Reko Diq proves we still don’t understand risk, properly

1 Introduction

Because the risks that matter most are not technical or financial, they are the ones we fail to model, price, or allocate in contracts.Reko Diqwas never simply a mining project. At its core, it has always been about sovereignty, risk, and a difficult question: can a state and its investors ever truly align on value?

The Reko Diq Mine is often introduced as one of the world’s largest undeveloped copper and gold deposits. That description is technically accurate, but strategically incomplete. For Pakistan, the project has evolved into something far more consequential: a live stress test of how emerging markets manage capital, credibility, and conflict under pressure.

And once again, progress is slowing. Not because of engineering failure. Not because funding has dried up. But because geopolitics has reasserted itself, reshaping risk, timelines, and confidence. To understand how Reko Diq arrived back at this point of uncertainty, you have to return to the dispute that almost ended the project altogether.

2 A project shaped by arbitration

The origins of the dispute are well documented. Reko Diq was initially developed by Tethyan Copper Company, a joint venture betweenBarrick GoldandAntofagasta plc. In 2011, Pakistan declined to grant the mining lease. That decision did more than pause progress. It set in motion one of the most consequential investor–state arbitrations of its time. Proceedings were brought before the International Centre for Settlement of Investment Disputes, where the tribunal ultimately awarded damages in excess of US$5 billion against Pakistan.[1]

The impact was not limited to the balance sheet. The award sent a clear signal to investors, lenders, and contractors alike: sovereign risk had materialised, and it had done so in its most concrete and costly form.

3 From legal defeat to commercial reset

What followed is often overlooked.

Rather than allowing the dispute to spiral into years of enforcement proceedings across multiple jurisdictions, Pakistan chose to re‑engage. The outcome was a negotiated settlement in 2022, under which Barrick Gold returned as operator and a new ownership structure was put in place. [2]

This was not a climbdown. It was a recalibration. The settlement underscored a basic but often forgotten truth at the sharp end of investment arbitration: outcomes are rarely binary. Legal rights create leverage, but it is commercial pragmatism that ultimately enables delivery.

In that moment, Reko Diq shifted. It moved from being a dispute defined by the past to a project once again oriented toward the future.

4 And now, risk has returned

But risk, in projects like this, does not disappear. It evolves. Today, the primary constraint is no longer legal uncertainty. It is geopolitical exposure.

Escalating tensions involving the United States, Israel, and Iran have introduced a new layer of regional instability. For a project located in Balochistan, close to the Iranian border, these dynamics are not abstract. They shape security planning, influence capital allocation, and undermine programme certainty in very practical ways.

Balochistan has long been presented as a region of untapped potential. Reko Diq could help unlock that promise, through jobs, infrastructure, fiscal revenues, and pathways to broader economic inclusion. Yet repeated delays reinforce a different narrative:promise without delivery.

For local communities, this is not a question of commodity prices or global power politics. It is about trust. And trust, once eroded, becomes one of the most difficult risks for any project to manage.

5 Where disputes begin, before they are visible

In projects like Reko Diq, disputes rarely start with a formal notice. They begin quietly. Governments recalibrate fiscal expectations, investors and insurers reassess risk premiums, contractors price in uncertainty, and communities begin to question commitments. By the time positions harden, alignment has already been lost.

This is where many projects falter: disputes are treated as events, rather than as evolving conditions. The consequences are predictable. Decision‑making slows. Investment committees hesitate. Risk pricing escalates. Governments reassess exposure. Timelines extend, not because parties fundamentally disagree, but because uncertainty itself has increased.[3]

The project remains viable. But once again, alignment is under strain.

6 The constant: misalignment

Across both phases, arbitration and slowdown, the same issue persists:misalignment. Initially, it was a misalignment of expectations between state and investor. That gap widened, hardened, and ultimately escalated into a formal dispute, culminating in a multi‑billion‑dollar award.

Today, the misalignment is different in form, but no less consequential. It is a misalignment of response. Stakeholders are reacting to geopolitical risk in different ways, at different speeds, and with different tolerances. That is how disputes really begin, not with a notice, but with divergence.

7 A practitioner’s perspective

Having acted across complex disputes and mediated conflicts where positions have hardened beyond repair, one pattern is consistent. By the time a dispute is formally declared, the outcome is already constrained. The real opportunity sits earlier, when parties still have room to adjust, recalibrate, and preserve value.

In projects exposed to geopolitical risk, commercial alignment can erode quickly, not through overt disagreement, but through silence, delay, and untested assumptions. Left unmanaged, those gaps almost inevitably convert into claims.

In that sense, the Reko Diq journey is not unusual. It is simply a particularly visible example of a much wider industry reality; one that remains consistently underestimated until it is too late.

8 Mediation as a strategic tool, not a last resort

This is where the industry continues to get it wrong.

Mediation is still treated as something to be deployed only after positions have hardened. By then, the cost-commercial, relational, and programme‑level, is already embedded.

Reko Diq illustrates a different path. The 2022 settlement was, in substance, a mediated outcome. It required the parties to step away from entrenched legal postures and re‑engage on commercial reality. That same logic applies now.

In geopolitically exposed projects, mediation provides a mechanism to address risks that contracts cannot fully allocate; security, delay, and external volatility. It creates space to realign expectations, recalibrate programme assumptions, and preserve relationships without triggering formal dispute processes.

For projects measured in decades, that is not optional. It is essential.

9 The real question

Disruption in major projects is not a question ofif, butwhen. So why do we still wait for it to crystallise into formal dispute? and why do we default to adversarial processes when alignment is still recoverable?

Reko Diq has already shown both outcomes: one ending in arbitration and a US$5 billion award; the other in a negotiated reset and a revived project. The difference was not legal principle. It was timing. Early engagement preserves value. Late reaction destroys it.

Common sense points to early engagement. The industry still defaults to late reaction. Not so common after all.

Having acted as party representative, expert, and mediator, I see disputes when they are already too late. The real value lies in addressing them before they are ever formally recognised.

[1]Tethyan Copper Company Pty Limited v Islamic Republic of Pakistan(Award, International Centre for Settlement of Investment Disputes Case No ARB/12/1, 12 July 2019). Available athttps://www.italaw.com/cases/1631

[2] Barrick Gold, ‘Barrick and Pakistan Reach Agreement on Reko Diq Project’ (Press Release, 2022). Available athttps://www.barrick.com/English/news/news-details/2022/barrick-pakistan-and-balochistan-agree-in-principle-to-restart-reko-diq-project/default.aspx

[3] Barrick Provides an Update on Reko Diq (Press Release, 2 April 2026). Available athttps://www.barrick.com/English/news/news-details/2026/barrick-provides-an-update-on-reko-diq/default.aspx