Saudi Minerals exploitation; Better Now Than Later

Arrogant as it may seem to any observer around the world, Saudi Arabia finds itself the “center of the world.” The view is not confined to the geographic zone the country is located, connecting three major continents together, but bears overtones of a more expansive approach in which the kingdom might play a central role in any worldwide agenda that serves the political and economic plans of the nation. Following the route that Qatar took during the years casting itself as a neutral broker of regional and trans-regional disputes, Riyadh reinforced relations with both sides of the world in the east and the west, trying to diversify its allies in political and security spheres.

The fresh political approach was adopted in framework of a larger agenda in which the diversification of economy is of the utmost priority. Still supplying the economy with revenues from hydrocarbons and its derivatives, Saudi leaders displayed dazzling development in tourism industry and monumental investment initiatives. One manifestation of the latter is the country’s magnificent projects on minerals which has turned to the third pillar of its economy.

During a three-day conference in Riyadh this year, 16,000 individuals, companies, and administrative agents from over 80 countries got together to discuss Saudi investment plans on minerals, refinements and exploration. The number shows a 340% hike compared to the number of attendees in the first Future Minerals Forum three years earlier. Riyadh secured memorandums of understanding with the United States on the one side, despite recent political frictions, and Russia on the other side, despite its conspicuous antagonism with the United States.

Under Saudi Vision 2030, exploiting the country’s mineral treasure is the main non-oil resource the county seeks to enjoy in expanding and bolstering the economy. Notwithstanding, the project has an eye on investments abroad in a bid to profit from resources across the world and consolidate its position as an influential force in the industry. Manara Minerals, a joint venture by Saudi Public investment Fund and Ma’aden, the country’s state mining firm, has been launched last year to partner with foreign countries and companies. As an early demonstration of the venture’s decisiveness to proceed with international adventures, Manara Minerals partnered with Brazilian mining giant Vale purchasing 10% of the company’s stake valuing over $3bn.

The focal reflection of Saudi mineral’s project, nonetheless, is discernible inside the borders where Riyadh has launched a campaign to attract investors from around the world through incentives and relaxing the legal restrictions. The country has economized the license fees for foreign investor enterprises and facilitated the paperwork process for them to be able to start projects in few months. Besides, the kingdom proposes the candidates with salary and inhabitation offers in order to encourage more companies to start the negotiation process. It has also forgone obligations and restrictions regarding the raw materials and equipment.

A major part of the licenses issued for foreign companies, over 30%, is allocated to exploration projects with incentive worth millions of dollars. The kingdom’s bid to explore more resource zones has been successful, with the estimated untapped mineral wealth increasing $1.2 trillion in eight years. Phosphates, gold, copper, and zinc are the main minerals Saudi Arabia explored ever since and more resources are expected to be sought with over 700 holdings and companies working on the project.

Years of resource exploitations by colonialist powers, especially in African countries, has conceived a negative view in most nations. The adverse historical experience has given rise to a resource nationalism, pushing back any foreign investment as a profiteering bid to colonize the national treasures. Saudi Arabia faces a similar challenge in its foreign investment programs in minerals having to provide the targets with legal and economic incentives. Locally, however, the country has dissolved the attitude in order to better capitalize on the silent treasure. Rulers in Riyadh, crown prince Mohammad bin Salman on top of whom, insist that the time has come to profit from these resources, evidently demonstrating the need for foreign investors to accelerate the process.

In the meantime, the kingdom has boosted its study cooperations with local and foreign centers and launched regular and pertinent programs in local universities. Training a professional and extensive team of engineers and geoengineers is on the top of the agenda. It has already invested on a $500m geology study to map the setting and features of resources, seasoning the program with another $200m this year. The encouragement campaign has also $182m in incentive for investors partnering in exploration studies. In partnership with foreign thinktanks and study centers, Saudi Arabia is, implicitly, capitalizing on studies that may diminish the role of foreign investors and companies in the future.

The Saudi minerals project has currently clients from across the world including sales to India, Brazil, Africa, and Bangladesh. During the recent forum, fresh MoUs were signed with Egypt, Congo, and Morocco among other African nations. Geology and mineral resources were the spheres of a further MoU with Russia. Besides, an agreement with American Export-Import Bank secures the finance of the U.S. exports to Saudi Arabia. Washington has also plans to partner with Riyadh on critical minerals projects. The latter’s agenda, apart from retaining political cooperation with Saudi Arabia in form of an economic agreement, is to balance the supply chain of critical minerals to lessen the global dependency on China and eastern Asian nations.

Saudi Arabia has well-suited itself in a middle position between diverse antagonistic forces of the world, serving its own interests in economy, politics, and security. Riyadh is well aware of the lingering sovereignty of the United States despite the Chinese staggering developments in recent years. Rulers in Saudi Arabia may acknowledge the security benefits of partnership with Russia while they still retain the strained ties with the United States to secure a vigorous nuclear program in the future. And in the multipolar world of the 2020s, Saudi Arabia sustains political ties with all sides, including with arch-rivals like Iran. Economic and investing initiatives on Minerals work as dynamic levers to balance and deflect the bellicosity of all these forces in the Saudi soil.