Political Risk Cover for Mining in Pakistan: What You Can Actually Get Underwritten

A German buyer asked me last month what insurance we carried on a proposed antimony off-take. Not the shipping. The country risk. He wanted to know if his 40 million euro exposure over five years could sit behind a MIGA guarantee or something equivalent from Euler Hermes.

Fair question. And one I get more often now than three years ago.

So here's what I've learned from actually going through the process — not from a broker's slide deck, but from sitting across from underwriters in Dubai and London who wanted to know exactly what we hold, where, and under whose licence.

What's actually on the table for Pakistan

The World Bank's MIGA (Multilateral Investment Guarantee Agency) does write cover in Pakistan. It's not theoretical. They've backed energy and infrastructure projects here, and mining sits within their mandate. The four classic perils they cover — currency transfer restriction, expropriation, war and civil disturbance, breach of contract by the host government — all apply. Tenors go out to 15 years, sometimes 20. Cover can reach 95% of equity and 99% of debt on some structures.

But — and this matters — MIGA won't underwrite a licence they consider legally shaky. They'll want to see your mineral title issued cleanly under the Gilgit-Baltistan Mines and Minerals Act 2018, your lease properly registered, and a clear chain from the concession holder to the JV entity. If any of that's messy, you don't get past the eligibility screen.

The private market is where most deals actually land, honestly. Lloyd's syndicates like Chaucer, Beazley and Canopius write political risk for extractive projects in frontier jurisdictions all the time. Premiums for Pakistan mining exposure I've seen quoted between 0.85% and 2.4% of insured value per annum, depending on the mineral, the region, and how the offtake is structured. Antimony and tungsten price better than gold because the end-use story (defence, EV, flame retardants) reads well to the underwriter's risk committee.

Then you've got the ECAs. Sinosure will cover Chinese buyers taking Pakistani concentrate — I've had two Chinese trading houses walk me through their internal Sinosure limits on Pakistan, and the ceilings are real but workable if you're moving under 30 million USD annually. SACE from Italy and Euler Hermes from Germany write on a case-by-case. Japan's NEXI has done Pakistan before, mostly on energy, but critical minerals for battery supply chains is opening that door again.

US OPIC — now DFC (Development Finance Corporation) — is technically available but politically slower. Look, I won't pretend that's a fast route right now. It exists on paper.

What the underwriters actually ask about

I got this wrong at first. I thought the conversation would be about grades and reserves. It wasn't. Underwriters aren't geologists. They want to know:

Who signed your lease, and can that signature be enforced? For us, that's the GB Mineral Investment Facilitation Authority — a body created specifically to give mining titles a firmer legal footing. That answer alone shifts the premium.

What's the export route, and does it cross any disputed territory? Karakoram Highway to Sost, then either onward to Kashgar or south to Karachi port. Both routes have real, documentable customs procedures. That's underwritable.

Is there any local community dispute currently active? They'll check. They have people who check. If there's a pending case in a GB court over your concession boundary, you'll be asked about it before you're asked about ore body.

What's the offtake structure? A pre-paid offtake with a creditworthy buyer changes the risk profile completely. If Umicore or Traxys is prepaying against tonnage, the insurer sees a different animal than a spot-sale operator hoping for market prices.

And — this one surprised me — they ask about power. Because a project that stops for six months a year due to load-shedding isn't a political risk, technically, but it kills the underlying economics they're insuring against. So you end up talking about your captive hydro plans whether you want to or not.

Where cover gets thin

Three areas where I'll be straight with you.

First, environmental liability. That's a separate policy, and the market for it in Pakistan is narrow. You'll likely be self-insuring or using a captive for anything beyond a basic third-party pollution wrapper.

Second, business interruption from natural catastrophe. GB is seismically active, and glacial lake outburst floods (GLOFs) are a real thing — we've had 33 documented events in the last decade in the region. Nat-cat cover for remote mine sites here is expensive and gets excluded quickly.

Third, contract frustration cover on the offtake side. If your Chinese buyer defaults because of a trade dispute unrelated to Pakistan, that's not political risk in the classical sense. You need trade credit insurance layered on top, which is a different underwriter and a different conversation.

The practical stack we've been working toward

For a serious JV — say, 50 million USD deployed over four years into an antimony or tungsten operation — the layered cover most partners end up with looks something like this: MIGA or a bilateral ECA on the base equity, a Lloyd's-led private political risk wrap on the top layer, Sinosure or Euler Hermes on the offtake receivables, and a separate trade credit facility for the concentrate shipments themselves. Environmental sits outside, usually with a Bermudian carrier if the numbers justify it.

Total insurance load ends up somewhere between 1.6% and 3.1% of project value per year in my experience. That's not cheap. But it's the cost of doing this properly, and every serious partner I've spoken to in the last eighteen months has built it into their model from day one.

The buyers who don't ask about insurance are usually the ones who won't close anyway. The ones who ask early — and ask sharply — are the ones you want across the table.