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Saudi Vision 2030: A sneak peek into Kingdom’s blueprint for ‘Mining Sector Domination’

Saudi Arabia wants approximately USD 200 billion in mining investments by 2030 due to its USD 1.3 trillion mineral riches

Under Saudi Arabia’s “Vision 2030” economic diversification strategy, the Kingdom’s mining sector has emerged as the third pillar of the National Industrial Development and Logistics Programme. The Gulf nation, in its bid to move away from the traditional energy trade, has now prioritised its mining sector as one of its non-oil growth engines. As Saudi eyes a plethora of things like green transition, digitisation, technology revolutions, nuclear energy production, and military procurement localisation, minerals will play a vital role in the coming days.

By 2030, Saudi Arabia envisions its mining-powered green transformation increasing the Gulf country’s renewable energy output to 50% of the overall mix. Saudi officials want to increase the mining sector’s GDP contribution from USD 17 billion to USD 75 billion by 2030. Local mining investments are predicted to cut Saudi mineral imports from USD 19 billion to USD 11.5 billion by 2035, lowering prices and making mineral-dependent businesses more competitive.

The Kingdom has around 48 minerals. High-demand metals like aluminium and steel are mined quickly. Saudi Arabia wants approximately USD 200 billion in mining investments by 2030 due to its USD 1.3 trillion mineral riches. The Saudi Arabian Mining business, or Maaden, the Gulf’s largest mining business, and the Public Investment Fund are driving the mission.

After establishing the Ministry of Industry and Mineral Resources in 2019, Saudi followed it up with a new law to encourage investment by making mineral exploration and extraction easier and granting financial incentives.

Saudi Arabia also increased its activities, awarding a USD 207 million contract to the Chinese Geological Survey to complete 50% of the survey of the Arabian Shield, a more than 230,000 square mile area of Precambrian rocks in the western part of the Gulf nation, by 2025.

The National Geological Database maps Saudi Arabia’s mineral resources to help investors identify mining prospects. To promote international cooperation in the industry, Saudi Arabia founded the Future Minerals Forum. In partnership with the National Stock Exchange of Australia (NSX) and Saudi Ajlan, a renowned investment holding business in the country, the Saudi Metal and Mining Exchange will be a mining company stock market and mineral trading platform.

The Saudi Ministry of Investment and Chinese electric car company Human Horizons struck a USD 5.6 billion electric vehicle production pact in July 2023. China leads the global EV market, which requires batteries made from lithium and copper. Riyadh hopes to use this to compete in the regional market. Through 2026, the monarchy plans to produce and export over 150,000 electric cars. Saudi Arabia announced a USD 6 billion steel plate mill complex and electric car battery metals production for shipbuilding, oil & gas, construction, and defence in May 2022.

Since 2022, Lucid Group, an American electric car manufacturer, has been building a plant in Saudi Arabia to produce 150,000 vehicles per year by 2026. In November 2022, Saudi Arabia founded Ceer Motors, its first national electric vehicle firm, to localise manufacturing.

The Kingdom is negotiating to establish a civilian nuclear programme with United States help as part of a larger arrangement to repair relations with Israel, but regional tensions may make that less probable. Despite Israeli opposition to US backing for Saudi enrichment, Saudi Arabia intends to use its local uranium stockpiles to fuel it. Saudi Arabia is also considering seabed mining to use Red Sea minerals and metals, but environmental concerns and a lack of regulation may postpone these ambitions.

Regional Partnerships And Competition

The Kingdom is forming regional mining partnerships for investments, processing capacity, and finished goods. Egypt and Saudi Arabia inked two non-oil cooperation agreements in June 2023. Turkey and Saudi Arabia inked a memorandum of agreement in August 2023 to share information and research on crucial minerals for solar panels and electric vehicles. Saudi Arabia also handed Mauritania USD 51 million in 2022 for cooperative iron ore mining development.

Saudi Arabia faces competition from other nations in the mineral market and electric vehicle business. Iran claims to have the second-largest lithium reserves in the world with 8.5 million tons of the rare element needed to make batteries and computer chips. Iran will invest USD 15 billion to increase copper production. Algeria proposed a USD 10 billion iron mine development plan in August with a 40 million-ton output potential.

Iranian and Algerian mining expansion might provide a platform for partnership with Saudi Arabia, but it also shows how regional competition for mineral supply is rising. Saudi intentions may fail in the electric vehicle market due to regional competition. Egypt, the UAE, Jordan, and Bahrain reportedly discussed creating the first Arab electric vehicle.

Togg, the first major Turkish electric vehicle manufacturer, plans to produce 175,000 vehicles annually. In 2022, Iran’s leading automaker, IKCO, introduced its first electric vehicle. Iran wants to sell electric cars to Iraq, Syria, and Lebanon in addition to its local market. Regional competition for market share may reduce the Saudi mining industry’s economies of scale in the domestic electric vehicle market.

International Deals

Saudi Arabia wants international relationships and foreign investment in addition to domestic and regional activities. Through Manara, its joint venture with the PIF, Maaden bought 10% of Vale in July 2023. Manara’s Vale investment will boost copper and nickel production. Maaden also bought 9.9% of Ivanhoe Electric and formed a joint venture to find copper, gold, silver, and other metals in Saudi Arabia.

In Saudi Arabia, Luxembourg-based Eurasian Resources Group will spend USD 50 million in large-scale, tech-enabled early-stage battery transition mineral exploration. Jersey-based Royal Road Minerals Limited and Saudi MSB Holdings Limited formed a joint venture to search for copper, gold, and other metals in Saudi Arabia. Saudi investor Ajlan & Bros and United Kingdom-based Moxico Resources aim to invest USD 14 billion in mines and processing facilities by 2030.

The Wall Street Journal reported in September 2023 that the United States and Saudi Arabia were discussing securing African metals to facilitate energy transitions. It stated that the Kingdom wants to buy USD 15 billion in worldwide mining assets to boost its position in the global fight for cobalt, lithium, and other metals for batteries and chips. A USD 3 billion joint venture with Maaden to buy DRC mining assets has also been explored by the PIF.

Challenges Ahead

Despite these efforts, some experts doubt the Saudi mining sector’s viability. The copper ore deposits in Saudi uranium reserves are projected to be tiny to medium-sized, making them less desirable for major global mining companies to exploit than larger resources. Water and infrastructural shortages in the desert are major concerns. Foreign monitoring of the mining industry’s environmental, social, and governance consequences may limit investors’ appetite to invest and collaborate abroad.

Riyadh hopes to become a global energy and communications powerhouse with Russia, China, India, Europe, and the US as long-term oil demand declines. The Kingdom wants to emulate China’s strong position in the global rare earth metals supply chain and its benefits.

Riyadh wants to become a data hub and corridor, and minerals will help it construct and maintain infrastructure. It wants to join the global mineral supply chain and digitize the global economy. The recently planned India-Middle East-Europe Economic Corridor shows Saudi Arabia’s ambitions as a global energy and connectivity hub.

Will the Kingdom succeed in its pursuit of “Mineral Supremacy?” Let’s wait and watch.

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