The Scoop
Saudi Arabia’s state mining giant is ramping up its domestic search for copper — a key ingredient for the energy transition — soon after announcing plans to explore the country for lithium, the company’s chief executive told Semafor.
Ma’aden, officially known as the Saudi Arabian Mining Co., plans to spend $2.5 billion a year for the next five to six years to expand its phosphate and gold mining operations and to develop new mines, but will pivot its metals exploration at home from gold to copper, spending 72% of its budget on copper, Bob Wilt said in an interview.
“We’ve already got a huge exploration effort going on and we’re expanding it rapidly,” he said. Wilt described Ma’aden’s search for copper as “the world’s largest single-jurisdiction exploration program,” and said he was looking to partner with other firms to help the Saudi giant cover the “vast amount of real estate” required.
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Prashant’s view
Wilt’s remarks underscore Riyadh’s strategy of building up its mining sector across the value chain: Mining has taken on increased prominence as the kingdom has sought to diversify its economy away from oil, gas, and petrochemicals in the short term, while girding itself against the impact the global energy transition will have on its role as a fossil fuel powerhouse.
Copper in particular is a necessary component of solar panels, wind turbines, batteries, and electricity transmission cables, and Ma’aden’s focus on it — in tandem with its joint venture with state oil giant Aramco to mine for lithium — points to the country’s growing focus on the materials necessary for the transition.
It’s not just the energy transition that will drive demand for copper: Morgan Stanley economists said in a report last week that copper and aluminum had shown the highest correlation with a basket of artificial intelligence-related stocks over the past two years, again driven by the increased electricity demands of AI.
Alongside those domestic exploration efforts, another Ma’aden joint venture — Manara Minerals, founded in partnership with the kingdom’s sovereign wealth fund, PIF — is looking abroad, with Wilt telling Reuters in October that the JV was in advanced discussions to buy a stake in a Zambian copper mine. Asked about that deal and others, Wilt said Manara was “still funneling ideas through for copper, lithium, iron ore.”
As Saudi Arabia’s deputy mining minister told me a year ago: “To be an industrial [power], we need minerals. To build projects, we need minerals. Therefore, mining of Saudi Arabia [is] the first step, bringing minerals from outside is the second step, third step is to build Saudi Arabia as a hub.”
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Wilt said the company’s exploration partnerships would take a variety of forms, ranging from joint ventures of the type Ma’aden has already agreed with Aramco, as well as separate ones with Canadian miners Ivanhoe and Barrick Gold, to instances where it will contract with specialist providers or service companies. The examples hold parallels with how oil and gas companies approach major projects, in some cases partnering with firms regarded as rivals and in others signing deals with service companies such as Halliburton and Schlumberger.
“I want to… get all the early stage exploration done,” Wilt said, “and turn these projects and prospective regions into development a lot sooner. Our 2040 strategy is to grow the company 10 times, and we are well on pace for that. But I don’t want to wait until 2040 to get there. I want to accelerate that.”
Notable
- Though Saudi Arabia has huge ambitions for its mining sector — the kingdom claims to have around $2.5 trillion worth of extractable metals and minerals — investors are increasingly expressing skepticism, telling Bloomberg that they’d rather court Saudi cash than deploy their own capital into the country for now.