Pakistan’s growing mineral cooperation with the United States presents a strategic paradox. Washington is exploring new sources of critical minerals to diversify its supply chains, yet persistent terrorism in Pakistan’s resource-rich regions threatens these emerging opportunities. While China already has substantial investments and an established strategic partnership with Islamabad, American economic engagement is still developing. Consequently, instability in Pakistan could undermine not only its economic prospects and Chinese investments but also Washington’s critical-minerals strategy and ambitions to expand economic access to Central Asia.
Pakistan possesses significant copper, gold and chromite deposits, alongside potential lithium-bearing and rare-earth resources, particularly in Balochistan, Khyber Pakhtunkhwa (KP) and its northern regions. These minerals are important for modern manufacturing, renewable energy, electric vehicles, electronics, defence industries and advanced technologies. However, limited domestic capacity in geological exploration, advanced extraction and mineral-processing technologies has constrained their development. Pakistan therefore requires foreign investment, technical expertise and technology partnerships to realise its mineral potential.
To address these challenges, Islamabad established the Special Investment Facilitation Council (SIFC) in 2023 to attract investment, streamline regulatory processes and facilitate international partnerships. Through SIFC, Pakistan is promoting joint exploration, modern mining technologies and domestic mineral processing.
Ahead of the Pakistan Minerals Investment Forum 2025, Islamabad invited representatives from 22 countries, including the United States, China, Saudi Arabia, Turkiye, Gulf states, Central Asian republics and several African and European countries, to explore investment opportunities. While China has already invested substantially in Pakistan’s infrastructure, energy and connectivity through the China-Pakistan Economic Corridor (CPEC), Islamabad is seeking broader partnerships to diversify investment and mineral supply chains.
American engagement has begun to materialise. In September 2025, Pakistan’s Frontier Works Organization (FWO) and US Strategic Metals signed a memorandum of understanding envisaging approximately $500 million in critical-minerals investment. Subsequently, in December 2025, the US Export-Import Bank approved $1.25 billion in financing for the Reko Diq copper and gold project in Balochistan, subject to implementation and financing requirements. These developments highlight Pakistan’s growing commercial significance for American businesses, although proposed investment and financing approvals do not necessarily represent fully disbursed capital.
However, these emerging economic opportunities face a serious security challenge.
Pakistan’s mineral-rich regions, particularly Balochistan and KP, have experienced persistent terrorist attacks targeting security forces, civilians, infrastructure and economic interests. Such violence threatens development projects, discourages foreign investment and increases risks to strategic supply chains. Washington’s efforts to secure diversified mineral supplies for manufacturing, energy transition and defence technologies depend on stable conditions for exploration, extraction, processing and transportation.
Pakistan has repeatedly accused India of waging a proxy war by supporting militant networks, including groups operating from Afghan territory. Islamabad maintains that foreign-backed terrorism aims to destabilise Pakistan, weaken its capacity to confront its traditional rival and obstruct economic development. Pakistani strategic analysts also argue that attacks against Chinese nationals and CPEC infrastructure are intended to undermine Beijing’s economic presence in South Asia. India denies sponsoring terrorism in Pakistan, and specific allegations of operational involvement remain disputed.
Nevertheless, China is already deeply entrenched economically and strategically in Pakistan. Despite attacks against Chinese nationals and investments, Beijing continues to maintain substantial economic commitments and supports efforts to safeguard its projects.
The United States, however, risks becoming a major economic casualty of this instability before its emerging investments in Pakistan’s mineral sector reach their full potential. Unlike China, Washington is still developing its investment presence in Pakistan’s critical-minerals sector. Continued terrorism could discourage American companies from committing capital and prevent proposed projects from becoming operational, undermining efforts to secure alternative mineral supplies amid growing international competition.
The implications extend beyond minerals. Pakistan offers potential southern transportation routes connecting landlocked Central Asian republics to the Arabian Sea through Afghanistan and Pakistani ports. Persistent terrorism and Afghanistan-Pakistan tensions obstruct these opportunities, limiting Washington’s prospects for expanding trade and economic engagement with Central Asia.
Russia maintains substantial political, economic and security relationships across Central Asia, while China has expanded its regional connectivity networks. Without secure transportation corridors through Afghanistan and Pakistan, Central Asian states face greater constraints in diversifying access to international markets. This indirectly reinforces the importance of established Russian and Chinese networks while limiting opportunities for additional American economic engagement. Although Washington is not excluded from Central Asian markets, insecurity restricts an important potential southern corridor.
The security threat has intensified since the Taliban returned to power in Kabul in August 2021. Pakistan has experienced a substantial increase in terrorist attacks, particularly those attributed to Tehreek-e-Taliban Pakistan (TTP). Islamabad maintains that TTP militants operate from Afghan territory, while the Taliban authorities deny permitting their territory to be used against neighbouring countries.
The UN Security Council’s August 2026 Monitoring Team report highlighted the continuing threat posed by terrorist organisations operating in Afghanistan to neighbouring countries and Central Asia. It also reported that Taliban authorities had relocated approximately 2,000 TTP fighters and their families away from areas near Pakistan’s border to other parts of Afghanistan in an effort to constrain the group.
Separately, a February 2026 Russian Foreign Ministry assessment estimated that approximately 5,000–7,000 TTP fighters were present in Afghanistan. Russia has also expressed concern over Pakistan-Afghanistan tensions and called for renewed political dialogue and counterterrorism cooperation. These assessments reinforce Pakistan’s longstanding concerns about cross-border militancy and its implications for regional stability.
The Balochistan Liberation Army (BLA) has likewise repeatedly attacked Pakistani security forces, civilians and infrastructure. Pakistan has presented intelligence assessments alleging Indian financial, material and operational support for the BLA, TTP and associated militant networks, although these allegations remain internationally contested.
Washington has independently recognised the BLA as a terrorist organisation. The United States designated it a Specially Designated Global Terrorist entity in July 2019 and subsequently designated it a Foreign Terrorist Organization in August 2025, including its Majeed Brigade alias.
Pakistan’s security concerns have also received attention in Washington. On October 31, 2026, US Secretary of State Marco Rubio acknowledged Islamabad’s concerns regarding terrorist attacks originating from Afghan territory. He stated that Washington had heard Pakistan’s concerns, did not want the country targeted by terrorism and would consider playing a productive role in addressing the situation.
Rubio’s remarks demonstrate Washington’s recognition of Pakistan’s security concerns, although he did not explicitly link counterterrorism cooperation to mineral investment. Nevertheless, emerging American economic interests provide a compelling strategic reason for greater engagement. Washington cannot realistically pursue reliable mineral supply chains and expanded Central Asian connectivity while treating terrorism in Pakistan as a peripheral issue.
For Pakistan, safeguarding international investments requires sustained counterterrorism cooperation, effective border management, responsible resource governance and economic opportunities for local communities. For Washington, supporting regional stability increasingly serves its own commercial and strategic interests.
Ultimately, a proxy conflict that Pakistan believes is intended to weaken its security and challenge China’s economic presence could also obstruct Washington’s emerging mineral interests, restrict Central Asia’s access to alternative trade routes and reinforce the very regional dependencies the United States seeks to diversify.
