Luxembourg firm commits $50m investment to Saudi mining

Erg

• Demand for minerals such as graphite and lithium is growing fast
• Saudi is rich in materials for batteries and renewable energy systems 
• Government estimates mineral resources worth about $1.3trn

A Luxembourg-based natural resources group is set to enter Saudi Arabia with an initial $50 million investment as the kingdom looks to attract more foreign companies to its burgeoning mining sector.

Eurasian Resources Group (Erg) said there is potential to grow its Saudi investment year-on-year, adding that it will prioritise large scale, early-stage exploration for battery transition minerals in the Ad Dawidimi region of the kingdom.

Erg said its two offices in Riyadh and Jeddah will be central to its planned regional development strategy that will seek growth across the Middle East and North Africa. 

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The company has already secured licences and is actively pursuing further exploration ground, Benedikt Sobotka, CEO of Erg, said. 

The entry into Saudi Arabia – Erg’s 16th market globally – comes as the World Bank estimates 75 percent of global exploration spend goes to only 10 countries. 

Sobotka said: “This is not sustainable if we want to meet the exponential demand for minerals needed to power the global energy transition.

“Erg is seasoned in entering new frontier markets, those previously overlooked, untapped or under-explored, and is looking forward to embarking on this journey with the kingdom.” 

Its Minerals for Climate Action report showed that global demand for minerals such as graphite, lithium and cobalt could increase fivefold by 2050 to meet the growing demand for clean energy technologies. 

Estimates indicate that more than 3 billion tonnes of minerals and metals will be needed to realise the goals of net-zero greenhouse gas emissions by 2050.

Sobotka said that Saudi Arabia provides “exceptional conditions” to help deliver essential materials for the production of batteries and renewable energy systems in the long term.

Dr Alexander Machkevitch, Erg chairman, said: “Under Vision 2030 and its mining strategy, Saudi Arabia has taken steps through legal reform and access to high-quality geological data to make its estimated $1.3 trillion worth of minerals attractive to explorers and investors. Erg is committed to long-term investment in the region.”

Earlier this month Khalid Al-Mudaifer, vice minister for mining affairs, was quoted as saying that Saudi Arabia is seeking foreign investors to help explore strategic and vital minerals used in the renewable energy sector.

He said that opportunities worth $32 billion were on offer, with both local and foreign investors currently studying proposals while about 16,000 new mine licences have been issued.

Supplied/Erg

Erg’s Saudi move has been announced as part of Riyadh’s efforts to build an economy that is not dependent on oil. It includes a shift towards mining to explore the country’s untapped reserves of resources from copper to phosphate and gold.

The Saudi government believes it has unused mineral resources worth about $1.3 trillion, with vast quantities of aluminium, phosphate, gold, copper and uranium.

The British government agreed this month to deepen its collaboration with Saudi Arabia on diversifying sources of critical minerals.

The UK’s Business, Energy & Industrial Strategy department said the partnership could see Saudi investment in the UK’s manufacturing and mining finance sectors, and new opportunities for UK mining firms to do business in Saudi Arabia.

Earlier this month Saudi Arabian Mining Co, better known as Ma’aden, the Gulf’s largest miner, also agreed to form a joint venture with the kingdom’s sovereign wealth fund.

Ma’aden said the new venture’s strategy “will initially be to invest in the iron ore, copper, nickel and lithium sectors as a non-operating partner taking minority equity positions”.

In November Saudi Arabia said it was considering setting up a new metals and mining stock exchange index to further boost the sector.

Similar to Australia’s ASX 300 Metals & Mining (XMM) sub-index, it would list metals and mining firms including producers of gold, steel and precious metals.

Mining minister Bandar bin Ibrahim Al-Khorayef said at the time: “The idea is to help the sector grow faster. We definitely see a need for small and medium firms in the sector to access capital through capital markets.” 

Erg is a founding member of the Global Battery Alliance which is dedicated to establishing a sustainable and responsible global supply chain for the lithium-ion batteries that can power a low carbon economy through mobile devices, electric vehicles and renewable energy systems.