desert landscape mountain panorama , madain saleh , saudi arabia
π Geopolitics π Economics π Energy
Oil to lithium, the energy transition is shuffling the cards for global politics

Saudi Arabia, a future mining power?

Emmanuel Hache, Assistant and Economist-Prospector at IFP Énergies nouvelles and Research Director at IRIS, Candice Roche, Research Fellow in Geopolitics of Metals and Ecological Transition at IFPEN and Vincent d’Herbemont, Civil engineer in the economics and environmental assessment department at IFP énergies nouvelles
On April 16th, 2024 |
7 min reading time
Emmanuel Hache
Emmanuel Hache
Assistant and Economist-Prospector at IFP Énergies nouvelles and Research Director at IRIS
Candice Roche
Candice Roche
Research Fellow in Geopolitics of Metals and Ecological Transition at IFPEN
Vincent d’Herbemont
Vincent d’Herbemont
Civil engineer in the economics and environmental assessment department at IFP énergies nouvelles
Key takeaways
  • Through its “Vision 2030” project, Saudi Arabia has clearly stated its ambitions to diversify its economy and become a leader in low-carbon technologies.
  • Keeping up with the shift towards decarbonisation imposed by the climate crisis is forcing the kingdom (which derives 60% of its revenue from oil) to target markets other than hydrocarbons.
  • To achieve this, the country wants to exploit the significant mineral potential of its subsoil and develop an efficient industrial base in the mining and metallurgy sectors.
  • The latest assessment highlighted the abundance of gold, copper, zinc, nickel, rare earths, lithium and manganese found in Saudi soil.
  • Saudi Arabia is displaying a new strategy on the diplomatic stage: multi-alignment.
  • The country’s polymorphous strategy puts it in competition with the United Arab Emirates for ‘leadership’ of the region.

At the last Future Min­er­als Forum, held in Riyadh in Jan­u­ary 2024, the King­dom of Sau­di Ara­bia clear­ly stat­ed its ambi­tions: “Sau­di Ara­bia has the vision, the min­er­al resources, a large mar­ket, region­al rela­tions and the right geog­ra­phy to become a key play­er in the min­er­als val­ue chain1.” Met­als are thus at the heart of the post-oil strat­e­gy known as “Vision 2030,” designed to pre­pare for the diver­si­fi­ca­tion of the Sau­di econ­o­my. The goal of a glob­al eco­log­i­cal tran­si­tion will require ener­gy and, above all, met­als to cope with the deploy­ment of dig­i­tal and low-car­bon tech­nolo­gies (bat­ter­ies, wind pow­er, solar ener­gy, hydro­gen, etc.). Ful­ly aware of this, Riyadh intends to imple­ment a mul­ti-pronged strat­e­gy to become a key play­er in its mar­kets. On the one hand, the King­dom of Sau­di Ara­bia is propos­ing a sus­tained pol­i­cy to encour­age the devel­op­ment of a nation­al min­ing indus­try. On the oth­er, it is seek­ing to stim­u­late for­eign invest­ment in its ter­ri­to­ry. Final­ly, it aims to become the region­al cen­ter for ener­gy and met­al trade between the min­er­al- and met­al-rich coun­tries of Cen­tral Asia and Africa.

The potential of the Saudi subsoil: a solution for the post-oil era?

At a time when the cli­mate cri­sis is forc­ing the decar­bon­i­sa­tion of ener­gy sys­tems and a shift away from fos­sil fuels, Sau­di Ara­bia needs to rethink its eco­nom­ic mod­el, which is large­ly based on the hydro­car­bon sec­tor. Oil alone accounts for 60% of the kingdom’s bud­get rev­enues and more than 75% of its exports2. Aware of these chal­lenges, the Gulf’s largest oil-rich monar­chy is prepar­ing to diver­si­fy its econ­o­my with the launch of its “Vision 2030” devel­op­ment plan in 2016. The plan aims to attract for­eign invest­ment to the coun­try and sup­port a num­ber of busi­ness sec­tors, includ­ing edu­ca­tion, tourism and min­ing3.

After being the world’s lead­ing sup­pli­er of oil through­out the 20th cen­tu­ry, Sau­di Ara­bia is dream­ing of becom­ing a region­al – or even glob­al – leader in the met­al indus­try. The idea is to exploit the min­er­al poten­tial of its sub­soil and devel­op an effi­cient indus­tri­al base in the min­ing and met­al­lur­gy sec­tors. In fact, the kingdom’s min­er­al reserves have recent­ly been re-eval­u­at­ed upwards (dou­bling since 2016), at around 2,500 bil­lion dol­lars by the Sau­di Geo­log­i­cal Sur­vey (SGS), even though more than half the ter­ri­to­ry remains unex­plored4. The Sau­di sub­soil is said to be par­tic­u­lar­ly rich in gold, cop­per, zinc, lead, and nick­el, as well as phos­phate, rare earths, baux­ite, lithi­um and man­ganese. All fun­da­men­tal resources for the low-car­bon tran­si­tion. These resources could put the king­dom in an ide­al posi­tion to become a met­als pro­duc­er capa­ble of sup­ply­ing its own indus­tri­al sec­tor, and then poten­tial­ly export­ing a por­tion to world markets. 

The Sau­di government’s nation­al min­ing project is over­seen by the Min­istry of Indus­try and Min­er­al Resources5 and the SGS, which is respon­si­ble for pro­vid­ing geo­log­i­cal infor­ma­tion on the country’s soil and sub­soil. In 2023, Riyadh launched sev­er­al ini­tia­tives to attract for­eign investors, includ­ing a $182 mil­lion pro­gramme of incen­tives for min­er­al explo­ration. The king­dom has also devel­oped its reg­u­la­to­ry frame­work to facil­i­tate out­side invest­ment and the grant­i­ng of min­ing licences, notably through the launch of 33 new explo­ration licences. The state-owned min­ing com­pa­ny Ma’aden6, set up in 1997, aims to facil­i­tate the devel­op­ment of the kingdom’s min­er­al resources. It has also become a key play­er in Sau­di strat­e­gy. With sales in excess of $10 bil­lion, annu­al growth of 25% over the last 3 years7 and a mar­ket cap­i­tal­i­sa­tion of around $50 bil­lion, it is one of the most dynam­ic and attrac­tive com­pa­nies in the sector.

Ma’aden and the world’s 10 biggest min­ing companies

In 2023, Ma’aden teamed up with the Sau­di Sov­er­eign Wealth Fund8 (PIF) to cre­ate Man­ara Min­er­als in response to growth in the country’s min­ing sec­tor. As soon as it was cre­at­ed, this Sau­di joint ven­ture acquired 10% of the Brazil­ian min­ing group Vale Base Met­als (VBM)9. This part­ner­ship is designed to sup­port growth in the ener­gy tran­si­tion met­als mar­ket, as VBM is a major pro­duc­er of cop­per and nickel.

At the same time, Sau­di Ara­bia is keen to host green and ener­gy tran­si­tion indus­tries with­in its bor­ders. In June 2023, for exam­ple, it signed a $5.6bn con­tract with the Chi­nese elec­tric vehi­cle man­u­fac­tur­er Human Hori­zon10. In this way, the king­dom aims to posi­tion itself in the var­i­ous seg­ments of the val­ue chain, from min­ing to the pro­duc­tion of high val­ue-added, tech­nol­o­gy-inten­sive prod­ucts. The aim of the part­ner­ship is to pro­duce around 125,000 elec­tric vehi­cles by 2026, using bat­ter­ies man­u­fac­tured in Sau­di Ara­bia and made from Sau­di metals.

The devel­op­ment of Sau­di Arabia’s min­er­al poten­tial appears to be one of the pil­lars of the country’s eco­nom­ic diver­si­fi­ca­tion strat­e­gy. Does this mean that the king­dom is mov­ing from an oil econ­o­my to a com­mod­i­ty econ­o­my? The answer is a pri­ori no: Sau­di Ara­bia intends to com­bine its min­er­al poten­tial with its eco­nom­ic ambi­tions by becom­ing a glob­al ener­gy and met­al hub.

Energy and metal hub: the kingdom’s ambitions for the “Super Region”

Through its domes­tic and for­eign invest­ment projects, Riyadh is seek­ing to occu­py a place in the mar­ket for the raw mate­ri­als need­ed for the ener­gy tran­si­tion. And this posi­tion could be facil­i­tat­ed by its cen­tral geo­graph­i­cal loca­tion between the main African met­al pro­duc­ers and Asian coun­tries. The city would become a major com­mer­cial hub. Sau­di Arabia’s strat­e­gy is mul­ti-faceted, since in addi­tion to the pro­lif­er­a­tion of trade agree­ments with Egypt11, Turkey12 and Mau­ri­ta­nia to devel­op iron ore mines13, it is aim­ing to cre­ate a trad­ing plat­form for min­er­al mate­ri­als and a region­al met­als exchange(Saudi Met­al and Min­ing Exchange) capa­ble of rivalling those of London(London Met­al Exchange) or Shanghai(Shanghai Met­al Exchange). By organ­is­ing the Future Min­er­als Forum14 in a min­ing and met­al­lur­gy sec­tor where inter­na­tion­al gov­er­nance is sore­ly lack­ing, it also hopes to lay the foun­da­tions for region­al and even inter­na­tion­al coop­er­a­tion on these issues. The aim of all these ini­tia­tives is to strength­en Sau­di Arabia’s eco­nom­ic, finan­cial, insti­tu­tion­al and diplo­mat­ic foothold, and to posi­tion Riyadh as a future anchor in the glob­al met­als market.

Its posi­tion as a com­mer­cial hub would enable it to estab­lish itself as a key ele­ment of the new “Super Region,” a con­cept pre­sent­ed by the Sau­di cap­i­tal in Jan­u­ary 2024 at the Future Min­er­als Forum.

This “min­er­al super-region” stretch­es from Africa through the Mid­dle East to Cen­tral Asia. It cov­ers 79 coun­tries, 3.5 bil­lion inhab­i­tants, 48% of the pop­u­la­tion and 12% of the world’s GDP15. Despite abun­dant min­er­al resources, these coun­tries suf­fer from a lack of infra­struc­ture, struc­tured financ­ing and skilled labour. Sau­di Arabia’s dri­ve for region­al inte­gra­tion seeks to fill these gaps. Cre­at­ing a syn­er­gy between the var­i­ous coun­tries is intend­ed to trig­ger an eco­nom­ic take-off. It intends to become a major investor in the entire val­ue chain in the region, notably in order to secure its own met­al sup­ply chain. This ini­tia­tive is rem­i­nis­cent, albeit on a small­er scale, of the Chi­nese deter­mi­na­tion seen since 2013 in the con­struc­tion of the New Silk Roads16.

It is not cer­tain that Sau­di Arabia’s region­al part­ners will let it take over the lead­er­ship of the group so eas­i­ly, in terms of both min­ing and tran­si­tion tech­nolo­gies. Iran17 and Alge­ria18 are devel­op­ing their own min­ing expan­sion projects, while Egypt and Turkey have posi­tioned them­selves to pro­duce elec­tric vehi­cles in direct com­pe­ti­tion with Sau­di plans19. So even if Sau­di Ara­bia man­ages to forge promis­ing region­al part­ner­ships, region­al com­pe­ti­tion remains fierce as each coun­try hopes to carve out a place for itself in the glob­al sup­ply chain.

Regional and global competition: the limits of hegemony

The eco­nom­ic repo­si­tion­ing of the King­dom of Sau­di Ara­bia on the min­er­al com­modi­ties mar­ket has led to a renew­al of tra­di­tion­al alliances and a new strat­e­gy on the diplo­mat­ic stage: mul­ti-align­ment. While the king­dom wish­es to main­tain cer­tain his­toric ties, it is also forg­ing new part­ner­ships by join­ing the BRICS+, in order to con­sol­i­date its region­al dom­i­nance and glob­al stand­ing, while refus­ing to be part of a sin­gle bloc.

First­ly, the move away from oil is weak­en­ing the his­toric alliance between the petro-monar­chy and the Unit­ed States. Since 1945, Riyadh has been linked to Wash­ing­ton through the “Quin­cy Pact,” which guar­an­teed oil sup­plies in exchange for uncon­di­tion­al sup­port for the rul­ing fam­i­ly and a com­pre­hen­sive secu­ri­ty agree­ment for the king­dom. To renew the para­me­ters of the alliance, the Unit­ed States and Sau­di Ara­bia began talks in autumn 2023 to secure met­al sup­plies for both coun­tries in Africa20. Sau­di Ara­bia would take con­trol of African mines through mas­sive invest­ment, and would then reserve part of the pro­duc­tion for Amer­i­can com­pa­nies. For the Saud­is, this would be a way of renew­ing their alliance in a post-oil world, while the Amer­i­cans would gain access to Africa’s min­er­al resources. If this part­ner­ship goes ahead, Sau­di Ara­bia would become the Unit­ed States’ link to Africa in terms of min­er­al sup­plies, and would enable the Amer­i­cans to re-enter the race for crit­i­cal met­als, which is cur­rent­ly dom­i­nat­ed by Chi­na. The Lobito cor­ri­dor, a rail­way line link­ing Tan­za­nia to Ango­la, could also com­ple­ment this strat­e­gy21. On the Sau­di side, the chal­lenge is also to rekin­dle rela­tions that had become strained with the Biden admin­is­tra­tion, and to renew a part­ner­ship that is essen­tial to the con­tin­ued exis­tence of the roy­al family.

In the East, the monar­chy is also strength­en­ing its ties with Chi­na. In addi­tion to the part­ner­ship for the man­u­fac­ture of elec­tric vehi­cles, Sau­di Ara­bia has signed a con­tract with the Chi­nese Geo­log­i­cal Sur­vey, com­mis­sion­ing it to car­ry out geo­log­i­cal sur­veys over more than 50% of the coun­try22. Sau­di Arabia’s ambi­tions for the “Super Region” do not, how­ev­er, appear to be com­pet­ing with the New Silk Roads project being pro­mot­ed by the Chi­nese gov­ern­ment. The sec­ondary aim of this project was to meet the need to diver­si­fy and secure China’s ener­gy sup­plies. Instead, Chi­nese and Sau­di inter­ests seem to be aligned, in that Sau­di Ara­bia could ben­e­fit from the mar­itime and land infra­struc­tures devel­oped by Chi­na in its own min­er­al mate­ri­als mar­ket project, with­out chal­leng­ing the Asian giant’s lead­er­ship in this mar­ket. Although the two projects – the New Silk Roads and the Super Region – appear at first sight to be in com­pe­ti­tion, they are in fact com­ple­men­tary, as demon­strat­ed by the project to build a com­mer­cial port at Jazan in Sau­di Ara­bia, won by a Chi­nese firm23. The monar­chy also main­tains that it does not want to enter into com­pe­ti­tion with Chi­na, but rather to work close­ly with it, as shown by its deci­sion in 2023 to join the Shang­hai Coop­er­a­tion Organ­i­sa­tion, an eco­nom­ic bloc led by China. 

The Sino-Sau­di part­ner­ship should above all enable Sau­di Ara­bia to assert itself in its rival­ry with its neigh­bour, the Unit­ed Arab Emi­rates (UAE), with which it is in com­pe­ti­tion on sev­er­al fronts. In par­tic­u­lar, the UAE hopes to sign a free trade agree­ment with Aus­tralia to invest in the latter’s min­er­als sec­tor24. Gen­er­al­ly speak­ing, the two coun­tries are rac­ing to become the base for investors and busi­ness­es in the Mid­dle East, by offer­ing a sta­ble eco­nom­ic and polit­i­cal frame­work. Sec­ond­ly, as their economies diver­si­fy, the two Gulf coun­tries are com­pet­ing on the tourism front, but above all in the field of tran­si­tion­al inno­va­tions, where the Emi­rates stand out for their tech­no­log­i­cal lead. So, the Sau­di monarchy’s min­ing project would enhance its attrac­tive­ness to its neigh­bour, strength­en­ing its posi­tion as leader in the region.

2World Bank, Trea­sury
15By way of com­par­i­son, Chi­na’s New Silk Roads project involves 68 coun­tries and 4.4 bil­lion peo­ple.

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