The elements of hedging: Great power competition and Pakistan’s resource diplomacy

By: Muhammad Adeel Qureshi

On October 2, 2025, Pakistan entered the global critical minerals trade by dispatching its first consignment of enriched rare earth elements and critical minerals to the United States. This shipment followed the landmark $500 million framework agreement between the military-led Frontier Works Organisation (FWO) and Missouri-based U.S. Strategic Metals (USSM), signed on September 8, 2025, at the Prime Minister’s House in Islamabad. The deal indicates far more than a routine commercial trade agreement; it marks the operational opening of Pakistan’s resource diplomacy in an era of intense great power competition.

The backdrop of this agreement is the swelling “tech war” between Washington and Beijing. Due to strict export controls on critical raw minerals, the United States has sought to establish secure “China-plus-one” supply routes. The global scramble focuses tightly on elements key to modern technology and defense infrastructure, such as antimony for military munitions, and light rare earth elements (REEs) like neodymium and praseodymium, which are vital for permanent magnets used in electric vehicles and aerospace hardware. As Beijing currently holds a commanding global processing monopoly over mineral refining and chemical separation, Western capitals are forced to identify untapped critical reserves to decouple their supply lines.

Pakistan’s capacity to anchor itself within this global supply diversification depends on verified scientific baselines. In late 2025, the country unveiled its first ever National Rare Earth Element Map, a comprehensive geochemical survey covering approximately 360,000 square kilometers. Exploration within the Himalayan Fold-and-Thrust Belt mapped world-class concentrations, with peak anomalies reaching up to 1,403 mg/kg. The survey confirmed the existence of 12 out of 17 critical rare earth elements, demonstrating a massive structural wealth with independent valuations estimating roughly $6 trillion in untouched mineral value.

From an International Relations perspective, the monetization of this data reveals the core mechanics of a calculated hedging strategy. In traditional structural realism, small states are expected to choose a side or “bandwagon” during a superpower deadlock. Pakistan, however, is executing a strategy of double engagement. The geological data that mapped the country’s mineral wealth was largely compiled through bilateral scientific initiatives involving Chinese geological surveys. But the primary commercial vehicle selected to extract and process these targeted zones is a prominent U.S. defense-supply partner. By actively inviting western mining capital into its resource sector, Islamabad is practicing “dominance-denial” that is preventing any single superpower from maintaining absolute control over the country’s strategic geological assets.

This sophisticated multi-vector approach is channelled through the state-backed facilitation body of the Special Investment Facilitation Council (SIFC). By structuring agreements through a single window framework, Pakistan insulates these high-stakes global contracts from localized bureaucratic friction and external diplomatic pressure. SIFC sidesteps governance problems — it doesn't solve them. Pakistan’s deeper institutional weaknesses such as political instability, rule of law gaps and regulatory inconsistency remain. For the minerals strategy to outlast a single government cycle, these structural gaps cannot be permanently avoided.

To transition these initial symbolic shipments into a long-term engine for economic sovereignty, Pakistan must rapidly overcome the “refining trap”. For the refinery phase to happen, financing, domestic political will, technology and the security of the northern regions are all paramount. Remaining a raw ore exporter keeps Pakistan permanently at the bottom of the global value chain. The FWO-USSM deal includes a second phase: a poly-metallic refinery on Pakistani soil. This refinery would convert raw concentrates into high-purity oxides —moving Pakistan up the value chain. If this second phase doesn’t happen, Pakistan remains a “low-margin exporter of raw dirt”. The refinery phase is therefore not optional —it is the difference between strategic leverage and strategic dependency.

Codifying this framework requires the creation of an independent National Rare Earth Authority (NREA) to provide institutional predictability, while simultaneously leveraging CPEC 2.0 Special Economic Zones to anchor advanced regional processing hubs. If Islamabad can maintain this independent, strategically coherent foreign policy path, it can successfully transform its mountains from a site of regional vulnerability into an indispensable node of global energy and defense architecture. The geology is settled. The politics are not. That gap is where Pakistan’s mineral future will be decided.

The writer is a freelance columnist.