Saudi Arabia ushers in the “era of minerals” and “attracts investors” imposes itself

The countries of the world are rushing 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 “Washington Post” newspaper.

The paper raised questions about the kingdom’s chances of attracting foreign investors.

The Kingdom’s Sovereign Fund and the kingdom’s mines are 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 sharing takes as a passive partner in companies spread around the world. .

“New Era”

The Kingdom unveiled 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 American 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 trading patterns, reorganizing the supply chain, in addition to reducing the level of carbon, working in a circular economy , the reduction of costs and the control of 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 local and international organizations, according to the Saudi Press Agency, “SPA”.

The agency indicated that the sessions discussed “the establishment of a new era of exploration in the region and the various paths for obtaining exploration and mineral exploitation rights and operating this industry in the Kingdom, in addition to addressing the benefits and disadvantages of modern technology and how to increase 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 drive to become a magnet for global astrology and establish a sector that could become vital to its economy.

The fund is expected to invest up to $15 billion in companies and assets around the world to ensure the supply of needed minerals for local use, at a time when the Kingdom is looking to expand into 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 world is witnessing a revolution in the renewable energy sectors with little growth in investment in rare earths

“the biggest challenge”

The US newspaper stated that the Kingdom’s timing is good with regard to the focus on rare earths, especially with the turmoil in supply chains and the pressure of legislation imposing a reduction in carbon emissions.

She noted that China’s role in the global economy has forced companies to look 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 to revive renewable energy sectors, such as solar power facilities, hydrogen fuel factories and electric batteries, all of which require large 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 the necessary minerals to achieve this.

The newspaper confirmed that the Saudi Crown Prince, Prince Mohammed bin Salman, “today faces the world’s greatest need and opportunity for decades to come,” but stated that the process will not be easy to implement.

The paper emphasized 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 emphasized that the Kingdom’s position today as a “spectator” without taking action on the ground and attracting foreign investment could be “the biggest challenge” for the Kingdom.

The Saudi crown prince’s vision for the year 2030 hopes to raise foreign direct investment to contribute to the gross domestic product, i.e. to rise from 0.7 percent to 5.7 percent.

The year 2021 witnessed a huge growth in foreign investment in the Kingdom, and the newspaper noted that this is due to the “Aramco” agreement to build a pipeline worth $ 12.4 billion.

However, the “Washington Post” stated that the large contributions, the results and profits of which will take years to be translated into reality, have not yet been announced, at a time when international companies are “floating” around the Kingdom memoranda of understanding undersigned. and several visits were made, but the funds were not “realistically embodied.” According to data cited by the newspaper on the latest data on foreign investment in the Kingdom.

She emphasized that policymakers and companies must balance between investing in a region full of wealth, but located on the rift of economic and geopolitical tensions.

And she emphasized that, especially in emerging markets, the most important foreign investments come after years of commitments and financial loans, which can add a new kind 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 usually difficult to comply with.

She explained that the general shareholders of companies are usually not interested in investing in projects whose profits can be extended, and at the same time they are not interested in big spending.

She pointed out that spending in the sector, at its peak in the last decade, was about $150 billion and is expected to decrease by about $11 billion worldwide this year.

She said that foreign direct investment constitutes cycles of “self-satisfaction”, explaining that when a country or province is successful, it will be easier to attract other investments, and this can be caused by the adoption of policies that are popular among investors, tax incentives and free trade markets, for local and foreign companies. In this way, economies can be launched efficiently and the returns obtained from those efforts can be increased.

She pointed out that it is “essential” to reach this stage of investment, noting that many companies have flocked to Riyadh, but few of them have expressed their desire to implement the large projects that astrology usually requires.

The Canadian company “Barrick Gold Corp” signed an agreement with the Saudi Ma’aden company to explore 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, since the minister declared that his country cannot rely on one country, which at the same time refers to his country’s need for partners such as Saudi Arabia.

Chinese experience

The Chinese experience suggests that the possibility of attracting foreign investment to focus it locally is driven by the size and growth of the economy, according to the “Washington Post”.

She mentioned that other key factors that can influence the attraction of 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 laws, 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 whether it can provide a big opportunity for foreign investors , which are accounts that must be completed earned.”

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