Allegations of a secret post-election deal surface as Nepal eyes handing over uranium-rich Himalayan territory to a US-Australia-led coalition, despite firm denials from the country’s former top leaders.

In a move that could reshape Nepal’s resource politics and its position in the global contest for critical minerals, the Nepalese government is reportedly preparing to designate a 30-square-kilometre tract of land in Lo Manthang, Upper Mustang, as the “Mustang Special Zone” (MSZ). The zone would grant exclusive rights to the United States and Australia for uranium processing as part of the US-led “Pax Silica” coalition, according to confidential documents and high-level sources.

The proposal comes at a delicate moment. Nepal, long caught between the strategic interests of China, India and the West, appears ready to align more closely with Washington on both mineral extraction and digital security. Yet senior figures from the previous administration have categorically denied any knowledge of the agreement, raising questions about transparency and the timing of the decision.

Uranium Discoveries Across Nepal’s Remote Regions

Uranium deposits have been identified not only in Lo Manthang and surrounding areas of Upper Mustang but also in Makwanpur’s Tinbhangale-Kalopani area of Dhiyal – reportedly the site of Nepal’s highest recorded radiation levels – and in Sindhuli’s Buka Khola and adjacent regions. The Mustang site, however, has been singled out for immediate development under the new special zone.

Under the plan, a joint technical team from the US and Australia would handle uranium processing in close coordination with the Nepalese Army. The MSZ would function as a high-security research zone, accessible only to Nepalese Army personnel and the designated foreign technical team. The arrangement is framed as a strategic counter to Chinese dominance in rare-earth and critical minerals, including uranium.

Pax Silica: A New Coalition Takes Shape

The “Pax Silica” coalition was formed under US leadership to secure supply chains of critical minerals and advanced technology away from Beijing’s influence. Nepal’s reported entry follows India’s formal joining on 20 February 2026 during the Global AI Impact Summit in New Delhi. That move, sources say, paved the way for Nepal to integrate into the emerging regional “Silicon Stack”.

On the night of Nepal’s 4 March 2026 general elections – as early results showed the Rastriya Swatantra Party (RSP) gaining ground – a preliminary agreement was reportedly reached between the Ministry of Communication and Information Technology and Pax Silica technical advisors. Three days later, on 8 March, an in-principle consent to join Pax Silica was signed, according to the same confidential documents.

The ministry had already given “in-principle” approval to the Mustang proposal before polling day, the sources claim.

Power from MCC, Data from the Himalayas

A key element of the deal is energy integration. Electricity needed for uranium extraction and processing in Mustang would be drawn from the Millennium Challenge Corporation (MCC) transmission lines already built in Nepal. These lines would also power new Edge AI data centres planned for the hilly regions, the documents state.

The agreement falls under the “Himalayan Resource and Digital Security Annex” and includes provisions for “Glass Box” AI security systems that would monitor fibre-optic traffic along Nepal’s borders for heightened alerts. It also reportedly addresses the transfer of data sovereignty and the securing of “Digital Hashes”.

Official Denials Raise Transparency Concerns

Despite the detailed claims in the leaked documents, two senior figures from the outgoing government have strongly denied any involvement.

Former Prime Minister Sushila Karki told reporters: “I haven’t heard the term ‘Pax Silica.’ I haven’t been to Singha Durbar since the March 4 elections, and I haven’t heard or discussed anything regarding this matter.”

Former Finance Minister Rameshwor Khanal was equally emphatic: “To my knowledge, this subject was never mentioned while I was in government.”

The stark contrast between the official denials and the confidential documents has sparked immediate concern among observers. Some fear the deal could open the door to foreign exploitation of Nepal’s resources, potentially mirroring resource conflicts seen elsewhere and risking ethnic tensions in the sensitive Himalayan borderlands.

Strategic Stakes and Broader Implications

If confirmed, the Mustang Special Zone would mark a significant shift in Nepal’s foreign and resource policy. It would tie the country more firmly into Western-led supply chains for uranium and rare earths while linking its energy infrastructure to advanced AI and digital security projects. The involvement of the Nepalese Army in coordinating the high-security zone underscores the strategic – and potentially military – dimensions of the arrangement.

Yet the lack of public debate, the timing immediately after a national election, and the explicit denials from the previous prime minister and finance minister have raised questions about accountability. Critics worry that such a major decision involving national resources, data sovereignty and border security may have been advanced without adequate parliamentary or public scrutiny.

As Nepal navigates its complex geopolitical position – sandwiched between giant neighbours and increasingly courted by global powers – the Mustang uranium proposal highlights the tension between development ambitions and the preservation of sovereignty. Whether the government proceeds with the Mustang Special Zone, and how it addresses the apparent discrepancies between documents and official statements, could shape the country’s international relations and domestic politics for years to come.