As countries and companies rush to get their hands on critical raw materials to bolster supply chains and deal with a rocky energy transition, Saudi Arabia is staking its claim. It stands a real chance, especially with growing discomfort around reliance on China. But are investors willing to trust it just yet?
The country’s sovereign wealth fund and state miner are plowing in as much 11.95 billion riyals ($3.2 billion) to create a fund that will invest across the world in resources such as copper, nickel and lithium, as a non-operating partner with a minority equity stake. The company’s formation was announced at Saudi Arabia’s annual Future Minerals Forum, where giants like BHP Group Ltd., Rio Tinto Plc to Ivanhoe Mines Ltd., and officials from the US and UK convened last week.
This comes as the kingdom vies to become a global mining hub and establish the sector as a crucial pillar of its economy. The new entity will invest up to $15 billion in companies and assets globally to secure supply for domestic use. Saudi Arabia has been pushing growth in non-oil businesses like manufacturing, and its economy is now among the fastest growing of the Group of 20 countries, with non-oil industries expanding.
The government’s focus on cornering raw materials is well-timed and targeted, especially with supply chains in disarray and emissions-related regulatory pressures rising. China’s vital, yet tenuous, role in the global economy has forced companies to look for alternatives. Where will they find their ex-China source? Across the world, shortages of critical minerals loom and investment in technologies that will bolster or accelerate production has been slow. Meanwhile, large industrial undertakings that are key for the energy transition, like solar plants, electrolytic hydrogen facilities, EV batteries and carbon capture and storage, require heaps of metals. Despite policies like the US Inflation Reduction Act that are attempting to reconfigure American…
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