Saudi Arabia eyes African critical minerals

Speaking at Riyadh's "Future Minerals Forum" in January last year, Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, said that "oil is no longer the energy security challenge - it's going to be gas, electricity and predominantly minerals." The comment was revealing in reflecting the shifting priorities of a country whose wealth has historically been based on oil. Saudi Arabia's "Vision 2030" plan, which was launched by Crown Prince Mohammed bin Salman in April 2016 as a framework to reduce Saudi Arabia's dependency on oil and diversify its economy, includes several key goals which require strong access to critical minerals.

Critical minerals underpin many of the "technologies of the future" in which Saudi Arabia aspires to be a leader. Electric vehicles, for example, require minerals including lithium, cobalt and nickel for the production of high-performance batteries, while solar power technologies are dependent on materials such as silicon and aluminium.

Riyadh has set a target of 30% of new car sales being electric by 2030, partly driven by a plan to boost production to 500,000 electric vehicles by that year. Under Vision 2030, Saudi Arabia also aims for 50% of its electricity generation to be from renewable sources, with more than $186bn so far invested in sustainable projects under the Saudi Green Initiative (SGI).

Africa has the minerals

Given such targets, Africa is becoming of increased significance to Saudi Arabia: the continent is home to an estimated 30% of the world's proven critical mineral reserves. Africa possesses around 55% of the world's cobalt, almost half of the total supply of manganese and more than 20% of natural graphite, among other vital resources.

Saudi Arabian investments in the African critical minerals industry have so far been relatively limited, especially compared to its neighbour and rival, the United Arab Emirates (UAE), which has grown to become by some measures the single largest investor on the African continent.

In July 2023 the UAE signed a $1.9bn deal with Sakima, the state-owned mining company of the Democratic Republic of Congo (DRC), to develop four critical mineral mines. In December that year the UAE also completed a $1.1bn investment in Zambia to acquire a 51% stake in Mopani Copper Mines.

Critical minerals rise up Saudi priorities

Partly as a reaction to these moves, Saudi Arabia has been pursuing similar deals. In June 2023, the Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund, expressed interest in investing in the DRC's critical minerals industry via the Saudi state-owned mining company Maaden.

At the Future Minerals Forum in 2024, Saudi Arabia also signed several memorandums of understanding (MoUs) with three African countries - the DRC, Egypt and Morocco - to explore cooperation in "the field of mineral wealth".

Shortly after the event, Saudi Arabia launched Manara Minerals, a joint venture between PIF and Maaden, which has a mandate to invest in critical minerals worldwide. Manara Minerals has only made one investment so far - acquiring a 10% stake in Brazilian firm Vale Base Metals - but potential deals in African assets have been touted.

Regional and trade media have previously reported that Manara was engaged in talks to purchase minority stakes in Zambian copper and nickel mines, although no deal has been completed.

Samuel Ramani, associate fellow at the Royal United Services Institute (RUSI) thinktank and CEO of the Pangea Geopolitical Risk consultancy firm, tells African Business that "the critical minerals issue is something that is rising up Saudi Arabia's list of priorities - they really want to present Saudi Arabia more muscularly in broader critical minerals supply chains."

Ramani points out that one reason for Saudi Arabia's relatively limited engagement in the African critical minerals space to date is the fact that Saudi Arabia itself is home to rich critical minerals reserves.

Indeed, the Kingdom's unexploited mineral wealth is now estimated at over $2.4 trillion - an increase of 90% since 2016 as a result of comprehensive surveys that have revealed an abundance of new resources, including rare earths, copper, zinc, lithium and gold.

While the importance of critical minerals to many of the Vision 2030 goals means that Saudi Arabia is also looking to secure further supplies from Africa and elsewhere, Ramani says that the country's strong domestic base potentially puts it at an advantage compared to regional rivals.

"Critical mineral sourcing, renewable energies, electric batteries, AI - all these things are central to the Vision 2030 project," Ramani says. "Saudi Arabia needs to make sure that it has both indigenous and foreign reliable supply chains to able to develop and sustain these industries.

"A lot of the other Gulf countries, including the UAE, do not have this combination of domestic deposits and foreign investments," he adds. "They can only buy up resources or invest. Qatar, for example, is trying to leverage a mediation role between the DRC and Rwanda to get preferential access to the Congolese mineral reserves. But they are having to do it from a position where they do not have anything domestically.

"Saudi Arabia sees itself as having an advantage with this ability to complement domestic deposits with foreign investments, in a very tactical way."

The sheer amount of cash which Riyadh is able to invest - such as through PIF, which currently manages assets worth approximately $925bn - means that it is seen by many African countries as an attractive partner, especially given that it also tends to be viewed as a stable, long-term investor.

There are also hopes that Saudi Arabia's experience in becoming a global economic power thanks to its oil resources could prove to be a model for many African countries, which are similarly aiming to leverage their critical minerals in order to achieve their development goals.

According to the International Monetary Fund (IMF), critical minerals could increase the continent's GDP by 12% by 2050, driven by growing demand for green technologies.

Assuming these predictions come to pass, there would still be a challenge for African governments in ensuring that they maximise the value of these resources and use them as a way to generate long-term economic growth and development.

Learning lessons from Saudi

Sheila Khama, former CEO of De Beers Botswana and non-executive director of several companies in the mineral space, has said that "what we know about the Saudis in their ability to steward the development of a petroleum sector is that they have been very successful.

"There's an opportunity here for peer learning: to use the lessons that the Saudis have learned from how they managed petroleum, and how they transformed the economy, and to use that to improve and take the opportunity for growth that we know is going to happen" as a result of Africa's critical minerals resources.

Saudi Arabia's geopolitical positioning also makes it an attractive partner for many African countries. Riyadh has been pursuing "strategic autonomy", which involves balancing its strong security cooperation with the United States with growing economic and technology ties with China.

Having joined the BRICS group of emerging economies in August 2023, Saudi Arabia combines strong relations with the US and Europe with deep "Global South" engagement.

Given this, Ramani says that "Saudi Arabia tends to be seen as a kind of hedge between the US and China," potentially making the Gulf country a useful partner for Africa's critical minerals industry in a multipolar world order where demand for resources is high.