Challenges ahead for US-Pak rare earth deal

Attacks on US projects would be a way for militants to express grievances and pressure the Pakistani government.

- PRABHU DAYAL

Donald Trump’return to US presidency in 2025 has witnessed increased high-level engagement with Pakistan and economic deals focused on the latter’s natural resources.

The United States has become involved in Pakistan’s mineral sector through a major investment and partnership deal. The deal is designed to help the US diversify its supply of critical minerals known as rare earth elements (REEs) away from China while providing Pakistan with the much needed foreign investment and technology transfer. The shift represents a significant change from the preceding Biden administration, which had largely sidelined Pakistan.

Pakistan has used its mineral potential to appeal to Trump's business-oriented mindset and to reframe its relationship with the US toward economic and resource cooperation. In September 2025, Pakistan’s Frontier Works Organisation (FWO) signed a $500 million Memorandum of Understanding (MoU) with Missouri-based US Strategic Metals (USSM). ‘The Frontier Works Organisation (FWO) isa military-engineering organization of the Pakistan Army which constructs infrastructure projects like highways and tunnels.

The agreement is planned in three phases:

Phase 1 (2025-2026): Exporting readily available minerals to US markets to generate revenue.

Phase 2 (2026-2028): Establishing mineral processing plants and refineries in Pakistan, including technology transfer for refining REEs.

Phase 3 (2028 and beyond): Conducting large-scale exploration and exploitation, including developing 5-10 mining projects in areas with high potential for REEs.