The Asian Development Bank (ADB) has agreed to finance a major upgrade of Pakistan’s railway system after delays in Chinese funding threatened to derail progress on a strategic mining project linked to the China-Pakistan Economic Corridor (CPEC).

According to sources cited by Reuters and MarketScreener, the ADB will lead a $2 billion project to modernise a 500-kilometre stretch of railway from Karachi to Rohri. The upgrade is considered critical for transporting copper ore from the Reko Diq mine in Balochistan, a venture operated by Canada’s Barrick Gold Corp, with production expected to begin in 2028.

The decision comes after over a decade of inconclusive talks between Islamabad and Beijing over financing the railway line. Pakistan continues to face repayment challenges on Chinese loans tied to other infrastructure projects under the $60 billion CPEC program, part of China’s Belt and Road Initiative.

ADB financing will be structured to include the selection of an international engineering contractor through a competitive bidding process. Officials described the project as vital to Pakistan’s broader mining ambitions and as a step toward relieving strain on the country’s ageing rail infrastructure.

China’s foreign ministry responded to reports of ADB’s involvement by reaffirming the strength of China-Pakistan ties, describing the two countries as “iron friends” and pledging to continue cooperation in multiple sectors. The Pakistani government also emphasised that the new financing arrangement would not undermine its partnership with Beijing.

The railway modernisation plan, which includes strengthening tracks and bridges, is considered essential for efficiently evacuating resources from the Reko Diq mine. The deposit, one of the world’s largest untapped copper and gold reserves, represents Pakistan’s biggest foreign investment in recent years.

However, the project also faces challenges beyond financing. The mine is located in Balochistan, a province affected by insurgency, raising security concerns for future operations. The ADB-backed railway upgrade signals a shift in the financing landscape of Pakistan’s infrastructure projects and highlights Islamabad’s growing reliance on multilateral institutions as Chinese lending slows.