Saudi Arabia’s and the UAE’s Quest for African Critical Minerals

On May 27, Abu Dhabi’s International Holding Company, a government-backed investment entity, announced it is in negotiations with the Zambian government to acquire Konkola Copper Mines. The move is part of an intensive effort by the United Arab Emirates as well as Saudi Arabia to increase investment in critical minerals as the Gulf oil producing countries strive to diversify their economies away from fossil fuels.

Minerals such as copper, cobalt, lithium, and graphite are critical for manufacturing electric vehicle batteries and in renewable energy infrastructure. Investing in these resources paves the way for Saudi Arabia and the UAE to not only generate substantial returns but also become key actors in the clean energy sector. Such investments, however, have geopolitical implications for China, a major established player in this sector.

The UAE Takes the Lead, Saudi Arabia Plays Catch Up

Between these two Gulf states, the UAE is leading the way in critical mineral investments in Africa. In July 2023, the UAE signed a $1.9 billion deal with the Democratic Republic of Congo’s state-owned mining company, Sakima, to develop four critical mineral mines, though the specific minerals and the exact Emirati entity involved have not been disclosed. In December 2023, the UAE signed a $1.1 billion investment agreement in Zambia, acquiring a 51% stake in Mopani Copper Mines. The deal was carried out by International Resources Holdings, an entity of International Holdings Company, chaired by UAE National Security Advisor Tahnoun bin Zayed al-Nahyan. That month, International Resources Holdings and Jubilee Metals Group, a metals recovery company, established a strategic partnership to recover approximately 350 million metric tons of copper in Zambia. Finally, International Holdings Company announced in May that it entered into joint venture agreements to mine iron ore in Angola, and it is in advanced discussions to extract various critical minerals in Burundi, Tanzania, and Kenya.

Over the past year, Saudi Arabia has been actively pursuing critical mineral deals in Africa, though it has not yet closed on any. In June 2023, the Public Investment Fund expressed interest in investing in the Democratic Republic of Congo’s critical minerals through Maaden, a state-owned Saudi mining company. Additionally, at the Future Minerals Forum in Riyadh in January, Saudi Arabia signed memorandums of understanding for mining investments with the Democratic Republic of Congo, Egypt, and Morocco. Following the forum, the kingdom established Manara Minerals, a joint venture between the PIF and Maaden, to invest in mineral resources worldwide. Manara Minerals was listed as a potential bidder for up to a 30% stake in Zambia’s copper mines owned by First Quantum Minerals, a Canada-based mining company.

Geopolitical Double-Edged Sword

Given China’s dominant presence in Africa’s critical mineral industry, the entry of Saudi Arabia and the UAE into the arena may have geopolitical implications for their relationships with China.

There is potential for economic cooperation on African critical minerals among the three states. China has established expansive economic partnerships in both Gulf countries’ renewable energy sectors. Given the success of these economic partnerships and the essential role of critical minerals in the clean energy industry, forming similar partnerships on African critical minerals could yield significant economic benefits for all parties.

However, Saudi and Emirati investments in Africa’s critical minerals could counter China’s strategic interests. China currently has a monopoly over Africa’s Copperbelt, owning 72% of cobalt and copper mines in the Democratic Republic of Congo alone. By contrast, the volume of actual and planned Saudi and Emirati critical mineral investments in Africa has remained relatively low and so has not yet posed a threat to China’s interests. However, Abu Dhabi’s International Resources Holdings reportedly has expressed interest in bidding for the 80% stake in Zambia’s Lubambe Copper Mine that Hong Kong-based private equity manager EMR Capital owns, which would complicate the sale already agreed upon with Chinese mining company JCHX. The sale is currently pending approval from the Zambian government. If the bid is awarded to International Resources Holdings instead of JCHX, it will mark the first Gulf challenge to China’s mineral investments in Africa.

Given the aggressive race between the United States and China to acquire African critical minerals, the United States could leverage its close ties with the Gulf states to further its own strategic interests on the continent through their critical mineral investments. According to a September 2023 Wall Street Journal report, talks are currently underway regarding potential economic partnerships between the United States and Gulf countries on African critical minerals, with discussions with Saudi Arabia so far advancing the furthest. These economic partnerships would reportedly grant U.S. companies purchase rights to some Gulf mineral investments, helping the United States gain indirect access to more of Africa’s critical minerals. This could help the United States counter China’s dominance over these minerals, as the two powers compete for resources. While such economic partnerships would strengthen Saudi and Emirati economic ties with the United States, the two Gulf states could risk being drawn more deeply into the broader geopolitical struggle between the United States and China. If these partnerships with the United States were developed more fully, China might view the UAE and Saudi Arabia as taking the United States’ side in the race for critical minerals, potentially affecting their bilateral ties with the Asian economic powerhouse.

Saudi and Emirati efforts to expand the countries’ presence in Africa’s critical mineral industry bring the potential for both economic collaboration and geopolitical tension. Navigating these complex dynamics alongside established actors in the field will require them to adapt to the multifaceted geopolitics surrounding African critical mineral resources.

The views represented herein are the author's or speaker's own and do not necessarily reflect the views of AGSI, its staff, or its board of directors.