Unlocking Pakistan’s Mineral Potential
Pakistan’s first shipment of critical minerals to the United States in October last year, following a $500 million agreement between a US company and the Frontier Works Organisation, was a milestone for a largely underdeveloped sector. Yet, while the shipment marked progress, it also underscores how far Pakistan still has to go before its mineral wealth can meaningfully drive economic growth.
A recent policy note from ICMAP, the country’s accounting body, stresses that exporting raw critical minerals is only the initial step toward joining higher-value, globally compliant supply chains. Raw or semi-processed exports do little to ease balance-of-payments pressures or expand Pakistan’s narrow industrial base. The true opportunity lies in moving beyond extraction—building an integrated domestic value chain that includes exploration, processing, refining, and downstream manufacturing.
Reliance on raw mineral exports tends to trap developing economies in low margins, price volatility, and limited employment. Pakistan, by contrast, could leverage its critical minerals to support industries ranging from electric vehicles and renewable energy equipment to advanced defence technologies. Developing local processing and manufacturing capabilities would capture far more value domestically.
Achieving this transformation, however, faces major hurdles. Fragmented governance, shifting regulations, weak environmental and social oversight, nearly nonexistent processing capacity, and poor infrastructure continue to discourage serious investment. Security concerns and a shortage of skilled labour exacerbate the challenge. As a result, a sector estimated to hold $8 trillion in resources contributes less than 3 percent to national output.
Without structural reforms, much of this wealth risks either remaining untapped or being exported cheaply to developed economies. This is particularly consequential given the global importance of rare earths, which are essential for everything from smartphones and wind turbines to electric vehicles and military systems, including fighter jets, missiles, and satellites.
Geopolitics adds another layer of complexity. Washington’s renewed engagement with Pakistan reflects efforts to diversify supply chains away from China, which dominates more than 60 percent of global rare earth mining and 92 percent of processing. Pakistan’s potential role as an alternative supplier may create tension with Beijing, highlighting the strategic dimension of the sector.
Handled prudently, Pakistan’s mineral resources could become a cornerstone of industrial diversification, export growth, and balance-of-payments stability. Mishandled, the country risks repeating a familiar pattern: exporting raw resources without structural transformation, locking the economy into low growth. The choice is clear, and urgent.