Saudi Arabia and the Strategic Mineral Boom
Summary: especially in the wake of the recent agreement with the US, Saudi Arabia’s longstanding drive into rare earth mining and processing appears to be gaining momentum. But multiple challenges remain.
We thank our regular contributor Alastair Newton for today’s newsletter. Alastair worked as a professional political analyst in the City of London from 2005 to 2015. Before that he spent 20 years as a career diplomat with the British Diplomatic Service. In 2015 he co-founded and is a director of Alavan Business Advisory Ltd. You can find Alastair’s latest AD podcast, Saudi Arabia and an uncertain oil market here.
“Saudi Arabia is seeking to anchor its economic diversification strategy in critical minerals, leveraging its vast reserves, foreign partnerships, and regional positioning to gain industrial clout and geopolitical leverage in the global energy transition.”
Cauvery Ganapathy, ORF Middle East, 30 September 2025
The announcement during Crown Prince Mohammed bin Salman’s de facto state visit to Washington earlier this month that Saudi Arabia and the United States had signed a ‘Strategic Framework for Cooperation on Securing Uranium, Metals, Permanent Magnets, and Critical Minerals Supply Chains’ has drawn attention to the longstanding aspiration of the Kingdom to diversify its economy into strategic minerals.
Under the terms of the deal, MP Materials has entered into a partnership with the Pentagon (which owns a 15 percent stake in the company) and Saudi state miner Ma’aden (which was set up as long ago as 1997) to develop and exploit the Kingdom’s seemingly abundant reserves of rare earth elements (REEs). As Camilla Hodgson and Ahmed al Omran wrote in the Financial Times on 19 November:
“The groups plan to develop a rare earths refinery that will process raw materials sourced from Saudi Arabia and other regions, and supply US and Saudi manufacturing and defence industries”.
This includes heavy REEs, which are particularly difficult to source other than through China. Financing from the US side will be supplied by the Pentagon in a part of the deal which has not been revealed in detail. Combined, these two factors should ensure that, as seen from Beijing at least, the Kingdom’s expansion into strategic minerals is nothing like as ‘geopolitically neutral’ as it likes to claim.
Nonetheless, on paper at least Saudi Arabia has the potential to be a valuable source of not just raw material but also refined REEs to the US and its allies and to target markets in the ‘Global South’. Notably, as a recent CSIS paper by Gracelin Baskaran explored:
- The estimated value of the Kingdom’s mineral reserves, including REEs, has risen from roughly US$1.3 trillion in 2016 to around US$2.5 trillion, reflecting Vision 2030's prioritisation of high value mineral resources;
- The Jabal Sayid deposit is believed to hold the fourth most valuable reserves of REEs globally with an estimated 552,000 tons of heavy rare earths and 355,000 tons of light rare earths. Unexplored adjacent deposits could yield even greater supplies;
- The Saudis have a huge ‘energy advantage’ relative to many competitors not only in the form of cheap hydrocarbons but also some of the world’s lowest cost renewables. With processing REEs requiring nine to 13 more energy than extraction, this is critical; and,
- Since the enactment of the 2021 Mining Investment Law the issuance of mining licences takes, in principle at least, just six months.
Furthermore, Saudi environmental regulations are likely to prove less onerous when it comes to processing in particular than has long been the case in developed countries.
![]()
Saudi Arabia is accelerating its economic diversification into strategic minerals following a new US partnership—the "Strategic Framework for Cooperation on Securing... Critical Minerals Supply Chains"—which includes a Ma'aden/MP Materials joint venture to build a rare earth refineryWhere the Kingdom is less well placed, as was highlighted in a May 2025 paper published by Rare Earth Exchanges (and backed up by an SWP paper looking at Saudi Arabia’s potential from an EU perspective), is as follows:
- In practice, the mining sector remains very state-dominated, i.e. Ma’aden and its overseas investment arm Manara. Licensing can therefore be much more byzantine and time-consuming than the relevant legislation suggests;
- Despite having a strategy, championed by the Vice‐Minister of Industry and Mineral Resources for Mining Affairs Khalid bin Saleh Al-Mudaifer, to develop downstream capacity through refining and value-added manufacturing, there are currently no REE or battery-metal processing plants in the Kingdom;
- All the relevant expertise and equipment for such will therefore have to be imported and none of the currently shortlisted partners (MP, Shenghe, Lynas, Neo) has completed an overseas REE refinery;
- The absence of relevant skills domestically may prove particularly critical as competition for such continues to heat up globally;
- Saudi Arabia is not a member of the Extractive Industries Transparency Initiative and transparency therefore remains a concern, particular around the power wielded by the Public Investment Fund which holds golden shares in many projects;
- In addition to NGO concern over lax environmental regulation (see above), there are also question marks over social/labour standards as highlighted in the 2 October Arab Digest Newsletter;
- With Jabal Sayid situated around 400km from Jeddah (albeit just 30km from Medina), building the infrastructure for mining (roads, power and especially water) may prove to be a major hurdle; and,
- The Gulf region as a whole remains prone to geopolitical risk and may become more so given clear Israeli concerns over deals struck between the US and the Kingdom which stand to alter the regional balance of power.
How potential investors view the balance between these pros and cons may become more apparent at the Kingdom’s 13-15 January Future Minerals Forum.
Stepping back to take in the bigger picture, there is a sense, legitimate in my view, that history may be about to ‘rhyme’. When seen in the broader context of the deals struck during MbS’s Washington visit, the REE pact has more than an echo of the 1945 Quincy Pact between then US President Franklin D Roosevelt and Saudi King Abdulaziz Ibn Saud. Of course, Donald Trump is no FDR; and, especially given his track record, it is far from clear what declaring Saudi Arabia a ‘major non-Nato ally’ would mean if push came to shove (or if this status will outlive his time in office). But, on the face of it, as the importance of oil to the global economy looks set to dip imminently, Riyadh’s move into REEs in return for US security-related ‘commitments’ looks like a smart move on its part.
As for Washington, perhaps someone in the White House should remind the President that just 15 years after the historic meeting on the USS Quincy Saudi Arabia was one of the five founding members of Opec, with all which this has ultimately implied for oil prices since then!
Members can leave comments about this newsletter on the Arab Digest website.