Domestically, Pakistan is challenged with a convergence of serious challenges which are signaling a potential doomsday scenario for the country from very low economic growth, increasing debt burden, border tensions, to narrow export base and more. Global changes, however, are presenting another chance to take a fresh breath, strategize well, and save the country from falling into a pit where it would take ages to climb back into the light.
In the aftermath of COVID-19, the Russia-Ukraine War, and China’s tightening of critical minerals-related export controls, the concept of friend-shoring gained momentum as countries realized the vulnerabilities of the existing supply chains.
Western countries have increasingly been seen shifting their supply chain nodes to more reliable partners to secure the critical minerals’ relentless supply for green energy transition. Fortunately, Pakistan has managed to position itself as one of these nodes by offering alternative critical minerals sources for supply chain security.
The recent $500 million critical minerals partnership between the US and Pakistan is one such manifestation of growing shift toward friend-shoring, where countries are relocating their production and processing to politically aligned states to reduce exposure to rivals.
This move comes straight from China’s tightening of export controls on rare earths and other critical minerals, which has pushed Western countries to diversify their critical minerals supply chain to minimize vulnerabilities and overdependence on Chinese refining capacity.
Although scholars warn that the shift towards reshoring or friend-shoring could hamper global economic balance, the World Economic Forum’s Global Risks Report 2025 cautions that the unraveling of global cooperation in trade, technology, and climate could deepen fractures between major powers and fuel competition over scarce resources.
Yet, as Kalvelage puts friend-shoring as a state-orchestrated reconfiguration of GPNs where political trust becomes a key governance criterion for supplier selection. Pakistan can place itself within this second category of states with the right strategy.
But it raises a critical question: Can Pakistan, in its current economic and institutional condition, be sufficiently reliable to function as a friend-shoring hub for a high-stakes critical mineral supply chain?
Who is looking forward to Pakistan as the next friend-shoring hub?
The recent engagements from countries like Saudi Arabia and China also reflect a turn towards Pakistan for securing more stable supplies of critical minerals. Having amiable historic ties and their increasing interest in investing in this sector indicate a potential for friend-shoring.
Saudi Arabia’s interests in acquiring a 10-20% stake in Pakistan’s Reko Diq copper and gold mine project are in the process of materializing, and both sides envision significant returns from the deal.
Since Saudi Arabia is making efforts to diversify its oil-dependent economy by investing in various sectors, critical minerals seems like a promising sector where it is pouring billions of dollars to make the country a hub for green energy transition.
In its quest, Pakistan can emerge as a promising node to secure stable and long-term minerals supplies. For recent increasing engagement, Saudi Industry and Minerals Resources Minister Bandar Alkhorayef states that the potential engagement is “a platform where we can see ourselves working with our friendly countries that look at Saudi Arabia as their reliable partner, like Pakistan”.
This kind of remarks indicate the potential for friend-shoring in future. Also, it is reflected from its interest in not only seeking equity but extending offtake agreements to secure future copper supplies.
The historically amiable relations between China and Pakistan and former’s increasing need for the upstream inputs is another potential case for friend-shoring. Although China enjoys unmatched dominance in downstream refining capacity, but it still heavily relies on imported ores and concentrates from countries like Congo to Australia.
Their lasting relations, built on cooperation and strategic trust can play instrumental role in Beijing’s willingness to source specific mineral ores from Pakistan. Contrary to other less favorable jurisdictions, Pakistan offers a more conducive option to China for importing ores or to scaling them up domestically as concentrating them at one place might increase risks.
But, how much could be materialized, or can it be materialized at all?
State sources are claiming an estimated $6 trillion worth of critical minerals deposits that can be found in country’s western and northern regions. If materialized with strategic vision, these resources carry the potential to turn Pakistan into next Dubai as states seek to acquire them without disruptions.
The emerging era of green energy transition is amplifying their demands for countries’ growing technological advancement.
However, the current politico-economic situation of the country raises acute questions about its viability not just for the US but other countries which may seek to make Pakistan a credible friend-shoring destination.
First, the regions where much of the critical minerals can be found are volatile, with active militancy and separatists’ group that pose threats not only to the local communities but to the state too.
Recent attacks on railway lines, convoys, and infrastructure especially projects linked to external partners have prompted shutdowns, communication failure, and heavy security deployments.
Much of this unrest is caused by the local populations feeling excluded from the benefits of the resources they live upon. So, how is Pakistan going to provide long-term security assurances to the investing partners which are willing to invest in the infrastructure required for mining activities?
Second, elite capture and weak governance around the resource deals have long been an issue of contention between state and the local communities. Issues of transparency, resource-sharing, environmental concerns, and the exclusion of local communities have been ringing loud bells, but they continue to fall on deaf ears.
Large land, resource, and infrastructure projects under CPEC have already come under scrutiny because of the lack of transparency in their allocation mechanisms and returns. Gulf countries have also poured billions of dollars into agriculture, farmland and the mineral resources of Reko Diq, but those projects too have faced disputes over ownership, royalties, and community impact.
If the contracts lack transparent revenue-sharing and rely on opaque procurement and licensing systems, how will they not undermine the agenda of friend-shoring, where critical supply-chain dependence can translate into political risks that breed rent-capture, litigation, and reputational harm for investing parties?
Third, macroeconomic volatility and political instability of Pakistan has not remained occasional anymore but have become embedded part of the system. These systematic uncertainties heighten both sovereign and operational risks.
Moreover, the country political situation has long remained contentious and the economy remains prone to global shocks as well as frequent changes of governments that dent the long-term political commitment.
These conditions render contract-enforcement, currency, and policy continuity risks that not only pose existential threats to the long-horizon mining projects but hinder high ambitions of becoming a thriving hub for friend-shoring.
In the backdrop, can other countries realistically commit to engage in long-term projects in the critical minerals sectors, which by nature require prolonged commitments?
Putting it together, Pakistan’s potential of around $6 trillion worth of critical mineral resource, which are building blocks of this century’s technological advancement, presents a jackpot opportunity for both Pakistan and its friends who seek to secure supply chains of these minerals.
Having a politically aligned and reliable state can be a promising spot for this endeavor. The era of energy transition is making resource rich countries crucial nodes in the critical supply chain as concentrating their dependence on one or two suppliers that too unstable, heightens risks in the moments of political instability both domestic and global.
Therefore, countries are turning towards the friend-shoring frameworks, which promise secure supplies for those who need them while opening avenues for FDI, stable buyers, and enormous opportunities to reshape the future of resource rich countries.
Given the current scenario, Pakistan is indeed sitting at the crossroads: harnessing the opportunity to change its destiny by reaping the benefits of these resources through cautious strategies and calculated policies, or choosing the same old path of rent-seeking, mismanagement, and systemic evasion, pushing country into deeper vulnerabilities and irreversible dependencies.
The time for appropriate action is now but the question remains: Is Pakistan going to act differently this time?
*The views expressed in this article are the authors’ own and do not represent TDI. The contributor is responsible for the originality of this piece.
Aamina Urooj
Aamina Urooj is an MA Political Science candidate at Universitas Islam Internasional Indonesia, pursuing her degree on a fully funded scholarship. Her works examine the current literary debates in the fields of human rights, sustainable development, and the political economy of the Global South. Her place of solace lies in exploring the geopolitical troughs and crests of the capitalist world.
