Saudi and UK to strengthen supply chain for minerals

Reuters/Fahad Shadeed

• Deal aims to boost supply of materials needed for clean energy tech
• Lithium, nickel and copper among the materials covered
• Declaration of intent also covers sustainable production of minerals

The UK and Saudi Arabia have signed a declaration of intent to develop supply chains for critical minerals.

The agreement aims to support the global energy transition by increasing the supply of minerals used in electric vehicles, wind turbines and solar panels.

Lithium, nickel and copper are among the metals covered by the declaration, which was signed last week by Bandar Al Khorayef, Saudi Arabia’s minister of industry and mineral resources, and Kemi Badenoch, the UK’s business and trade secretary.

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The partnership will also prioritise sustainable production of minerals. Saudi Arabia estimates that it has unused mineral resources worth about $1.3 trillion, including vast quantities of aluminium, phosphate, gold, copper and uranium.

Last year the UK imported non-ferrous metals worth £68.4 million ($84.5 million) from Saudi Arabia.

The bilateral trade relationship was worth £17.3 billion in 2022, an increase of 68.5 percent or £7 billion.

Al Khorayef said the two governments aim to diversify supply chains for mineral-intensive industries such as manufacturing, electric vehicles, defence and renewable energy.

Badenoch added that the agreement would “strengthen our partnership on supply chain resilience and industrial cooperation – brilliant news for both our economies.”

The deal aims to engage the private sector to explore joint investment opportunities. It also sets out to identify opportunities for research into clean mineral production.

A 2020 World Bank report said demand for minerals such as graphite, lithium and cobalt could increase fivefold by 2050 to meet growing demand for clean energy. 

Mining is a central pillar of Saudi’s Vision 2030. The kingdom is looking to attract local and international companies to bid for licences on five exploration sites. The deposits include copper, zinc, lead, silver and gold.

Officials say opportunities worth $32 billion are on offer. Licences are expected to be issued later this year.

Saudi Arabia is offering potential investors incentives as it works to reduce its dependence on oil. These include co-funding up to 75 percent of capital expenditure, a five-year royalty holiday for miners and royalty discounts for downstream projects.

On Monday, Riyadh unveiled a geological mapping project valued at SAR777 million ($207 million) for the Arabian Shield, an exposure of crystalline rocks on the flanks of the Red Sea including parts of Israel, Jordan, Egypt, Saudi Arabia, Sudan, Eritrea, Ethiopia, Yemen and Somalia.

Al Khorayef said the mapping aimed to strengthen the national geological database and give domestic and international investors a better understanding of Saudi mining opportunities.