Middle East Conflict Forces Barrick to Halt Reko Diq Mine Development

Barrick Mining (TSX:ABX,NYSE:B) has delayed development of its massive Reko Diq copper project in Pakistan until mid-2027, citing regional security risks fueled by the war in the Middle East.

The firm announced the sweeping delay to the project in an April 2 update, stating it is "reviewing all aspects of the project in light of the escalation of security risks and increased security incidents."

Reko Diq, an equal partnership with Pakistani authorities, is estimated to hold 15 million tons in reserves and was previously targeted for first production by the end of 2028. Barrick expected the mine to generate over US$70 billion in free cash flow and US$90 billion in operating cash flow over a 37-year lifespan.

The company stated it anticipates "significant increases to the previously disclosed total estimated capital budget and timeline for the project."

The initial capital cost of Phase 1 was estimated between US$5.6 billion and $6.0 billion, with Phase 2 requiring an additional US$3.3 billion to US$3.6 billion.

While the company noted it considers it "necessary to slow the development activity and continue the project review until mid-2027," Phase 1 will proceed under active management with a reduced capital spend.

The pullback comes as the commodities market braces for Tehran’s response to Trump's deadline: reopen the Strait of Hormuz or face expanded military strikes.

The blockade of the vital shipping chokepoint has already spiked global energy prices while also introducing recessionary risks that are aggressively repricing industrial metals.

Analysts at Goldman Sachs (NYSE:GS) issued a stark warning regarding copper's near-term trajectory if the blockade holds.

“We see the near-term risks as skewed to the downside if strait flows remain disrupted for longer than our base case, which would keep energy prices higher for longer and likely slow global economic growth,” Goldman analysts said in a note cited by Bloomberg.

Despite the macroeconomic threat, copper traded higher on Tuesday (April 7), buoyed by physical demand from China ahead of its peak season. Benchmark three-month copper on the London Metal Exchange (LME) rose 0.55 percent to US$12,428 a metric ton. In Asia, the most-active copper contract on the Shanghai Futures Exchange (SHFE) gained 0.34 percent to close at 96,560 yuan (US$14,049.38) a ton.

A similar dynamic is providing a floor for the gold market. Bullion rose as much as 1 percent on Tuesday (April 7), reversing a two-day decline, as a weakening US dollar and aggressive purchases by the People’s Bank of China (PBOC) offset increased market liquidations.

Official data showed the PBOC increased its bullion reserves for the 17th consecutive month, buying 160,000 troy ounces, or about 5 tons, in March. This marks the bank's largest monthly purchase in more than a year and extends an accumulation cycle that began in November 2024.

In February, the PBOC added 30,000 troy ounces, bringing its total holdings at the time to 74.22 million fine troy ounces.

The sustained buying from Beijing is acting as a critical buffer for gold against the volatility of the Gulf conflict.

While global central bank net buying slowed to five tons in January–down from a 12-month average of 27 tons–analysts expect the accumulation to continue.

“Volatile gold prices and the holiday season may have given some central banks pause,” Marissa Salim, an analyst from the World Gold Council (WGC), wrote in a recent note. “Though geopolitical tensions, which have shown little sign of abating, are likely to keep accumulation going through 2026 and beyond.”

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.