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Expanding Gulf nations’ role in Africa’s critical minerals: Economic opportunities and geopolitical challenges

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On May 27, Abu Dhabi’s International Holding Company, a government-backed investment entity, revealed ongoing negotiations with the Zambian government to acquire Konkola copper mines. This move underscores the United Arab Emirates’ and Saudi Arabia’s concerted efforts to boost investments in critical minerals, aiming to diversify their economies away from fossil fuels.

Minerals such as copper, cobalt, lithium and graphite are pivotal for manufacturing electric vehicle batteries and renewable energy infrastructure. Investing in these resources not only promises significant returns but also positions Saudi Arabia and the UAE as key players in the clean energy sector. However, these investments carry geopolitical implications, particularly in relation to China, a dominant player in the sector.

UAE leads, Saudi Arabia follows

Among Gulf states, the UAE has taken the lead in investing in Africa’s critical minerals. In July 2023, the UAE signed a $1.9 billion deal with the Democratic Republic of Congo’s state-owned mining company, Sakima, although the specific minerals and involved entities were not disclosed. Later, in December 2023, the UAE secured a $1.1 billion investment in Zambia, acquiring a 51% stake in Mopani Copper Mines through International Resources Holdings, an entity of Abu Dhabi’s International Holding Company chaired by UAE National Security Advisor Tahnoun bin Zayed al-Nahyan. Concurrently, International Resources Holdings and Jubilee Metals Group established a strategic partnership to recover approximately 350 million metric tons of copper in Zambia. Additionally, the UAE’s International Holding Company entered into joint ventures for iron ore mining in Angola and is in advanced talks to mine various critical minerals in Burundi, Tanzania and Kenya.

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In the past year, Saudi Arabia has also actively pursued critical mineral deals in Africa, although none have been finalized. In June 2023, the Public Investment Fund expressed interest in Congo’s critical minerals through Maaden, a Saudi state-owned mining company. At the Future Minerals Forum in Riyadh in January, Saudi Arabia signed memorandums of understanding for mining investments with Congo, Egypt, and Morocco. Subsequently, the kingdom established Manara Minerals, a joint venture between the PIF and Maaden, aimed at global mineral resource investments. Manara Minerals is a potential bidder for up to 30% stake in Zambia’s copper mines owned by First Quantum Minerals, a Canadian firm.

Geopolitical considerations

The entry of Saudi Arabia and the UAE into Africa’s critical mineral industry poses geopolitical implications, particularly concerning China’s established dominance. While economic cooperation among these states on African critical minerals could be beneficial, Saudi and Emirati investments could also challenge China’s strategic interests. Currently, China holds a monopoly over Africa’s Copperbelt, owning 72% of cobalt and copper mines in the DRC alone. In contrast, Saudi and UAE investments, while substantial, have not yet posed a direct threat to China’s interests.

However, Abu Dhabi’s International Resources Holdings has expressed interest in bidding for an 80% stake in Zambia’s Lubambe Copper Mine, complicating an already agreed sale to Chinese mining company JCHX pending Zambian government approval. If awarded to International Resources Holdings instead of JCHX, it would mark the Gulf’s first challenge to China’s mineral investments in Africa.

Potential U.S. Involvement

Amid the U.S.-China competition for African critical minerals, the United States could leverage its close ties with Gulf states to advance its strategic interests through their investments. Talks are reportedly underway between the United States and Gulf nations regarding economic partnerships on African critical minerals. These partnerships could grant U.S. companies rights to purchase Gulf mineral investments, enhancing U.S. access to critical minerals and potentially countering China’s dominance.

While strengthening economic ties with the United States, Gulf states risk being drawn deeper into the broader U.S.-China geopolitical rivalry. If developed further, these partnerships could lead China to view Saudi Arabia and the UAE as aligning with the United States, impacting bilateral relations.

Conclusion

Saudi Arabia’s and the UAE’s efforts to expand their presence in Africa’s critical mineral industry present economic opportunities alongside geopolitical challenges. Negotiating these complexities amid established actors will require adept navigation of the multifaceted geopolitics surrounding Africa’s critical mineral resources.

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