Mining firms embrace bumper interest from the Middle East

Mining executives have welcomed a sharp increase in interest from investors from the Middle East at a time when Gulf countries are trying to expand their critical mining ambitions and take on established global players.

Critical minerals refer to a subset of materials considered essential for energy transition. These resources, which are at high risk of supply chain disruption, include metals such as copper, lithium, nickel, cobalt and rare earth elements.

“The interest in rare earths in this part of the world is phenomenal,” Tony Sage, CEO of US-listed rare earth miner Critical Metals, said during a business trip to the Middle East.

“I wasn’t expecting that because, you know, they can’t mine it. There [are] “There’s actually no exploration in this area, but they want to be able to somehow join the undertow,” Sage told CNBC by phone.

His comments come as policymakers and business leaders flock to Saudi Arabia’s Future Investment Initiative (FII) in Riyadh, dubbed “Davos in the Desert”.

The annual event, which started on Monday, is held under the theme “The Key to Prosperity: Unlocking New Frontiers of Growth”. This year’s FII is expected to focus on areas such as artificial intelligence, especially as it continues its mission to diversify the oil-rich kingdom’s economy.

Analysts say Gulf countries such as Saudi Arabia and the UAE are increasingly trying to leverage their financial capital and geographical position to capture critical minerals market share.

A series of targeted acquisitions and international partnerships form an important part of this regional strategy. analysis By the International Institute for Strategic Studies (IISS) Gulf countries are trying to present themselves as alternative partners to Western nations.

Critical Metals has partnered with Saudi Arabia’s Obeikan Group to establish a large-scale lithium hydroxide processing plant in the kingdom.

Kevin Das, senior technical advisor at Australia-based rare earth prospector New Frontier Minerals, linked investor interest in rare earths in the Middle East to the rapid growth in artificial intelligence.

“It’s not surprising that you’re seeing interest not only in the Western world but also in the Gulf countries because I think people are realizing that we’re probably on the verge of an AI boom,” Das told CNBC by phone.

“If you start to see the emergence of robotics, every robot is going to need these rare earths. And I think the supply is going to get tighter and tighter,” he added.

Rare earth elements have emerged as a key bargaining chip in the ongoing US-China trade war. Global stocks rose on Monday amid investors’ hopes that tensions between the world’s two largest economies will be resolved.

IISS research analyst Asna Wajid said in an analysis: “Many of Saudi Arabia’s mining ventures are still in their infancy, even at the conceptual stage, and the country is still reliant on foreign partners for expertise, such that it may be years before Saudi Arabia, and the Gulf states more generally, grow large enough to weaken Chinese dominance or fully meet Western demand.” It was published In late July.

“Moreover, many in the West may be wary of replacing their dependence on China with dependence on the Gulf countries, which already have significant strategic power due to their oil and gas resources,” Wajid said. he said.

China is the undisputed leader of the critical mineral supply chain; produces roughly 70% of the world’s rare earth supply and processes almost 90%; This means that it imports and processes these materials from other countries.

U.S. officials have previously warned that this dominance poses a strategic challenge amid a shift toward more sustainable energy sources.