Mining positions itself as a new source of revenue in Saudi Arabia
The move towards a sustainable economy through clean energy, which is part of Saudi Arabia's royal Vision 2030 project, is increasingly on the rise. While many countries face a shortage of the mineral resource reserves needed for this process, many are shifting their focus to the African continent.
Saudi Arabia is expanding the mining sector to ensure a strong position in essential resource supply chains and become a global hub for essential minerals to achieve the goal of energy transition.
Record exports and production
Over the past year, Saudi Arabia has made significant strides by investing heavily in the exploration and development of its mineral resources. This is a two-part endeavour, as the country seeks to develop its mineral resources in the long term, and to form partnerships with countries such as the US, some African countries and India to be a global mineral hub.
Saudi Arabia recently updated its estimates of untapped mineral resources. With an increase in value from approximately $1.3 trillion anticipated eight years ago to $2.5 trillion.
This increase of more than $1.3 trillion was due to the discovery of more reserves, the inclusion of new minerals to the list of estimated resources and a revision of commodity prices. Last November, Saudi Arabia unveiled nine investment pacts in the metals and mining sector worth $9 billion.
The government recently announced an auction of six mining permits that are aligned with the new Mining Investment Law and will cover lead, zinc, copper, and iron deposits.
The mining sector
Reports showed that Saudi Arabia has enormous quantities of minerals essential for energy transmission, such as aluminium, copper, and rare earth elements. According to the Global Risks Report 2023, the mining sector in Saudi Arabia was one of the fastest growing investment-friendly environments in the world for five years.
The study highlighted a 138% increase in the number of mining licences granted after the new Mining Investment Law was implemented in 2021. This diversity will be crucial as demand for transition metals increases due to advances in renewable energy technologies and the production of electric vehicles.
As part of its effort to facilitate this transformation, Riyadh has offered new mining licences and formed international partnerships, and its actions demonstrate its commitment to developing its extensive mineral reserves.
These incentives encompass the potential exploration of mineral resources such as copper, zinc and gold, and a focus on key strategic minerals to produce batteries and renewable energy technologies.
On the other hand, it is important to note that Saudi Arabia imports around 365,000 tonnes of copper each year to meet local demand. Current projections suggest that these imports will double by 2035. In addition, one of the most important companies in the sector, Vedanta Metals, will develop a smelter and refinery with the capacity to process more than 400,000 tonnes of copper per year, which is needed to produce electrical cables.
Saudi Arabia devotes significant resources to geological research and analysis, using modern technologies and international expertise to find new mineral deposits. Other important local initiatives include the Jabal Sayid Copper Project, a collaboration between the Saudi Arabian mining company (Al-Ma'aden), Barrick Gold and the Al-Jalamid Phosphate Mine.