With the growing imperative of a global clean energy transition, many nations face deficits in reserves of mineral resources. In response to this, a significant number of them are turning their focus to the African continent, but that’s old news.
For the last year or so, Saudi Arabia has taken major steps beyond its traditional oil sector, investing heavily in the exploration and development of its extensive domestic mineral resources. This effort is two-pronged. On the one hand, the country wants to develop its own mineral resources in the long term. On the other hand, it hopes to strike foreign partnerships with countries like the U.S., some African nations and India to become a global mineral hub.
The overall aim is to slowly move away from its oil-dependent economy and capitalize on the growing global demand for transition minerals, specifically lithium, cobalt and nickel. Such mineral resources are critical for the shift from fossil fuel-dependent economies to more sustainable, carbon-neutral systems.
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Mineral Resources to Become a Major Sector of the Economy
By leveraging its abundant mineral resources and strategic initiatives, the mining sector in Saudi Arabia is poised to become a cornerstone of economic diversification and sustainable development. That is, if everything goes according to plan.
Media reports indicate that mining now plays a central role in Riyadh’s strategy to reduce oil dependency, with a focus on utilizing its significant reserves of phosphate, gold, copper and bauxite. The reports claim that Saudi Arabia holds considerable amounts of minerals necessary for the energy transition, such as aluminum, copper and rare earth elements.
According to Arab News, the World Risk Report 2023 published by UK-based consultancy MineHutte last year pointed out that Saudi Arabia’s mining sector had been one of the world’s fastest-growing regulatory and investment-friendly environments for five years. The report added that after the passing of a new Mining Investment Law in 2021, there was a 138% increase in the number of exploitation licenses issued.
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Saudi Arabia’s Vision 2030 Initiative Looks Beyond Oil
The kingdom has been adamant about its “Vision 2030” initiative, which seeks to diversify its economy from an over-reliance on oil. This diversification will prove crucial as the demand for transition minerals surges due to advancements in renewable energy technologies and electric vehicle production. By expanding its mining sector, Saudi Arabia not only seeks to secure a foothold in these vital resource supply chains, but also aims to position itself as a global hub for minerals critical to the worldwide energy transition.
In order to facilitate this transformation, Saudi Arabia has opened new mining exploration licenses and established foreign partnerships, further underlining its commitment to developing its vast mineral reserves. Such investments include not just potential extraction of mineral resources like copper, zinc and gold, but a focus on strategic minerals essential for battery production and renewable energy technologies.
Mineral Resources Worth Over $2.5 Trillion
Saudi Arabia recently revised its estimate of untapped mineral resources, raising the value from the US $1.3 trillion forecasted eight years ago to $2.5 trillion. According to a report from Reuters, Saudi Arabia’s mining minister, Bandar Al-Khorayef, stated that the Kingdom’s reserve potential had grown by nearly 90%.
This $1.2 trillion increase was attributed to the discovery of higher reserve quantities, the addition of new minerals like rare earths to the list and a reassessment of commodity prices.
More Investments Flowing In
In late November, Saudi Arabia announced nine investment agreements in the metals and mining sector valued at over US $9 billion (35 billion riyals). The deals, which involve companies such as India’s Vedanta and China’s Zijin Group, were unveiled during the World Investment Conference in Riyadh. The Global Supply Chain Resilience Initiative, a key component of Saudi Arabia’s National Investment Strategy, organized that conference.
Where copper is concerned, Saudi Arabia presently imports about 365,000 tons of copper each year in order to meet domestic demand. The current prediction is that these imports will double by 2035. Vedanta, the metals powerhouse led by Indian billionaire Anil Agarwal, has also unveiled plans to invest $2 billion in Saudi Arabia to establish cutting-edge copper-processing facilities.
The new facilities will feature a smelter and refinery with an annual capacity of 400,000 metric tons, along with a plant capable of producing up to 300,000 tons of copper rods, which are essential for electric cables.
The Jabal Sayid copper project, a joint venture between the Saudi Arabian Mining Company (Ma’aden), Barrick Gold and the Al-Jalamid phosphate mine, is just one of several other key domestic initiatives currently underway.
Actively Seeking Mineral Investments Elsewhere
Saudi Arabia is also investing heavily in exploration and geological surveys, using advanced technologies and global expertise to uncover new mineral deposits. In line with the new Mining Investment Law, the government recently announced an auction for six mining licenses covering lead, zinc, copper and iron deposits.
A few years ago, the country set up Manara Minerals, an investment fund jointly owned by Ma’aden and the Public Investment Fund (PIF), with the goal of acquiring global assets. In 2023, the fund made its first major overseas investment, acquiring a 10% stake in Vale Base Metals, a $26 billion copper and nickel spin-off of Vale S.A.
Saudi Arabia’s ambitious pivot toward mineral resource development marks a critical point in its journey to diversify its economy and lead the global energy transition. By tapping into over $2.5 trillion in untapped reserves and building strong foreign partnerships, the kingdom positions itself as a key supplier of transition-critical minerals. The Vision 2030 initiative showcases a forward-thinking strategy that reduces oil dependency while establishing Saudi Arabia as a central hub in the sustainable resource economy.
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