The countries of the world are racing to collect basic materials for production to revive supply chains and deal with a turbulent transition in the energy sectors, among those countries, Saudi Arabia, which “has a real opportunity, especially with growing concerns about dependence on China,” according to the newspaper.Washington Post“.
The newspaper raised questions about the kingdom’s chances of attracting foreign investors.
The Kingdom’s Sovereign Fund and the kingdom’s mines are set to invest more than 11.95 billion riyals ($3.2 billion) to establish a fund focused on collecting minerals, such as copper, nickel and lithium, by participating as a passive partner in companies distributed around the world.
“new age”
The Kingdom revealed the establishment of the fund, or the joint stock company, at the Future Metals Forum hosted by Saudi Arabia last week, in the presence of prominent companies such as “BHP Group Ltd”, “Rio Tinto Plc” and “Ivanhoe Mines Ltd”, in addition to US and British officials.
The International Mining Conference discussed the establishment of flexible supply chains for minerals in an integrated manner, addressing the requirements in the region, creating new patterns of trade, reorganizing the supply chain, in addition to reducing the level of carbon, working in a circular economy, reducing costs and controlling the purchase of production, with the participation of 60 countries represented by 40 ministers and 18 officials. high-level, and in the presence of 10 regional and international organizations, according to what was reported by the Saudi Press Agency.SPA“.
The agency indicated that the sessions discussed “establishing a new era of exploration in the region and the various paths for obtaining exploration and mineral extraction rights and operating this industry in the Kingdom, in addition to addressing the advantages and disadvantages of modern technology and how to enhance productivity using automation, drones, artificial intelligence, the Internet of things and smart sensors.” machine learning and training the next generation of workers.”
This coincides with the Kingdom’s aspiration to become a magnet for global astrology and establish a sector that could become essential in its economy.
The fund is expected to invest up to $15 billion in companies and assets around the world to ensure the provision of necessary minerals for local use, at a time when the Kingdom aspires to expand in non-oil sectors, such as manufacturing, given that its economy is one of the fastest growing among the G20. in the non-oil sectors.
“the biggest challenge”
The American newspaper stated that the Kingdom’s timing is good with regard to focusing on rare earths, especially with the turmoil in supply chains and the pressures of legislation that impose a reduction in carbon emissions.
She noted that the Chinese role in the global economy has prompted companies to search for alternatives, at a time when the world is trying to address the shortage of rare metals, while investment is slow in the technology needed to increase their production.
At the same time, the world is also moving towards reviving renewable energy sectors, such as solar energy facilities, hydrogen fuel factories, and electric batteries, which all require huge quantities of these minerals.
Legislation, including the recent policy adopted by the United States to address climate change, within the “US Inflation Reduction Act” plan, has contributed to a clear growth in the establishment of factories to implement it, but investment has not yet focused on providing the necessary minerals to achieve this.
The newspaper confirmed that the Saudi Crown Prince, Prince Mohammed bin Salman, “stands today in front of the world’s greatest need and opportunity for the coming decades,” but stated that the process will not be easy to implement.
The newspaper stressed that the questions do not revolve around the Kingdom’s financial ability to implement these plans, but rather its need for investors and foreign capital that can help transfer technology, business strategies and productivity.
She stressed that the Kingdom’s standing today as a “spectator” without resorting to action on the ground and by attracting foreign investments “may be the biggest challenge” for the Kingdom.
The Saudi Crown Prince’s vision for the year 2030 hopes to collect foreign direct investment to contribute to the gross domestic product, that is, to rise from 0.7 percent to 5.7 percent.
The year 2021 witnessed a huge growth in foreign investments in the Kingdom, and the newspaper noted that this is due to the “Aramco” deal to build a pipeline worth $ 12.4 billion.
However, the “Washington Post” stated that the huge contributions, whose results and profits require years to be translated into reality, are still not announced yet, at a time when international companies are “hovering” around the Kingdom, memorandums of understanding were signed and several visits were made, but the funds were not “realistically embodied.” According to data quoted by the newspaper on the latest data on foreign investments in the Kingdom.
She stressed that policy makers and companies must balance between investing in a region full of wealth, but it is located on the rift of economic and geopolitical tensions.
And she stressed that, especially in emerging markets, the main foreign investments come after years of commitments and financial borrowing, which may add a new type of costs and complications.
The newspaper raised several questions: “Can companies be compensated for the risks of investing in the Kingdom? And can the rules change before they reap the best side?”, noting that multibillion-dollar mining projects require the approval of other shareholders and are usually difficult to adhere to.
She explained that the general shareholders of companies may not usually be interested in investing in projects whose profits may be prolonged, and at the same time they are not interested in huge spending.
She pointed out that spending in the sector, at its peak in the past decade, was about $150 billion, and is expected to decrease by about $11 billion globally this year.
She stated that foreign direct investments constitute cycles of “self-satisfaction”, explaining that when a country or province proves successful, it will be easier to attract other investments, and this may be prompted by the adoption of policies that are popular with investors, such as tax incentives and free trade markets, for local and foreign companies. Thus, economies can be effectively launched and the returns derived from those efforts can be increased.
She pointed out that reaching this stage of investment is “essential,” noting that many companies flocked to Riyadh, but few of them expressed their desire to implement the huge projects that astrology usually requires.
The Canadian company “Barrick Gold Corp” signed an agreement with the Saudi “Ma’aden” company to explore for copper. Maaden will initially contribute $7.6 million.
Saudi Arabia’s Ma’aden also announced a $126 million deal with Ivanhoe Electric Inc.
While Britain, represented by the Minister of Business and Energy, Grant Shapps, did not exceed “loose” commitments, according to the newspaper’s expression, as the minister stated that his country could not rely on one country, pointing at the same time to his country’s need for partners such as Saudi Arabia.
Chinese experience
The Chinese experience indicates that the possibility of attracting foreign investments to focus them locally is driven by the size and growth of the economy, according to the “Washington Post”.
She mentioned that other key factors that could affect attracting foreign investment, including labor and infrastructure costs.
China is one of the biggest beneficiaries of these investments, despite the questions raised about its management and labor legislation, but it has established its position as “the factory floor of the world and has also brilliantly provided its manufacturing expertise.”
The newspaper concluded its report by saying: “For Saudi Arabia, opening the door is a big step, as well as welcoming foreign business, but it will have to determine if it can provide a huge opportunity for foreign investors, which are accounts that deserve to be completed.”
