Saudi Arabia has made a strategic entry into the critical metals market following a series of investments in mining companies and facilities.
Only time will tell if this move will shift the country’s focus from oil, but a deal with Brazil’s largest miner is a major move to establish Saudi Arabia’s place in the critical metals market.
This $2.6bn deal will see the country buy a 10% share in Vale SA’s base metals division.
The deal, which is expected to close in early 2024 pending regulatory approval, is a joint venture between the country’s sovereign wealth fund and state mining company Ma’aden.
Other investments by the country include the allocation of 127 hectares of land from The Royal Commission at Yanbu and a gas and power allocation from the Saudi Arabian Ministry of Energy to EV Metals Arabia.
Robert Wilt, Executive Director of Manara Minerals and CEO of Ma’aden, said: “These investments are a step further towards Saudi Vision 2030. They will support local industrial development, create jobs across the Kingdom, and strengthen the position of the mining sector as the third pillar of the economy.”
Saudi Arabia’s crucial role in the critical metals market
Despite being a new player in the industry, Saudi is set to play an important role in the critical metals market.
Vale will expand its mining capacity for copper and nickel, which are both important in the manufacturing of electric vehicles. Moreover, it will invest up to $30bn in new projects in Brazil, Canada, and Indonesia.
So where does Saudi Arabia slot itself into this venture?
The funds from Saudi allegedly raised Vale’s base metals division’s implied value to $26bn.
Through this transaction, Saudi Arabia will gain access to high-quality supply chains across the critical metals market, including nickel, copper, and cobalt. These acquisitions will support the growth of Saudi Arabia’s mining sector.
The EV Metals investment will see a $905m battery chemicals complex in Saudi later this year. The country will also buy up to 100,000 electric vehicles over ten years.
The investments line up with the country’s Vision 2030, which is the national framework for economic reform and positions mining as the third pillar of the Saudi economy.
Can this shift secure a stable and transparent supply chain?
Investments in the critical metals market are essential for accelerating the development of world-class mining assets.
“Saudi investments serve the demand for high-purity chemicals from electric vehicle and battery cell manufacturers both locally, and from target markets in Europe and North America looking for stable and transparent supply chains,” commented Michael Naylor, Chairman of EVM Arabia and Managing Director and CEO of EVM Group.
Eduardo Bartolomeo, Vale’s CEO, added: “With these investments, we are uniquely positioned to meet the growing demand for green metals essential for the global energy transition while remaining committed to strong social and environmental practices and sustainable mining.”
