Rare earth elements (REEs) have become indispensable in modern technology and defense. As the global demand for these critical materials rises, nations are seeking to diversify their supply chains to reduce dependence on dominant producers like China. Saudi Arabia, with its ambitious Saudi Vision 2030 plan, is emerging as a new frontier in the mining sector, and French expertise in rare earth mining and processing is poised to play a pivotal role in this transformation.

Definition and Importance of Rare Earth Elements (REE)

Rare earth elements comprise 17 metallic elements, including scandium, yttrium, and the 15 lanthanides. These elements are crucial due to their unique magnetic, luminescent, and electrochemical properties, making them essential in various high-tech applications.

REEs are vital in the production of smartphones, computers, electric vehicles, and renewable energy technologies like wind turbines and solar panels. In defense, they are used in precision-guided weapons, night-vision goggles, and stealth technology, underscoring their strategic importance.

China’s Dominance in the REE Market

China controls approximately 60% of global REE production and refining capacity, making it the primary supplier of these critical materials. This dominance has significant implications for global supply chains and pricing stability. Diversifying REE supply chains is crucial to mitigate risks associated with geopolitical tensions and supply disruptions. Countries like the United States, Australia, and Canada are investing in domestic production and processing facilities to reduce reliance on Chinese imports.

The decoupling strategy of Western countries from China is driven by a combination of economic, geopolitical, and strategic imperatives. The Western economies, particularly the European Union and the United States, have recognized the risks associated with their heavy reliance on China for critical minerals and other key resources. This dependency has become increasingly untenable amid rising geopolitical tensions, particularly in the Pacific region and around Taiwan. China’s assertive stance on Taiwan, including military maneuvers and diplomatic pressure, has heightened the risk of conflict in the region.

For European countries, the strategic imperative to find alternative sources of minerals is not only about reducing economic dependence on China but also about ensuring national security and maintaining geopolitical stability. The potential for China to leverage its control over critical minerals as a geopolitical tool is a significant concern. As such, Europe is actively pursuing partnerships with countries like the United States, Canada, and Australia, and investing in domestic capabilities to process and refine these essential materials. The European Union’s Critical Raw Materials Act, for instance, aims to secure alternative sources and reduce reliance on Chinese imports, reflecting a broader strategy to bolster supply chain resilience and support the green and digital transitions essential for future economic growth.

Saudi Arabia’s Rare Earth and Mining Ambitions

Now, Saudi Arabia boasts significant geological diversity and mineral wealth, particularly in the Arabian Shield region. Key REE deposits, such as Jabal Tawlah and Ghurayyah, hold substantial potential for exploitation. However, the Kingdom’s mineral resources extend far beyond rare earth elements, encompassing a wide array of valuable minerals that can significantly impact its economy and geopolitical standing.

Indeed, Saudi Arabia’s mineral reserves are extensive, with over 5,300 mining sites valued at approximately $2.5 trillion. These sites contain a variety of minerals, including gold, silver, copper, zinc, phosphate, bauxite, limestone, and more. For instance, Saudi Arabia produces about 409,000 ounces of gold annually from its mines in the Arabian Shield, alongside 68,000 tons of copper and zinc concentrates, and 24.6 million tons of phosphate ore, which is processed into 5.26 million tons of phosphate fertilizers each year. The Kingdom’s bauxite production stands at about 4.9 million tons per year, yielding around one million tons of aluminium.

Saudi Arabia’s Vision 2030 aims to diversify the economy by developing the mining sector as a third pillar alongside oil and gas and petrochemicals. The comprehensive strategy for the mining sector includes ambitious targets, such as increasing the production of gold, copper, and primary metals tenfold and expanding the phosphate fertilizer industry to place Saudi Arabia among the top three global producers. The strategy also aims to double the production of iron and glass to meet growing demand and achieve self-sufficiency, while developing new value chains for rare earth elements, tantalum, and niobium.

Recent reforms in mining laws and foreign investment incentives have made the sector more attractive to international investors. The Saudi Mining Investment Law, for instance, streamlines the licensing process and offers incentives such as reduced royalty rates, extended license durations, and assurances on the security of tenure. These reforms have already attracted significant foreign direct investment (FDI), with a record $8 billion secured in 2021 and the issuance of 145 licenses.

To fully realize the potential of its mineral resources, Saudi Arabia plans to attract nearly $200 billion in mining sector investments by 2030. This influx of capital is necessary to develop the infrastructure, technology, and expertise required for large-scale mining operations. Key areas of expertise needed include advanced exploration techniques, sustainable mining practices, and state-of-the-art processing technologies. Companies like Ma’aden are leading the charge, reporting total revenues of $1.9 billion in Q2 2023, driven by record phosphate production and strategic growth initiatives.

Economic Impact and Geopolitical Implications

The development of the mining sector is expected to significantly contribute to Saudi Arabia’s economy. Officials aim to boost the mining sector’s contribution to GDP from $17 billion to $75 billion by 2030. This growth will generate thousands of high-value jobs, reduce mineral imports, and enhance the competitiveness of Saudi industries that rely on these minerals.

The strategic development of Saudi Arabia’s mining sector has far-reaching geopolitical implications. Saudi Arabia’s efforts to attract international investment and forge partnerships with countries like the United States, Canada, and Australia position it as a key ally in the global quest for critical minerals. However, the Kingdom must also navigate its relationship with China, a dominant player in the REE market. Balancing these relationships will be crucial for Saudi Arabia to leverage its mineral wealth effectively and maintain geopolitical stability.

French Expertise in Rare Earth Mining and Processing

France has a rich history in rare earth mining and processing, and several French companies are already actively participating in the development of the Saudi mining sector.

For instance, Ginger SOFRECO has been actively sharing its expertise in geology, mining studies, mineral processing, and environmental management. Ginger SOFRECO’s involvement in Saudi Arabia includes providing consultancy services for exploration and development projects, ensuring that mining operations are conducted efficiently and sustainably.

Moreover, Schneider Electric has introduced its StruxureWare technology in Saudi Arabia, a comprehensive suite of applications optimizing production operations to reduce costs and improve sustainability within the mining, minerals, and metals sectors. Schneider Electric’s technology is being implemented in various mining projects across the Kingdom, enhancing operational efficiency and environmental performance.

In addition, MCS Mining, a joint venture between Modern Chemicals Co. of Saudi Arabia and EPC Groupe from France, offers drilling, blasting, and explosive products and services. The company operates two manufacturing sites in the Kingdom, providing comprehensive coverage of the Saudi market. MCS Mining’s expertise in explosives and drilling technology is critical for efficient and safe mining operations.

Finally, other notable French companies involved in Saudi Arabia’s mining sector include Technip, Thales, Veolia, and PMG Consultant. Their involvement underscores the depth and breadth of French expertise available to support Saudi Arabia’s mining ambitions.

Yet, French companies are not the only ones involved in the Kingdom. They have to face fierce competition from other countries. For instance, U.S. company Alcoa and Canadian firm Barrick Gold have made significant investments in the Kingdom. Alcoa operates the Ma’aden Bauxite and Alumina Company, a joint venture with Saudi Arabian Mining Company (Ma’aden), which is responsible for the largest fully integrated aluminum complex in the world. Barrick Gold, on the other hand, operates the Jabal Sayid copper mine in partnership with Ma’aden. Australian companies are also prominent players in Saudi Arabia’s mining sector. For example, Australian firm Alara Resources is involved in the Khnaiguiyah Zinc-Copper Project, which has substantial reserves of zinc and copper.

Future Prospects

Despite this strong competition, French expertise can significantly support Saudi Arabia’s mining ambitions through technology transfer and capacity building. It can also help the Saudi mining industry be more sustainable. This partnership offers economic and geopolitical advantages for both nations, enhancing their positions in the global REE market, especially following the announcement of the Indian-Middle East-Europe Economic Corridor (IMEC) during the 2023 G20 New Delhi Summit.

By actively participating in the development of Saudi Arabia’s mining sector through IMEC, French companies can not only tap into a lucrative market but also play a crucial role in shaping the future of global mineral supply chains. This collaboration has the potential to create a win-win situation, enhancing both countries’ economic and geopolitical standings while contributing to the diversification and sustainability of global rare earth element supplies.