In early 2023, Saudi Arabia announced that it will launch a new mining fund, which aims to purchase key metals and mineral resources overseas through investment, including holding non-operating minority stakes in international mining projects.

Set up a mining fund to seek overseas assets

It is understood that Saudi Arabia's new mining fund was jointly established by the Saudi state-owned mining company, the largest miner in the Gulf region, and the Saudi sovereign wealth fund, the Saudi Public Investment Fund. Among them, the Saudi state-owned mining company holds 51% of the shares. The two companies said in a joint statement that the initial capital of the fund is about 187.5 million Saudi riyals, or about 50 million US dollars. If there is a need for business development, the two companies will also jointly provide up to 11.952 billion Saudi riyals. Yar, about $3.182 billion in additional funding.

The fund's initial strategy is to invest in mineral resources such as iron ore, copper, nickel and lithium as a non-operating partner holding a minority stake. Domestic mineral processing, steelmaking, battery manufacturing, etc.

It is understood that US$50 million is only the operating capital of this mining fund for the first year, and the additional US$3 billion is the investment amount for the next 12 months. Given the overall state of the commodity market, the new Saudi mining fund will seek to deploy more than $15 billion in investments over the next few years when the time is right.

It is reported that the Saudi Mining Fund has discussed with the Brazilian mining group Vale on taking a stake in the latter's basic metal business, including cooperation in the supply of nickel, copper, cobalt and other metals. In addition, BHP Billiton, Rio Tinto, Trafigura and other mining and commodity companies also participated in a mining exchange meeting held by the Saudi state-owned mining company in mid-January, laying the foundation for future cooperation with the new Saudi mining fund. The birth of Saudi Arabia's new mining fund marks the official entry of Saudi Arabia, a veteran oil producer, into the competition for global strategic metal minerals.

Robert Wilt, CEO of the Saudi state-owned mining company, said that this is an important step in the development of the Saudi state-owned mining company. The new fund aims to acquire existing assets and company equity to supply the raw materials needed for Saudi Arabia's development, including iron ore, copper, nickel and lithium, which are also strategic resources needed for renewable energy and energy storage, and will provide us with Paving the way for a firm foothold in global commodity value chains.

The value of mineral resources exceeds one trillion US dollars

Indeed, Saudi Arabia sees mining as a key component of its Vision 2030 strategy. The strategy aims to diversify the Saudi economy away from a sole reliance on fossil fuels. As the country with the largest crude oil reserves and the highest oil production in the world, Saudi Arabia is also rich in mineral resources, including gold, silver, copper, iron, tin, aluminum, zinc, phosphate and other metals and non-metals. Its official estimates put the total value of its untapped mineral resources at more than 5 trillion Saudi riyals, or about $1.33 trillion. It is reported that Saudi Arabia plans to auction five new exploration licenses involving copper, zinc, lead and iron ore to domestic and foreign investors this year.

On January 17, during the second Future Mining Forum, Saudi Arabia and various partners reached 60 agreements and memorandums of understanding in the field of mining, which covered mineral exploration, technology and communication, application of sustainable development standards, certification and Industrialization of the mining industry.

Regarding the development prospects of Saudi Arabia's mining industry, Saudi Minister of Industry and Mineral Resources Hulaif said that the next step will be to vigorously develop the value chain of gold, phosphate and aluminum, and provide a broader development space for the electric vehicle industry. The mining industry must develop rapidly, otherwise it will not be able to keep up with the growth of global demand for minerals, which will affect the global transition to clean energy. He said it was necessary to develop the minerals and metals industry by focusing on innovative solutions, making data and technology more accessible, and attracting investment. "

It is understood that the Saudi government approved a new bill on the mining industry in 2020 to encourage foreign capital to invest in the Saudi mining industry. Breadwinner. Khuref pointed out that by 2030, the contribution of Saudi Arabia's mining industry to GDP is expected to reach 64 billion U.S. dollars per year.

Deepen cooperation to strengthen supply chain resilience

It is worth mentioning that Saudi Arabia and the UK also deepened their partnership in mining and manufacturing during the second Future Mining Forum. The UK Department of Business, Energy and Industrial Strategy stated that this will help Saudi Arabia invest and finance in the UK and provide new opportunities for British mining companies to operate in Saudi Arabia. British Business Secretary Grant Shapps said he looked forward to working with Saudi Arabia to ensure the resilient extraction of key minerals that are vital to economic development, energy security and growing industries.

At the same time, Saudi Arabia has also reached new cooperation with a number of mining companies. In mid-January, the Saudi state-owned mining company announced the acquisition of a 9.9% stake in the US mineral exploration group Ivanhoe Electric for US$126 million, thereby obtaining the exclusive right to use its Typhoon geological survey technology. The Saudi state mining company said Ivanhoe Electric's Typhoon technology can detect metal deposits buried below 1,500 meters, which is available in many parts of the kingdom because the country's bedrock is buried under 1,000 meters of gravel soil.

Subsequently, the Saudi state-owned mining company signed a new joint venture agreement with Canada's Barrick Gold, the world's second largest gold producer, to deeply develop the Jabal Sayid mine in Saudi Arabia. Editor/He Yuting