Saudi Arabia, the world's largest energy exporter and a contender for becoming a key player in electric vehicle production, is investing in lithium production in Latin America.
Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef plans to visit Santiago in July to meet with his Chilean counterpart. The exact dates of the trip have not yet been determined, but it is known that the prospects for concluding a lithium deal in Latin America are one of the main goals of the minister’s visit.
Earlier Alkhorayef said the kingdom is interested in sourcing lithium from abroad as it seeks to enter the electric vehicle sector.
The kingdom's pursuit for lithium comes amid China's dominance in lithium, cobalt and rare earth elements markets. At the same time, other countries are trying to reduce their dependence on this single source of critical minerals.
According to The National, there is a “high probability” that Saudi Arabia will sign a lithium supply agreement with Chile. However, as experts note, the kingdom still has several stages to go before it begins to use lithium in the electric vehicles’ batteries production.
“There are a number of stages before you can take the raw ore from the ground and then turn and convert that into a product that is then capable of being used in an EV,” said Mehdi Ali, co-founder of Dubai-based private equity firm Woodcross Capital.
“I won’t be surprised if Saudi Arabia decides to not only secure raw materials such as lithium but also establish an entire EV battery production chain in the kingdom, from raw materials to finished products”.
Riyadh is investing billions of dollars in a strategic plan to transform the country into an electric vehicle manufacturing hub, aiming to catch up with the world's leading electric vehicle makers in the United States and China. Thus, the kingdom invested about $10 billion in the Californian company Lucid Motors, launched its own electric vehicle brand Ceer in 2022, and built a plant for the production of metals for electric vehicles. Last year, a joint venture between a Saudi mining company and the Public Investment Fund announced it would acquire a 10% stake in Brazilian mining company Vale, valued at $2.6 billion.
In 2023, global sales of electric vehicles amounted to about 14 million units, 95% of which were in China, Europe and the United States.
After two years of rising, prices for critical minerals fell sharply in 2023, returning to pre-pandemic levels. The International Energy Agency said in its report in May that materials used to make batteries have seen particularly steep price declines, with the price of lithium falling 75% last year. Prices for cobalt, nickel and graphite fell by 30% - 45%.
Chile's lithium reserves are located in more than 60 salt flats scattered across the mountains of the northern Atacama Desert. Currently, only two companies produce lithium in the country: Chilean company Sociedad Quimica y Minera (SQM), with China's Tianqi as its second-largest shareholder, and US-based Albemarle. Despite having the largest reserves, Chile trails Australia in lithium production.
Last year, Chilean authorities announced plans to partially nationalize the lithium industry in the interests of the country's economy and environment protection.
Hélène Tarin, Editor in Chief of the Asian Bureau, Rough&Polished
