Saudi Arabia, the second largest oil producer in the world, has launched a mining fund that plans to invest up to $15bn of capital in overseas assets as the country works to reduce its dependence on fossil fuels, offering lessons for Nigeria heavily depended on fossils despite abundant minerals.
With the right policies to attract investment, Nigeria’s mining sector can help create jobs, boost its Gross Domestic Product (GDP), and reduce its reliance on oil.
Saudi Arabia says the investment will help secure access to minerals in solar panels, electric cars and other industries in an article published in the Financial Times.
In Nigeria, minerals like lithium, silicon, copper, and nickel cobalt, among others, can be used to either manufacture solar panel parts or batteries for electric vehicles. However, these minerals are not fully exploited.
Data from the Nigerian Geological Survey Agency (NGSA) confirms that Nigeria has over 44 mineral deposits in commercial quantities in over 500 locations across the country. However, these resources cannot contribute to Nigeria’s development as small-scale activities are plagued with little inflow of funds.
“The venture, 51 percent owned by Saudi state-owned miner Ma’aden, with the remainder owned by the country’s Public Investment Fund (PIF), will take non-operating minority stakes in international mining projects, ” the two companies told FT,” the statement said.
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“That will help Saudi Arabia secure resources such as iron ore, copper, nickel and lithium for domestic mineral processing and other industrial activities like steelmaking.”
According to FT, the companies said the fund’s initial capital would be $50 million, and the two shareholders would provide just over $3 billion if additional funding is required.
However, two people familiar with the fund’s plans told FT that Saudi Arabia has publicly downplayed the scale of the investment plans and that the $50 million represented its first year of working capital and the $3 billion the amount intended for investment over the next 12 months.
“Given the scale of projects in commodity markets, the fund is prepared to deploy more than $15bn of capital for investments over the coming years as suitable opportunities emerge,” FT said.
“The fund was signed by Tarmo Haehnsen, formerly a senior executive at Anglo American, as its chief investment officer.”
FT also said the new fund comes as the US and Europe race to catch up with China in securing access to critical minerals in strategic manufacturing industries such as solar panels, wind turbines and electric cars.
“The investments will provide critical minerals to ensure supply security for domestic minerals downstream sectors and position Saudi Arabia as a key partner in global supply-chain resilience,” the companies told FT.
FT further said in the statement that the fund has already had discussions with Brazilian mining group Vale about taking a stake in its base metals unit, which includes nickel, copper and cobalt assets.
“The fund’s strategy parallels Japanese trading houses, which took equity stakes in mining projects during the country’s postwar industrialisation to supply manufacturers,” the British daily business newspaper said.
According to FT, Ma’aden, which is 67 percent owned by PIF, will finance its share of the investment from its resources, the companies said. It may also raise capital through a rights issue.
Also, Ma’aden said that it would buy a 9.9 per cent stake in Ivanhoe Electric, a US mineral exploration group backed by mining tycoon Robert Friedland, for $126 million, giving it access to geological surveying technology.
“It also signed on the same day a joint venture agreement with Barrick Gold, the world’s second-largest gold producer, to explore for minerals at the site of the Jabal Sayid copper mine,” the statement said.