields-rare-earths-as-a-strategic-weapon/a-72868760

[2] Underwood, J. (2025). Pakistan-U.S. Rare Earth Partnership: Strategic Breakthrough in Supply Chain Security. [online] SFA (Oxford). Available at: https://www.sfa-oxford.com/market-news-and-insights/sfa-pakistan-s-rare-earths-partnership-advances-us-supply-chain-security-and-independence/

[3] Ghumman, M. (2025). Govt decides to create ‘Minerals Division’. [online] Brecorder. Available at: https://www.brecorder.com/news/40340671 [Accessed 16 Dec. 2025].

[4] Akbar, K.M. (2025). One-stop shop: Pakistan unveils harmonised national minerals framework. [online] Norton Rose Fulbright. Available at: https://www.nortonrosefulbright.com/en-pk/knowledge/publications/2a6c8284/one-stop-shop-pakistan-unveils-harmonised-national-minerals-framework [Accessed 16 Dec. 2025].

[5] Provincial Assembly Khyber Pakhtunkhwa. (2025). The Khyber Pakhtunkhwa Mines and Minerals Bill, 2025. [online] Available at: https://www.pakp.gov.pk/bill/the-khyber-pakhtunkhwa-mines-and-minerals-bill-2025/ [Accessed 16 Dec. 2025].

[6] The Express Tribune. (2025). US EXIM approves 1 25 billion for Reko Diq. [online] Available at: https://tribune.com.pk/story/2581589/us-exim-approves-125-billion-for-reko-diq [Accessed 17 Dec. 2025].

[7] Pakistan Green Taxonomy. (2025). [online] Islamabad: Ministry of Climate Change and Environmental Coordination, pp.1–177. Available at: https://mocc.gov.pk/SiteImage/Misc/files/2025%20Pakistan%20Green%20Taxonomy_Aug%2014.pdf [Accessed 17 Dec. 2025].

[8] The News Pakistan . (2025). SECP unveils updated ESG disclosure guidelines. [online] Available at: https://www.thenews.pk/print/1386167-secp-unveils-updated-esg-disclosure-guidelines [Accessed 17 Dec. 2025].

[9] Ministry of Climate Change and Environmental Coordination (2025). Pakistan’s Third Nationally Determined Contribution (NDC 3.0). [online] Available at: https://mocc.gov.pk/SiteImage/Misc/files/Pakistan_NDC3_0_24%20Sep.pdf [Accessed 19 Dec. 2025].

[10] ARY News (2025). Pakistan calls for urgent grant-based climate finance at COP30 as losses mount. [online] Arynews.tv. Available at: https://arynews.tv/pakistan-calls-for-climate-financing-at-cop30 [Accessed 17 Dec. 2025].

[11] DIGBY WELLS ENVIRONMENTAL (2025). Reko Diq Mining Project, Pakistan. [online] UK, pp.1–140. Available at: https://www3.dfc.gov/environment/eia/rekodiq/Reko_Diq_ESIA_Executive_Summary.pdf [Accessed 18 Dec. 2025].