The Challenges and Opportunities in Saudi Arabia's Mining Sector

(FAYEZ NURELDINE/AFP via Getty Images)

Saudi Mining and Industry Minister Bandar Al-Khorayef addresses the Future Mineral Forum in Riyadh on Jan. 10, 2024.

Saudi Arabia's mining sector will likely struggle to attract significant foreign investment. which will constrain its growth, though certain resources closely linked to the kingdom's robust oil industry, such as lithium, are expected to fare better. As its ambitious Vision 2030 economic diversification strategy enters the home stretch, Saudi Arabia has recently been seeking to expand its mining sector by securing bilateral agreements with Western countries and inking investment deals to extract and refine mineral resources. In the first six months of 2025, Saudi Arabia issued 22 mining licenses, an increase from nine during the same period in 2024. On Jan. 14, representatives from the United Kingdom and Saudi Arabia signed a critical minerals cooperation deal in efforts to secure British critical minerals supply chains and support the development of British industries that rely on critical mineral supplies, including artificial intelligence, electric vehicles and clean energy technologies. During U.S. President Donald Trump's visit to the kingdom in May 2025, U.S. and Saudi officials signed a memorandum of understanding to cooperate on mining and mineral resources, as the United States similarly looks to secure its critical minerals and raw materials supply chains. Later, in July 2025, Saudi Arabia's vice minister of industry and mineral resources said that Saudi Arabia had received $32 billion in investments for iron, phosphate, aluminum and copper projects within the kingdom, only around a third of the country's goal of $100 billion in mining investments by 2030.

In November 2024, the Saudi government and London-based mining company Vedanta signed a memorandum of understanding to invest in copper projects within Saudi Arabia, including the construction of a smelter and refinery and copper rod project.

With the Vision 2030 deadline quickly approaching, Saudi Arabia is seeking to rapidly expand investment in the mining industry, which is a key pillar of the kingdom's strategy to diversify away from oil. Saudi Arabia's Vision 2030 plan aims to establish the mining sector as the third pillar of its economy, alongside oil and petrochemicals. The kingdom claims that its untapped mineral resources are worth $2.5 trillion (though the actual value is likely lower), with reserves of copper, bauxite, gold, phosphate, lithium and some rare earth minerals. By the end of the decade, the government aspires for the mining sector to contribute $75 billion to the GDP, a nearly fivefold increase from $17 billion in 2024. But even with this growth, the sector would still represent a relatively small portion of the Saudi economy, given that the country's GDP totaled $1.2 trillion in 2024. In order to meet these goals, Riyadh has recently ramped up efforts to attract foreign investment into the sector and encourage mineral exports. In June 2020, Saudi Arabia passed a law that removed the government's priority status on mineral purchases. The government has also offered tax exemptions and reduced royalties.

Despite ongoing efforts to diversify its economy, Saudi Arabia still relies heavily on oil, which in 2024 accounted for about 60% of government revenue and 65% of the country's exports.

Despite recent reforms and incentives, Saudi Arabia's mining sector will struggle to secure the level of investment needed to accomplish the ambitious goals laid out in Vision 2030 due to its overall underdevelopment and cumbersome operating environment. Despite the memorandums of understanding with both the United Kingdom and the United States and other deals, Saudi Arabia's nascent mining sector will likely struggle to attract significant foreign investment over the next several years. The sector is significantly less developed than those in other countries, and also continues to face structural challenges, including a lack of transparency, heavy bureaucracy and complex licensing procedures. This means that while Saudi minerals may see some increased interest as more countries try to diversify their critical mineral supply chains away from China, the bulk of those new investments will likely still go to countries with more established mining infrastructure and better operating environments. If there is limited success and increasing pressure within the government to accelerate the mining sector's growth, Saudi Arabia will likely introduce more incentives to further entice foreign investors, such as expanding its exploration investment program and increasing financial support for license holders. Given Saudi Arabia's broader challenges in attracting foreign investment to achieve its Vision 2030 goals, the Public Investment Fund (PIF) has emerged as the primary financier of diversification initiatives. The strategic importance of the mining sector's growth to Vision 2030 means the PIF will likely fund numerous mining projects. However, the extent to which the PIF's investment can expand the sector will probably be limited, as the fund is also backing projects across many other non-oil sectors.

Saudi Arabia aims to become a key player in the rare earth market, leveraging its untapped reserves as Western nations seek to reduce their reliance on China. However, China's continued dominance — with 50% of the world's rare earth mining operations and 90% of the world's rare earth processing — will present a considerable challenge for Saudi Arabia's efforts to establish itself as a major alternative.
Among some of the resources that Saudi Arabia is rich in, other countries have greater reserves and more developed industries. For example, Morocco has around 70% of the world's phosphate rock reserves, Chile and Peru combined have around 40% of the world's copper output, and the top five gold producers (China, Russia, Australia, Canada, and the United States) produce around 40% of the world's gold supply.

However, certain minerals adjacent to oil production, like lithium, will likely experience some growth. While Saudi Arabia's mining sector overall will likely see slower growth than the Vision 2030 projections, certain minerals that are located near the country's robust oil and gas reserves are poised to attract more investment and, in turn, see greater growth. This is largely because mining site development in these areas is more advanced, and technical expertise can be readily transferred. Lithium, in particular, shows immense growth potential because Saudi Arabia is expanding the technological capacity to extract it from the brackish waters found in its oil fields. Indeed, state-owned oil giant Saudi Aramco, Saudi mining company Ma'aden and the Saudi lithium extraction company, Lithium Infinity, have already partnered for this purpose. Expanded lithium extraction capabilities would not only support Saudi Arabia's developing industries that rely on the mineral, such as electric vehicles and renewable energy, but would also contribute to the growth of lithium exports, thereby bolstering non-oil revenue. But despite some prospective growth, Saudi Arabia's mining sector overall will likely experience slower growth than the Vision 2030 projections.