The global energy transition has spotlighted the critical role of hard minerals like lithium, cobalt, nickel, copper, and rare earth elements. These minerals are pivotal for renewable energy technologies, particularly in the manufacture of solar panels, wind turbines, and batteries for electric vehicles and for energy storage systems, integral to the transition’s global rebalance of energy sources and the ever-growing global demand for electricity.
The Middle East, while primarily known for its oil and gas wealth, is now at the threshold to emerge as a potential key player in the supply of these critical minerals.
With the Middle East in the spotlight for the COP28, the decision-making body responsible for monitoring and reviewing the implementation of the United Nations Framework Convention on Climate Change (UNFCCC) that the UAE hosted at the end of 2023, the Gulf Cooperation Council (GCC) nations have reaffirmed their full support for tackling climate change and have been working on diversification and expansion of their sustainable energy practices for which hard materials are key.
Increased interest
While the Middle East is predominantly associated with oil and gas, the region also holds significant reserves of hard minerals. Countries like Saudi Arabia, Iran, and Oman possess notable deposits of copper, zinc, phosphate, and other minerals. The untapped potential of these resources and the region’s forward-looking infrastructure growth plans positions the Middle East as a critical supplier in the global mineral market, especially for the energy transition.
Given the concentration of mineral resources in specific global regions and the region’s growing interest to increase the amount of minerals that are processed locally, the Middle East can contribute to diversifying the supply chain. This is crucial for global energy security, as reliance on a few sources can lead to supply vulnerabilities, as seen in rare earth elements largely controlled by China.
In addition to supply chain diversification, processing these minerals domestically adds value before export, creating jobs, developing skills, and retaining more of the value chain within the region.
Saudia Arabia
A prime example of this trend is Saudi Arabia, which has substantial reserves of gold, copper, and other valuable minerals. Under its Vision 2030, Saudi Arabia aims to more than triple the mining sector’s contribution to the national gross domestic product (GDP), attracting US$170 billion to the mining sector. Significant investments are being made in mineral processing facilities, aiming to establish the Kingdom as a regional hub for the mining industry. Saudi Arabia introduced a new mining investment law in 2020 by Saudi Arabia Royal Decree No. M47/1425 to attract international investments. The law simplified licensing procedures and reduced financial burdens on mining companies. Notably, it also emphasised sustainable mining practices and environmental protections, a theme that is becoming increasingly prevalent in mining legislation across the region.
Following the enactment of the mining investment law in 2020, the Saudi Ministry of Industry and Mineral Resources (MOIMR) issued the implementing regulations, which came into effect in 2021, to make the licensing process more transparent and enhance stability for the development of mineral reserves.
Saudi Arabia has also been developing the special economic zones that benefit from unique competitive regulatory and tax advantages to promote industrial development, including in mining and processing industries.
UAE
The UAE, known for its innovative approaches to economic development, is also investing in mineral processing. The UAE’s focus is on leveraging technology and innovation to create a sustainable and efficient mineral processing sector. This includes the utilisation of cutting-edge technologies for mineral extraction and processing, with an eye towards environmental sustainability.
The UAE has been also developing downstream activities in the metals and mining industry through local processing and recycling projects. The Dubatt Battery Recycling plant, the first fully integrated Used Lead Acid Battery (ULAB) Recycling Facility in UAE, is implemented in line with the UAE Circular Economy Policy 2031 and Dubai Integrated Waste Management Strategy 2041. The plant recycles the ULAB in a state-of-the-art factory at Dubai Industrial City and manufactures value added lead metal products that are sold as raw material for new battery manufacturing. The UAE also continues seeking to diversify its oil and gas revenues through outbound investments in critical minerals abroad.
Oman
Oman, with its vast reserves of minerals like gypsum, limestone, and dolomite, is another key player in the region. The country is focusing on adding value to these raw materials through local processing facilities. This not only reduces reliance on oil but also helps Oman in positioning itself as a significant exporter of processed minerals.
In 2019, Oman’s new mining law (namely, Mineral Wealth Law promulgated by Oman Sultani Decree No. 19/2019 on February 13, 2019) came into effect, aiming to attract new investment and revitalise Oman’s mining industry. However, in 2021, Oman’s Ministry of Energy and Minerals Energy slightly retightened control over ownership, issuing a circular pursuant to which mining license ownership cannot be transferred without their approval—no new partners can be admitted, or ownership of license holder transferred without providing evidence of the technical competence and financial solvency of the new owners and obtaining the Ministry’s written approval.
Collaboration and partnership
For the Middle East to play a significant role, substantial investment in mining infrastructure is necessary. This includes the development of mining facilities, processing plants, and sustainable mining practices. There’s a growing recognition in the region of the need for advanced technologies and responsible mining to extract and process these minerals with minimal environmental impact.
Collaboration between Middle Eastern countries and global partners is vital. Joint ventures, technology sharing, and investments can help develop the region’s mineral sector, integrating it into the global supply chain for hard minerals.
Foreign investment and technology transfer are crucial components of the Middle East’s pivot to mineral processing. For this the countries are updating their mining laws to attract foreign investment and expertise. This includes offering tax incentives, streamlining approval processes, and ensuring investor-friendly policies.
The road ahead
The Middle East’s interest in mineral processing represents a strategic and economically prudent pivot or natural extension. By focusing on adding value to their natural mineral reserves, Middle Eastern countries are not only diversifying their economies but also positioning themselves for a more sustainable and stable economic future. This move aligns with global trends towards cleaner energy and materials essential for the technology and renewable energy industries. With the right mix of policy, investment, and technology, the Middle East’s foray into mineral processing could herald a new era of economic development in the region.
Despite the potential, several challenges must be addressed. The region must further develop comprehensive mining laws that attract international investments while ensuring sustainable practices. As with any mining activity, environmental concerns are paramount. The Middle East must balance its economic ambitions with the need for environmental stewardship. This includes managing the ecological impact of mining and adhering to global standards for sustainable practices.
By harnessing its untapped mineral resources, the region can contribute significantly to the renewable energy landscape. However, this requires a strategic approach, balancing economic, environmental, and social considerations, and fostering international collaborations. If navigated wisely, the Middle East can transform its economic narrative, from being primarily an oil-rich region to becoming a key player in the global transition to a sustainable energy balance.
By Jennifer Josefson, partner, and Alexandra Rotar, legal consultant, in the energy, infrastructure, and natural resources team at Morgan Lewis & Bockius.
