US-Saudi negotiations for African metal acquisition

author: FutureCar Staff    

The US and Saudi Arabia are in discussions about securing metals from African countries for the energy transition, with the goal of reducing China's dominance in the electric vehicle (EV) supply chain, according to the Wall Street Journal (WSJ). Saudi Arabia is looking to purchase $15 billion worth of mining assets in countries such as the Democratic Republic of Congo, Guinea, and Namibia. This move would support the US' efforts to limit China's role in the production of cobalt, lithium, and other metals used in batteries for electric cars, laptops, and smartphones.

If the partnership between the US and Saudi Arabia is finalized, it would be a significant step for both countries, despite the strained relations between the Biden administration and the Gulf Kingdom. This collaboration would align with Saudi Arabia's plans for economic diversification and its ambition to develop its own EV industry, matching its dominance in the global oil market. The mining discussions are reportedly part of a larger initiative by the Group of Seven countries to invest in global infrastructure projects in developing nations.

The G20 Leaders Summit in New Delhi also emphasized the importance of narrowing the infrastructure gap in low and middle-income countries to promote inclusive and sustainable growth. Leaders from the US, Saudi Arabia, EU, France, Germany, India, Italy, Japan, Mauritius, the UAE, and the World Bank expressed a collective urgency to address this issue.

In July, China announced that it would restrict the exports of critical minerals widely used in the semiconductor industry starting from August 2023. This decision came as the US considered imposing restrictions on the export of artificial intelligence chips to China. The US Department of Commerce had previously announced the halt of chip shipments from US chipmakers such as Micron, AMD, and NVIDIA.

China's new measure requires exporters to obtain licenses for shipping gallium and germanium products, which are classified as critical minerals by the US Geological Survey. China currently accounts for 98% of global raw gallium production and 67% of raw germanium production. However, experts argue that China does not have a monopoly on the global supply chain for these minerals.

As tensions between the US and China continue, European companies have been caught in the crossfire of the "China-US spat over the export of key chipmaking materials." Many European companies are now reevaluating their supply chains and seeking alternative ways to procure raw materials. Meanwhile, NVIDIA's stock has experienced significant growth, increasing by over 220% this year, with the company expecting further growth in the upcoming quarter.

The WSJ also reported that Saudi Arabia is interested in securing stakes in mining assets rather than solely buying and operating them. This approach would make Saudi Arabia a lucrative investor for African countries.

FutureCar Staff