Surging Demand for Metals to Meet Net Zero Targets and Fuel the AI Revolution

Global shifts accelerating the use of renewable energy and the need to achieve net-zero carbon emissions has generated surging demand for metals such as lithium, cobalt, nickel, and copper. These metals are crucial to produce batteries, electric vehicles (EVs), and renewable energy technologies. 

Copper remains essential for both the energy transition and its wide-ranging applications across existing industries, including consumer electronics, electricity infrastructure, defence systems, automobiles and data centres that support the AI revolution. According to S&P Global, copper demand could double to 50 million metric tonnes by 2035, which will put immense pressure on existing mining operations. Industry forecasts predict that copper shortages could begin as early as 2025.

To meet this escalating demand, it is estimated that the global mining industry would need to develop approximately 194 new large copper mines by 2050, averaging six new mines per year, according to a recent study. However, major copper producers such as Peru, Chile, and the Democratic Republic of Congo are not expected to see significant production growth in the short term. A Bloomberg study further underscores the urgency of addressing this supply gap, noting that critical energy transition metals more broadly could face deficits as early as this decade. The mining sector is projected to require $2.1 trillion in new investment by 2050 to meet the anticipated demand.

As the importance of critical minerals grows, governments worldwide, including the United States (US) and China, are taking steps to strengthen their mineral supply chains. China’s dominance in mineral processing has prompted other nations to diversify their supply chains. The US in particular, is seeking partnerships worldwide to access minerals beyond the China-led supply chain. 

Gulf countries, with their strong diplomatic networks and financial clout, are uniquely positioned to mediate between these competing global powers and secure access to critical minerals. Two countries in particular, Saudi Arabia and the United Arab Emirates (UAE), have already developed robust strategies to invest broadly across mineral belts in Africa, Latin America and elsewhere, while Saudi Arabia has also made significant moves to mine more at home and develop into a processing hub.

 

Saudi Arabia and Gulf Arab States Grow Their Mining Ambitions Through Investments, Domestic Exploration and Processing

Of all the Gulf Arab states, Saudi Arabia has developed the most ambitious mining strategy. Declared as the “third pillar” of its ambitious Vision 2030 economic transformation initiative, the Kingdom aims for the mining sector to account for up to $75 billion of its GDP by 2030.

Saudi Arabia has pursued a multi-pronged strategy: investing in mineral resources at home, strategically partnering with major players for operations abroad, developing a role as a global hub for mineral refining and research, and attracting international companies to produce batteries and electrical vehicles domestically. The Kingdom aims to capture as much of the minerals value chain as possible to support its industrial growth.

Saudi Minister of Industry and Mining Bandar Al Khorayef has noted that the Kingdom possesses some $2.5 trillion in untapped mineral resources. At the recent World Investment Conference in Riyadh, Saudi Arabia signed nine investment agreements in the metals and mining sector, worth over 35 billion riyals ($9.32 billion). These agreements involve major international companies, including Vedanta (India), Zijin Group (China), and Hastings Technology Metals (Australia). Vedanta announced a $2 billion copper exploration project in Saudi Arabia, while Zijin will invest up to $1.6 billion toward construction of a zinc smelter and lithium carbonate extraction facility.

A key player in Saudi Arabia’s efforts to acquire stakes in mining operations abroad is the state-backed Manara Minerals, a joint venture between Saudi mining company, Ma’aden, and the Public Investment Fund (PIF), the Kingdom’s sovereign wealth fund with assets approaching $1 trillion. In mid-2023, Manara Minerals acquired a 10% stake in a copper and nickel-focused unit of Brazilian mining giant Vale. Manara is also exploring investment opportunities in a copper mine in Zambia, a copper and gold mine in Pakistan, and a lithium project in Chile. PIF Chairman Yasir Al-Rumayyan has noted that the Kingdom plans to invest $25-30 billion in international mining projects over the next decade. Manara Minerals will lead this charge.

The acquisition of stakes in mines globally supports another key pillar of Saudi Arabia’s mining ambitions: to become a major global hub for the processing of minerals. Assets owned by Manara Minerals abroad would create a pipeline that could be transferred to Saudi Arabia for processing. A private Saudi company, Ajlan and Bros, is planning to build the largest zinc and copper processing plant in the Middle East at Yanbu on the Saudi west coast. These metals could also support Saudi Arabia’s ambitions to become a major EV and battery producer.

Since 2021, Saudi Arabia has developed investor-friendly regulations to attract global mining companies to explore the Kingdom’s Arabian Shield formation covering most of western Saudi Arabia. The highly attended Future Minerals Forum, hosted by Saudi Arabia since 2022, has put the Kingdom on the global mining map and demonstrated its convening power. 

Riyadh’s foreign policy also supports its mining ambitions. Seen as a “neutral” third party in the growing US-China showdown and an important link to the Global South, Saudi Arabia will be courted by both Beijing and Washington for joint projects. Chinese companies are leading the geological surveys of the Kingdom, but as Saudi Arabia develops into a major investor and processor of metals, it will also find itself in competition with China on projects abroad and processing at home.

Other Arab Gulf states are also actively investing in the mining sector, especially for critical minerals such as lithium, copper, cobalt, and nickel. 

The UAE is focusing on acquiring mining concessions abroad, particularly in Africa, to secure critical mineral supplies. The UAE’s International Resources Holding (IRH), a state-backed company, acquired a 51% stake in Zambia’s Mopani copper mines in late 2023 for $1.1 billion, and they are currently seeking other Zambian copper assets. The IRH is also canvassing for projects in Angola, Burundi, Democratic Republic of Congo, South Africa, Tanzania, Zambia, and Zimbabwe, and recently signed an agreement with South Africa's Public Investment Corporation (PIC) to invest in rail infrastructure and green energy projects,  UAE-based Titan Lithium is also building a $1.3 billion lithium processing plant in Abu Dhabi, which will source materials from Zimbabwe. 

Minerals Development Oman recently re-started copper exports from its mine in Sohar - after a thirty-year hiatus. Omani companies have also explored opportunities in countries such as Saudi Arabia, Sudan, and Australia.

Bahrain’s aluminium production, particularly through Alba (Aluminium Bahrain), drives significant import activity for raw materials like bauxite. Bahrain relies on strategic partnerships with major bauxite-exporting countries such as Guinea in West Africa. While Bahrain does not directly operate overseas mines, its reliance on global trade networks and its role as a processing hub make it an important player international mining markets around bauxite.

Alba is majority-owned by Bahrain Mumtakalat Holding with a 20.6% stake held by Saudi’s Arabia’s SABIC. A deal is in the works for Ma’aden to acquire SABIC’s entire stake in Alba for roughly $1 billion.

Qatar Investment Authority has played a large role in global mining for more than a decade as one of the largest owners of Glencore, one of the world’s largest commodity traders. QIA also recently invested $180 million in TechMet, a US-backed fund and mining investment vehicle aimed at securing responsibly sourced critical minerals.

Geopolitically, the US sees Gulf Investments in African minerals as a potential counterbalance to China’s influence, particularly in regions critical for the clean energy transition. This could have broader implications for global supply chains, as automakers and manufacturers may seek alternatives to Chinese-dominated lithium-ion battery production if geopolitical tensions continue to rise.

 

The Future

As the next decade unfolds, Gulf states’ investments in mining and minerals processing will continue to reshape global minerals supply chains. By leveraging their unique geopolitical positioning, financial strength, government ambitions, and strategic partnerships, the Gulf states are poised to become major players in the global mining sector. 

Saudi Arabia and the UAE are leading the charge and will increasingly compete across the mining spectrum, although the Kingdom’s own mineral resources set it apart from other Gulf Arab states. China will continue to be both partner and competitor, and the US will seek partnerships with Gulf Arab players to counter China.