Saudi Arabia is making significant strides to establish itself as a dominant player in the global critical minerals processing market, a move that could reshape regional and global supply chains. Critical minerals—such as lithium for batteries, platinum for fuel cells, copper and bauxite, the raw material for aluminum—are essential for strategic industries. These minerals are at the heart of ongoing competition, particularly between the US and China, as both countries vie for control over the supply of materials crucial for their economic and military sectors.
With its vast energy reserves, low energy costs and strategic location at the crossroads of global trade, Saudi Arabia is well-positioned to succeed in the critical minerals sector. According to Christopher Ecclestone, a mining strategist at Hallgarten & Company, Saudi Arabia’s deep pockets and abundant resources will play a central role in its efforts to capture a significant share of the critical minerals processing market. However, the kingdom faces stiff competition from its regional rival, the UAE, which has also set its sights on this lucrative sector.
Ecclestone predicts that the competition between Saudi Arabia and the UAE will intensify over the next two years, particularly in efforts to acquire an indirect stake in Alphamin, a Canadian company with valuable tin interests in the Democratic Republic of the Congo (DRC). The UAE’s International Resource Holding (IRH), a subsidiary of the Abu Dhabi-based International Holding Company (IHC), has already entered talks to secure a stake in Alphamin. Meanwhile, Saudi Arabia’s Manara Minerals, a joint venture between the state-owned Maaden and the Public Investment Fund (PIF), is reportedly among the contenders. Manara Minerals has been at the forefront of Saudi Arabia’s two-year-old Global Supply Chain Resilience Initiative.
In recent weeks, Saudi Arabia has made notable moves to expand its presence in the critical minerals sector. Last week, the country signed partnerships worth over $9 billion with major mining firms, including India’s Vedanta, China’s Zijin Mining Group, and Canada’s Platinum Group Metals. These partnerships aim to develop smelters and refineries for copper, zinc, platinum, and palladium, marking a significant step in the kingdom’s efforts to position itself as a global hub for critical minerals processing.
While Saudi Arabia has a domestic supply of metals like copper, gold, and zinc, its true strategic focus lies in critical mineral processing. This sector is typically energy- and labor-intensive, making it expensive in many regions outside of China. As Ionut Lazar, a principal consultant at CRU, a UK-based consultancy, notes, this is where Saudi Arabia’s cheap energy and plans for renewable energy development give it a competitive edge. In the long run, the kingdom is working to create a more sustainable version of the materials it processes, using cleaner energy to reduce the carbon footprint of its operations.
Saudi Arabia’s relationship with China, the global leader in critical mineral processing with approximately 85% of the world’s processing capacity, remains complex. While their relationship is currently cooperative, with China seeking to export its technology and expertise to new customers, competition could arise as demand for critical minerals grows and geopolitical tensions escalate. As US efforts to decouple from China intensify, Saudi Arabia may find an opportunity to position itself as an alternative source for critical minerals, particularly in the context of rising demand for electric vehicle (EV) batteries.
Ecclestone emphasizes that Saudi Arabia’s first move will likely be to build smelters for a wide range of minerals, something it is already well-versed in due to its established expertise in aluminum production. From there, the kingdom will need to follow in China’s footsteps by advancing to the production of end-products, positioning itself to capture market share as the global demand for critical minerals increases.
According to Will Adams, head of base metals research at Fastmarkets, the battery market is currently oversupplied, but as demand grows, more mining projects will be needed to meet future needs. Adams suggests that Saudi Arabia could follow China’s example by supporting projects that may not be economically viable now but could become profitable in the future, helping to expand its critical minerals sector.
Meanwhile, US officials are becoming increasingly concerned about China’s dominance in the critical minerals industry, particularly as they scrutinize Beijing’s influence in key sectors like semiconductors and green energy. US Energy Secretary Jennifer Granholm has expressed concerns about the reliance on countries with values that may not align with those of the US, highlighting the need to diversify the supply chain for critical minerals.
As tensions between the US and China grow, the question arises: can Western automakers, like BMW, VW, and General Motors, continue to depend on China for lithium-ion EV batteries when the stability of that supply chain is at risk? Lazar warns that as geopolitical tensions rise, materials that avoid the China link could command a premium in the critical minerals market.
Saudi Arabia’s push for a larger role in critical minerals processing, bolstered by its investment in renewable energy and its strategic position, could provide an opportunity for the kingdom to capture market share and lessen reliance on China. As the global demand for critical minerals continues to grow, Saudi Arabia’s efforts could play a key role in reshaping the global supply chains that underpin industries like electric vehicles and renewable energy.
