Saudi Arabia Aims to Become a Global Mineral Powerhouse

In a remote area in Wa’ad Al-Shamal, Saudi Arabia, situated 1,200km north of Riyadh, the extraction of phosphate is currently taking place. This mineral is subsequently transported to the port of Ras Al-Khair for further processing into fertiliser and ammonia, before being distributed to various countries around the world. The scale of this enterprise is considerable, with sales and domestic investment accounting for approximately 2% of the kingdom’s non-oil GDP. Additionally, another project of comparable magnitude is poised to commence imminently, further enhancing its economic value.

This foray into mineral resources extends beyond just phosphate. Saudi Arabia has recently revised its estimate of the value of its mineral wealth to an astounding $2.5 trillion, encompassing substantial deposits of gold, copper, and zinc. Crown Prince, Muhammad bin Salman, envisions Saudi Arabia as a crucial global player in the mineral market, particularly in providing resources for the energy transition. Despite this aspirational objective, the kingdom is committed to accomplishing this without resorting to the resource nationalism that has impacted other nations.

As part of its strategy, Saudi Arabia has initiated Manara Minerals, an entity that will invest up to $15 billion in stakes in foreign mines. The country has also actively positioned itself as an appealing investment destination, implementing policies to facilitate foreign investment in the sector. Furthermore, the government has revised its mining laws to create a more investor-friendly environment, resulting in a substantial increase in active licenses for exploration and mining.

To achieve its objectives, Saudi Arabia is making comprehensive efforts to enrich discovery and extraction, including offering financial incentives for exploration and mapping of its geological resources. Moreover, the country is striving to address the scarcity of skilled professionals in this field through partnerships with international research institutions and investments in mining education.

Nevertheless, despite these ambitious plans, challenges lie ahead. Internationally, Saudi Arabia will need to navigate issues such as resource nationalism and the demand for greater local benefits in its partnerships with other countries. Domestically, the timelines for these projects may conflict with the realities of prospecting and mining, which frequently entail long-term processes. Moreover, the country also needs to focus on developing its capabilities in power-intensive processing and refining.

The realisation of Saudi Arabia’s vision to become a global mineral powerhouse ultimately hinges on its ability to entice the world’s miners to invest in new projects. While the kingdom’s plans are audacious, they also encounter uncertainties and potential impediments. Nevertheless, the country’s determination to diversify its economy beyond oil represents a significant development with far-reaching implications for the global mineral industry.