By: Observe research foundation

Saudi Arabia’s Vision 2030 outlines the Kingdom’s ambition to capitalize on its substantial mineral base, a resource in addition to its oil and gas wealth. The diverse applications of these minerals, many identified as critical, mean that their availability and accessibility carry significant geopolitical weight. Harnessing this endowment of transition minerals would grant Riyadh leverage over the evolving energy landscape and, by extension, the global political economy. Control over the sector would also bring Saudi Arabia the industrial and economic influence associated with the data centers powered by these minerals—a domain in which the country and its partners are making substantial investments.

Economic and Industrial Value of Critical Minerals to Saudi Arabia

A systemic expansion of Saudi Arabia’s mining sector and the development of its critical minerals processing capacity—a major bottleneck in global supply chains—could contribute close to $75 billion to the country’s GDP by 2030, an increase of more than $50 billion from 2024 figures. Developing expertise in mining and processing can subsequently support the growth of downstream sectors such as magnet production and advanced electronics manufacturing. Cumulatively, this would create a high-value vertical integral to Vision 2030’s economic diversification strategy.

The Kingdom’s energy transition agenda targets 130 GW of capacity by 2030, with 50 percent coming from renewable sources. Fulfilling this goal requires the rapid installation of renewable energy projects nationwide. Critical minerals are essential to this agenda, as they are ubiquitous components across the energy transition value chain, from magnet production and nuclear energy to green hydrogen and electric vehicles (EVs).

The push to decarbonize and integrate more renewable energy is driven not only by the Kingdom’s clean energy commitments but also by strong financial incentives. Increasing the share of renewables in the domestic energy mix would free up more crude oil for conversion into downstream petrochemicals—a significantly more lucrative output.

The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, has announced a $6 billion investment to establish a mega data center ecosystem. The Kingdom’s resilient, grid-scale electricity from oil and gas, the world’s lowest renewable energy costs, growing expertise in water desalination, and strategic geographic location provide substantial advantages for it to emerge as a regional digital infrastructure hub. Securing access to domestically mined and processed critical minerals for these data centers would enable the Kingdom to build cost-effective, resilient digital infrastructure.

Additionally, reserves of heavy rare earth elements such as dysprosium and terbium, which are central to defense production, have been discovered in the country. This could facilitate the localization of certain defense manufacturing capabilities within Saudi Arabia, creating another lever of industrial and geo-economic influence. The successful domestic extraction and processing of these minerals would enhance the Kingdom’s value as a defense partner and likely pave the way for high-technology transfers, given the importance of defense manufacturing to the national security of allied nations.

The Kingdom’s Critical Minerals Opportunity

Saudi Arabia’s geographic and political-economic context offers distinct advantages in addressing several global critical minerals supply chain challenges. The country possesses a lucrative, exploitable domestic mineral resource base valued at $2.5 trillion. While a lack of processing expertise remains a concern, the Kingdom is actively developing mining capabilities through foreign collaborations, and its extensive process engineering experience from the oil and gas sector is also beneficial. Saudi Arabia has a record of deploying patient capital and offers financial incentives for exploration.

The country’s abundant fossil fuels and the world’s lowest renewable energy costs help mitigate the prohibitively high energy consumption of mining, and its decarbonization commitments support the adoption of cleaner methods. Although water scarcity is a challenge, the Kingdom is a significant investor and emerging leader in desalination and water management. To address the shortage of skilled human resources in mining and processing, Saudi Arabia is offering lucrative incentives for global mining firms to establish local operations and is inviting international experts. Joint ventures with established entities like MP Materials are expected to facilitate knowledge transfer and workforce training.

A successful Saudi critical minerals portfolio, alongside its vast fossil fuel reserves, could further concentrate global resource supplies. Currently, Riyadh is far from achieving such influence and relies heavily on foreign collaboration to advance its ambitions. For instance, the geological survey to map the nation’s resource wealth utilizes Chinese expertise, and the state-owned mining company Ma’aden has signed a memorandum of understanding with U.S.-based MP Materials to develop an integrated critical minerals value chain. As it forges these partnerships, Saudi Arabia must consciously position itself as a dependable and responsible actor, distinguishing its approach from models that involve the weaponization of resources.

Positioning Saudi Arabia as a Critical Minerals Hub

Saudi Arabia has previously proposed a Commodities Exchange for battery components to enhance market transparency. A natural extension of this would be participation in creating international regulatory frameworks and permitting regimes. Achieving this would allow Riyadh to exert influence on these issues and position the Kingdom as a critical minerals hub where fragmented global frameworks could be streamlined.

The Kingdom is also increasing its stake in the global electric vehicle race. The domestic extraction and processing of transition minerals like cobalt, lithium, and nickel would offer significant advantages in cost-effectiveness and supply chain reliability. The PIF’s support for the local EV company Ceer, which targets an output of 300,000 units by 2030, along with its growing stakes in companies like Lucid Motors, reflects a long-term commitment to a sector that would benefit from localized mineral supply chains.

Perhaps the most significant strategic play for Riyadh is geopolitical. Saudi Arabia fits the "friendshoring" template, which is driven by partner nations' needs for resilient supply chains, energy transition materials, diversified manufacturing bases, and critical mineral stockpiles. As resource nationalism rises and local content requirements grow in current supply chain bastions like China, Africa, and Latin America, Saudi Arabia can position itself as a reliable gateway and partner, helping to diversify and de-risk the supply portfolios of the United States, the European Union, the United Kingdom, India, and the UAE.

Regional Clustering in the Gulf

While the UAE, with its own critical minerals strategy and international asset acquisitions, is a competitor, a cooperative framework between the two Gulf neighbors could generate a powerful cluster of investment, logistics, and skills. Such collaboration would avoid the inefficiencies of fragmentation as they compete individually against established leaders like China.

Collectively, the two nations are at the heart of connectivity corridors like the India-Middle East-Europe Corridor (IMEC), which prioritizes data centers, clean energy, and resilient supply chains. By supplementing each other’s efforts and consolidating strengths where possible, Abu Dhabi and Riyadh could capitalize on their combined advantages to gain greater international leverage. A partnership could also help establish regional minimum pricing structures, making sector investments more lucrative and boosting both countries' efforts to attract global technology firms seeking to invest in data centers and emerging technologies across different geographies. Discussions regarding a Mineral Innovation and Acceleration Park and green metal hubs, initiated by the Saudi Ministry of Industry and Mineral Resources, could serve as excellent starting points for such bilateral cooperation.