US-Saudi negotiations for African metal procurement

author: FutureCar Staff    

The US and Saudi Arabia are in discussions about securing metals from African countries for the energy transition, according to the Wall Street Journal. The goal is to reduce China's dominance in the electric vehicle (EV) supply chain. 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 curb China's role in the global race for cobalt, lithium, and other metals used in electric car batteries.

If the partnership between the US and Saudi Arabia is completed, it would be a significant step for both countries, despite strained relations between the Biden administration and the Gulf Kingdom. This partnership aligns with Saudi Arabia's plans for economic diversification and its desire to build its own EV industry. The talks about mining assets are part of a larger initiative by the Group of Seven countries to invest in global infrastructure projects in developing countries.

At the G20 Leaders Summit in New Delhi, leaders from various countries emphasized the importance of narrowing the infrastructure gap in low and middle-income countries to promote economic growth and prosperity. This collective urgency reflects the need for inclusive and sustainable development.

Tensions between the US and China have also played a role in these discussions. China recently announced that it would curb exports of critical minerals used in the semiconductor industry, which led the US to consider restricting exports of artificial intelligence chips to China. This move by China would require exporters to obtain licenses for shipping gallium and germanium products, which are classified as critical minerals by the US Geological Survey.

China currently dominates global raw gallium and germanium production, but it primarily caters to domestic consumption. It does not have a monopoly on the global supply chain for these minerals. However, ongoing retaliation between the US and China has caused challenges for European companies involved in the export of key chipmaking materials.

Despite these challenges, European companies are adapting by reworking their supply chains and seeking alternative ways to procure raw materials. As a result, companies like NVIDIA have seen significant stock growth and expect further expansion in the coming months. Saudi Arabia's interest in securing stakes in mining assets rather than buying and operating them directly makes the country an attractive investor for African countries.

FutureCar Staff