Saudi Arabia intends to launch a new platform to trade materials used in battery production, including graphite and rare earth elements.
This step comes within the framework of Saudi Arabia’s efforts to diversify its economy and reduce dependence on oil, by exploiting the Kingdom’s untapped mineral resources, whose value is estimated at about $1.3 trillion.
The platform to be established aims to enhance trade and facilitate the trading of mineral materials used in the manufacture of batteries, including graphite, rare earth elements, lithium, cobalt, and nickel.
The establishment of a futures exchange for these metals is seen as a step to improve the price determination mechanism and provide an effective trading environment for this industry.
Khaled bin Saleh Al-Mudaifer, Saudi Deputy Minister of Industry and Mineral Resources, recently spoke about the importance of developing a metals exchange to enhance the Kingdom’s position as a center for metals, considering the presence of an effective price setting mechanism and futures exchange as necessary to achieve strong competitiveness in this sector.
This new platform is expected to provide great benefits to Saudi Arabia:
- In the short term, the platform will boost trade and provide a favorable environment for local and international investors and companies.
- In the long term, the platform will contribute to the development of new industries in the Kingdom, including the electric car industry, and strengthen Saudi Arabia’s position in the global market for mineral materials.
Important step
According to Al-Mudaifer, the Kingdom is studying the possibility of creating a platform for trading materials used in the production of batteries, such as graphite, rare earth elements, lithium, cobalt, and even nickel.
He added that there are currently no exchanges in the world that offer contracts for graphite or rare metals, which are important materials for electric cars and energy transformation, while lithium and cobalt are traded on the London Metal Exchange and the Chicago Mercantile Exchange, stressing that the decision on establishing the trading platform is not expected to be taken before 6 months. Months, as work has been underway to study this matter since the past three months.
Commenting on this step, Saudi economic analyst Mohammed bin Abdullah Al-Rasheed said that launching a platform for trading materials used in battery production will be an important step in supporting Saudi Arabia’s efforts to diversify its economy.
He added in statements to Al Jazeera Net that this platform will contribute to enhancing trade and facilitating the trading of these materials, which are considered among the most important commodities used in the manufacture of electric cars and energy transformation.
The Saudi economic analyst continued, “Establishing a futures exchange for these metals will be of great importance in improving the mechanism for setting prices and providing an effective trading environment for this industry,” stressing that Saudi Arabia has great potential to benefit from this platform, as it possesses large reserves of these metals.
Al-Rasheed said, “We believe that Saudi Arabia can become a global center for trading materials used in the production of batteries, as it has the necessary components and capabilities for that.”
Opportunities and challenges
However, the Saudi economic analyst points out that the Kingdom faces some challenges that need to be addressed in order to achieve success in this field, including the need to develop the necessary logistical infrastructure to trade materials used in the battery industry, and build the human capabilities necessary to operate the platform to be established.
He stresses that if Saudi Arabia is able to address these challenges, establishing a platform for trading materials used in the battery industry will be an important step in strengthening its position as a global center for trading these materials.
For his part, the Saudi economic expert, Khalid bin Muhammad Al-Saif, said that launching a platform for trading materials used in battery production will contribute to supporting Saudi Arabia’s efforts to attract foreign investments.
Al-Saif confirmed in an interview with Al Jazeera Net that Saudi Arabia has great potential to attract foreign investments in the mining sector, as it possesses large reserves of important minerals.
The Saudi economist believes that the launch of this platform comes as confirmation of what the World Bank announced regarding the need to increase the production of minerals such as graphite, lithium, cobalt and copper by up to 500% by 2050 to meet the growing demand for clean energy technologies in the future.
Al-Saif points out that launching this platform would motivate international and local companies to research and explore to extract such minerals, thus increasing their production and meeting the global demand for them.
He pointed out that Saudi Vision 2030 aims to provide unprecedented investment opportunities in various sectors, including the mining sector, as the Kingdom has rich reserves of many minerals, such as gold, copper, zinc and lead.
Al-Saif pointed out that according to recent estimates:
- The country’s gold reserves are 56,263,984 ounces, with a total value estimated at $69 billion.
- Copper reserves 2,243,000 tons (worth $17 billion)
- Zinc reserves 4,383,900 tons (worth $9 billion)
- Lead reserves 448,900 tons ($0.8 billion)
- Silver reserves 95,938,000 ounces ($2 billion)
- Nickel reserves 108,000 tons (total value $1.6 billion).
Last January, the Manarat Al Ma’aden Fund was established as a joint venture between the state-owned mining company (Ma’aden) and Saudi Arabia’s sovereign wealth fund.
This fund aims to buy assets abroad, while focusing mainly on copper, nickel, iron ore and lithium.
Also last July, the Manara Metals Fund made its first major investment move abroad, as it participated with 10% in the copper and nickel unit of the Brazilian Vale Company, with a value of up to $26 billion.
According to observers, Saudi Arabia is seeking to compete with many countries in developing the rare earth elements sector, such as China, the United States, and Russia.
China has large reserves of rare earth elements, and it controls most of the global production of these elements.
China currently has a share of about 60% of the market for producing metals used in the battery industry, while the United States seeks to develop the rare earth elements sector, with the aim of reducing dependence on China in this industry.
