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The Middle East’s Oil Giants Have Entered the Critical Minerals Race

Oil may be the lifeblood of many Middle Eastern economies, but some of the region’s biggest players are now setting their sights on another booming energy sector: critical minerals. 

Minerals such as lithium, cobalt, and rare earths power the world’s clean energy technologies and electric vehicle batteries. As these resources take center stage with the clean energy transition, oil-rich countries such as Saudi Arabia and the United Arab Emirates (UAE) are also ramping up investment in critical minerals supply chains in a bid to diversify their economic portfolios and carve out a stake in the growing industry.

“This is not about replacing the bedrock of their economic engine away from oil to minerals,” said Ahmed Mehdi, managing director at Renaissance Energy and a visiting fellow at the Columbia University Center on Global Energy Policy. “This is more about making sure that they have a seat at the table in the energy transition, especially given how geopolitically charged this industry.” 

Rising geopolitical tensions have cast a new spotlight on these minerals and the countries that wield outsized influence over their supply and production. China, in particular, dominates the processing of many of these resources, which has heightened fears of strategic vulnerabilities and catalyzed efforts to secure alternative supply chains. And in the Middle East, where fears of fossil fuel revenue over-dependence run high, many governments refuse to be left out of this new race. 

“Saudi and the UAE are coming out as big players in the critical minerals space,” said Gracelin Baskaran, a senior fellow at the Center for Strategic and International Studies. “These are oil-dependent countries who realize that the clean energy transition and electric vehicles are going to reduce global demand for oil, so if they are going to economically grow, it’s not going to be purely on continuing an oil-only model.”

“They are the new big kids in town,” she said.

Take Riyadh, which has outlined big ambitions in the mining sector. The country highlighted the importance of mining in Vision 2030, the government’s big plan to overhaul Saudi Arabia’s economy and slash its dependence on fossil fuel revenues. It has also set aside some $182 million for a mineral exploration incentive program. Saudi Arabia is home to some $2.5 trillion in untapped mineral reserves, according to government estimates, and in 2021, it launched its own annual mining conference, the Future Minerals Forum.

“Saudi Arabia is being transformed. Through this transformation we want to be an economic powerhouse,” Khalid al-Mudaifer, Saudi Arabia’s vice minister for mining. “To be an industrial [power], we need minerals. To build projects, we need minerals. Therefore, mining of Saudi Arabia [is] the first step, bringing minerals from outside is the second step, third step is to build Saudi Arabia as a hub.”

To execute this vision, Riyadh has focused on securing new partnerships, including by signing memorandums of understanding focused on mining with the Democratic Republic of the Congo, Egypt, Russia, the United States, and Morocco. Washington and Riyadh were reportedly in talks to purchase mining stakes in several African countries, the Wall Street Journal reported last year; Saudi Arabia is also weighing investments in Brazil and has dispatched a delegation to Argentina to discuss that country’s lithium wealth.

The UAE is also ramping up efforts to carve out a stake in the sector, including by inking a $1.9 billion mining partnership in the Democratic Republic of the Congo and securing new agreements in copper-rich Zambia. The UAE and Australia are reportedly also in talks for a free trade agreement that could see Abu Dhabi invest in Canberra’s critical minerals sector. And in nearby Qatar, Doha has taken its own initial steps by signing mining agreements with Nigeria and underscoring the importance of cooperation in the critical minerals space during talks with Washington.

Baskaran said that Abu Dhabi and Riyadh both have the means of financing their ambitions. “Both of these countries have a lot of capital to deploy in the sector,” she said. So at a time when most Western companies are pulling back on their drilling and exploration because lithium, nickel, cobalt prices are low, these Middle Eastern countries.


Foreign Policy

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