Rising minerals demand due to energy transition will drive mining sector: Saudi minister

Growing demand for minerals and metals required for the energy transition and the increasing competition between countries to supply them will drive the global mining sector, Saudi Arabia’s Vice Minister for Mining Affairs Khalid Al Mudaifer said.

“Our collective green future will be mineral-intensive … and the global pursuit of an energy transition is triggering high demand for critical minerals, estimated to be 40-fold current levels. This is creating price volatility and high prices,” Mr Al Mudaifer told the FT commodities conference in Lausanne.

“Competition is increasing between countries for leadership positions in global mining markets … while at the same time, geographical concentration of some minerals and resource nationalism has led to a push to diversify supply chains.”

Lithium, nickel, cobalt and manganese are integral components for batteries while rare earths are important for wind turbines and electric vehicle motors. An electric car requires six times the mineral inputs of a conventional car while an offshore wind plant requires 13 times more mineral resources than a gas-fired power plant, S&P reported.

Saudi Arabia currently accounts for about 37.9 per cent of the Middle East and Africa’s $16 billion metals and mining market.

The kingdom’s mining industry has grown 27 per cent annually to reach more than 727 million Saudi riyals ($194m) — achieving its highest revenue last year. The country has also issued more than 130 mining licences.

Expansion of Saudi Arabia’s industrial and mining sectors is an important part of its Vision 2030 strategy that aims to reduce its reliance on oil revenue by diversifying its economy.

In 2020, the country approved a mining law to boost foreign direct investment in the sector. The law, which came into effect in January 2021, will help the country explore mineral resources worth about 5 trillion riyals, with 20 million ounces of gold reserves below ground, Invest Saudi said.

“Mining is at an inflection point,” Mr Al Mudaifer said.

“To meet future demand, the world needs more resilient mineral supply chains from diverse sources, and these supply chains must be more responsible and more equitable.

“Saudi Arabia has a central role to play in developing the emerging super-region from Africa to Asia.”

Last month, Saudi Arabia announced the next steps related to the awarding of licences for the Khnaiguiyah project, the kingdom’s largest mining exploration site.

Mr Al Mudaifer said the effect of sustainability on the mineral and mining markets will also boost the industry.

Sustainability is “impacting both global supply and demand”, he said and added that it offers new business opportunities while also posing new challenges.