Life Beyond Oil: Saudi Arabia’s Mining Ambitions

From last year’s COP28 climate conference emerged the “UAE Consensus.” It was a watershed moment, with the UNFCCC in its global stocktake calling on governments to transition away from fossil fuels in “a just, orderly and equitable manner” and accelerate deployment of more sustainable energy sources.

This consensus significantly impacts the future of Saudi Arabia’s economic and energy landscape. It’s the latest driver of the country’s expansion of its interest in mining, both domestically and in many lower-income countries.

Oil’s diminishing prospects

At COP28 the Saudi delegation, together with other Arab oil-producing nations, opposed any proposals mandating the end of fossil fuel production. In a bold stance, energy minister Abdulaziz bin Salman Al Saud openly opposed phase-out or phase-down provisions in the final agreement, likening the fossil fuel related provision to an “à la carte menu”. He later expressed satisfaction with the UAE Consensus, emphasizing that it allows countries to tailor their energy transitions based on their capacities and interests.

Saudi Arabia faces a complex challenge: it remains heavily reliant on oil revenues not only to fund government salaries and infrastructure but to drive the non-oil sectors envisioned under Vision 2030. While Saudi leadership acknowledges the inevitability of the global energy transition and the economic implications, theirs is a cautious approach to avoid a rapid shift. The focus remains on maintaining Saudi citizens’ standard of living while balancing economic growth with the evolving global energy landscape.

In response, state oil company Aramco has taken steps that signal its recognition of the transition. It joined the Oil and Gas Decarbonization Charter at COP28, committing to net-zero operations by 2050, ending routine flaring by 2030, and reducing upstream methane emissions, specifically within Scope 1 and 2. This reflects Aramco’s focus on the most direct and controllable sources of its carbon footprint. Aramco also aligned with the government’s decision to halt expanding oil production to 13 million barrels per day, as part of its shift from a hydrocarbon producer to a broader energy company.

While these measures aim to ensure Aramco’s resilience during the transition, Saudi leadership is also exploring new opportunities in economic diversification, particularly in transition minerals, making a significant shift as the kingdom prepares for a post-oil future.

Saudi Arabia’s domestic mining sector

Beyond oil, Saudi Arabia is expanding exploration and exploitation of its vast domestic mineral reserves through substantial investments in the mining. The kingdom is driven by the growing demand for transition minerals such as lithium, cobalt and nickel, which are required for the transition from fossil fuels based economies to decarbonized economies.

The strategic prioritization of mining is closely linked with Vision 2030’s aim to maximize the benefit of the kingdom’s abundant natural resources beyond its conventional hydrocarbon reserves. Saudi Arabia is tactically re-oriented to exploit increasingly demanded resources that are pivotal in the worldwide transition to renewable energy sources by emphasizing essential transition minerals. This signifies not only a strategic response to the evolving dynamics of the global energy sector, but also a calculated attempt to preserve the kingdom’s preeminent position on the international energy arena.

As per official statements, the estimated value of unexploited mineral resources in Saudi Arabia has increased from $1.3 trillion to $2.5 trillion, driven by  the discovery of rare earth elements and higher quantities of phosphate, gold, zinc and copper.

As part of its goal to pursue economic diversification and reduce reliance on oil production, Saudi Arabia aims to increase the mining industry’s GDP contribution from $17 billion to $75 billion by 2035. The Ministry of Industry and Mineral Resources, headed by Bandar Al-Khorayef, holds a pivotal position in directing the country’s mining endeavors. The Saudi Arabian Mining Company (Ma’aden), a prominent state-owned enterprise, plays a crucial role in the execution of the kingdom’s mining strategies, the development of partnerships to exploit mineral resources, and the operation of significant projects.

The Jabal Sayid copper project, a collaborative effort between Ma’aden and Barrick Gold, and the Al-Jalamid phosphate mine are among the significant domestic initiatives currently in progress. Saudi Arabia is also making substantial is investments in exploration and geological surveys utilizing cutting-edge technologies and international expertise to discover new mineral deposits. In alignment with the new Mining Investment Law, the ministry recently announced the auction of six mining licenses, covering deposits of lead, zinc, copper and iron. To further bolster the sector, the kingdom has introduced a $182 million exploration incentive program and granted 33 additional mining licenses.

On the global stage, Saudi Arabia is driving industry conversations through international initiatives such as the Future Minerals Forum and active participation in Africa’s Mining Indaba, underscoring its commitment to becoming a key player in the global mining industry.

Building international alliances for transition minerals mining

Saudi Arabia plans to become a world leader in sustainable mining by making strategic use of its own significant reserves of transition minerals. Al-Khorayef has said that “the investments will continue to position the kingdom as a mining production and logistics hub for a region that stretches from Africa to Asia, while also supporting the transformation of our mining sector so it can achieve its potential.”

The kingdom’s comprehensive growth strategy for the mining sector involves significant investments, collaborations, and policy reforms. Recent memoranda of understanding (MoUs) signed with countries like the Democratic Republic of the Congo, Egypt, Morocco and Russia underline Saudi Arabia’s intent to enhance its mining capabilities and infrastructure, thereby influencing the global energy transition. And Turkey and Saudi Arabia have entered into a MoU to collaborate on transition minerals, focusing on knowledge exchange and research related to minerals essential for solar panels and electric vehicles.

Furthermore, Saudi Arabia’s global involvement includes not just formal agreements but also direct investments in prominent mining companies. Most recently, the kingdom secured a 10 percent stake in Brazilian mining company Vale Base Metals, demonstrating its approach to investing in the worldwide mining industry by acquiring equity.

With this strategic pivot Saudia Arabian authorities not only aim to diversify the country’s economy but also to secure its role in the new geopolitical alignments around transition minerals. As the global energy landscape shifts toward sustainable sources, the kingdom’s leaders are keenly aware of the necessity to adapt without losing longstanding influence in the energy market.

Challenges and opportunities in Saudi Arabia’s mining ambitions

With its ambitious mining objectives Saudi Arabia faces both domestic and international constraints that officials must solve to maximize industry potential.

Domestically, the country still requires specialized infrastructure tailored to support large-scale mining operations, particularly in remote desert regions. Additionally, the kingdom must invest in education and training programs to develop a workforce skilled in advanced mining techniques and technologies.

Water scarcity in the desert areas poses a significant challenge, as limited water resources complicate mining operations and increase costs. To address these issues, Saudi Arabia needs to explore innovative water management solutions such as desalination and water recycling, specifically designed for mining activities. Furthermore, given the potential environmental impact of mining—such as land degradation, water contamination, and biodiversity loss, the country should implement and enforce rigorous environmental standards to ensure sustainable and responsible mining practices.

The mining industry in Saudi Arabia offers a large array of opportunities. There is great potential for economic expansion in the kingdom because of its substantial transition mineral reserves, which include unexplored amounts of phosphate, copper and rare earth elements. Because of its advantageous position, Saudi Arabia is able to access to important markets in Europe, Asia, and Africa, which serves as a competitive advantage. The government’s dedication to establishing a favorable investment climate, via the implementation of transparent regulations and incentives, is attracting investors from other countries and supporting growth inside the country. However, it is imperative that Saudi Arabia places a high priority on openness in international contracts in order to foster confidence, further benefit producer countries and entice global investment.

Internationally, Saudi Arabia faces challenges linked to geopolitical dynamics and competition in the mining industry, requiring strategic diplomacy to secure lasting partnerships in a shifting global economy. As Saudi investments, particularly in Africa and other lower- and middle-income countries, expand, the kingdom must ensure these ventures are mutually beneficial. This means developing long-term relationships that provide tangible benefits to host governments and communities, such as fair revenue-sharing, infrastructure investment, and skills transfer. By committing to transparent and equitable partnerships, Saudi Arabia can strengthen its role as a responsible global actor, ensuring its investments align with its mining objectives while also promoting sustainable growth in host countries.