How Saudi Arabia and Morocco are shaping the EV battery supply chain19th February 2024
7 min read
Critical MineralsGeopoliticsAs the global race to secure critical minerals heats up, actors in the Middle East and North Africa (MENA) region, especially Saudi Arabia and Morocco, are gaining a strategic foothold in the lithium ion battery supply chain. Through various policy approaches utilising state support and industrial policy and taking advantage of geopolitical trends, these countries are attracting investors and deploying capital to increase their role in the EV battery supply chain.
Saudi’s mineral wealth and mid and downstream ambitionsFor Saudi Arabia, entering the EV battery supply chain is a way to
diversify its ‘fossil fuel economy’, which is part of Saudi Crown Prince Mohammad bin Salman’s landmark “Vision 2030”.
To achieve Vision 2030, the Saudi government is leveraging its Public Investment Fund (PIF), one of the world’s largest sovereign wealth funds, to drive its economic transition. Specific programs to boost mineral production include the provision of $182 million to be used as de-risking money to get mining endeavours off the ground, as well as financing up to 75% of CAPEX with preference to advanced exploration and mining activities.
Saudi Arabia recently increased its estimate of its mineral resources nearly two-fold, from $1.3 trillion to $2.5 trillion. The estimates include deposits of rare earths, phosphate, and copper. To capitalise on this, the Saudi authorities have developed dozens of new mining exploration sites and awarded foreign investors over 30 mining exploration licences for 2024.
Beyond mineral exploration and
mining, Saudi Arabia is also involved in
developing mid- and downstream capabilities domestically. In 2021, Saudi Arabia became the first Middle Eastern country to establish pipeline capacity in lithium processing by signing an agreement with EV Metals Group to build a battery chemicals complex in Yanbu Industrial City. In 2023, TAQAT Development, a Saudi energy company, began a joint venture with Novonix to build a 30,000-tonne capacity graphite anode materials facility to supply EV and energy storage systems (ESS) to markets in the Middle East and North Africa.
The kingdom’s ambition of producing EVs began to materialise in 2022 when Lucid Motors announced that it would build its first ex-US factory in Saudi Arabia and when the Saudi EV brand Ceer was launched. Both investments are backed by the Saudi PIF. The Saudi government has announced its goal of producing 500,000 EVs by 2030 and making 30% of all vehicles on the road in Riyadh electric.
Saudi overseas mineral investments and geopolitical engagementBesides developing its domestic chemicals-to-EV supply chain, Saudi Arabia invests in key overseas mining assets to secure critical mineral supply. For example,
a recent deal involving Manara Minerals (a JV between the PIF and Saudi’s state mining company Ma’aden) along with Brazilian miner Vale gives Saudi Arabia minority control in various critical mineral assets and the opportunity to secure offtake agreements. This strategy closely resembles the kingdom’s previous efforts to develop a
domestic aluminium industry.
As the geopolitical competition to secure critical minerals heats up, Saudi Arabia is notably balancing its engagement with the US, Russia and China to position itself in the lithium ion battery supply chain. At the recent and well-attended Future Minerals Forum in Riyad, Saudi officials signed several MoUs with, among others, Russia and the US Export-Import Bank to cooperate in critical mineral projects.
Chief among the regions that may benefit from Saudi Arabia’s wealth and zest for battery minerals is Africa, endowed with battery mineral deposits like cobalt, copper, lithium, manganese, and natural graphite. For instance, according to
Benchmark’s natural graphite forecast, Africa has emerged as a low-cost hub for natural flake graphite production in countries like Madagascar, Mozambique and Tanzania and the region is forecasted to mine 41% of natural flake graphite by 2030. As for lithium, Africa is set to produce
15% of global lithium production in 2030.
This past fall, the US and Saudi officials were engaged in talks to secure critical minerals in Africa, with the Saudis announcing their intention to purchase $15 billion in mining stakes in countries such as Namibia, Guinea, and the Democratic Republic of Congo (DRC). The DRC
accounted for 76% of the world’s mined cobalt supply last year and will continue to dominate the cobalt market, even if its market share is expected to decrease to 66% by 2030.
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