In recent decades finding new alternatives to fossil fuels has become more than just a matter of speculation. The Gulf Cooperation Council (GCC) countries have realised the need to diversify energy sources for a sustainable future. Key to their strategy is investing in the mining sector which promises to be profitable in the long run. In this article, we shall look at the ways in which the Gulf Arab states could incorporate investing in mining to answer for a post fossil fuel world.
West leading
Russia leads the world as of 2021 in holding natural resources to an estimated value of USD 75 trillion, including coal, natural gas, oil, gold, timber, and rare earth metals. The US comes second with an estimate of USD 45 trillion, followed by Saudi Arabia with an estimated value of USD 34 trillion.
In terms of spending in mining sectors, as of 2021 Canada tops the list at USD 800 million per annum, followed by Australia and the US at USD 531 million and USD 345 million respectively.
Shifting strategy
The Gulf region is rich with natural resources beyond fossil fuels. Expected oil shortages in the long run and increased global demands for alternative carbon-free energy resources, have influenced the GCC’s strategy.
Mining offers a safety net during turbulent oil prices. As oil makes up the vast majority of the GCC states Gross Domestic Product (GDP) income, they started looking at other sources of reliable income. They have been developing in recent years new frameworks and policies to drive the expected growth in the mining sector.
Global and regional mining companies have been given the opportunity to invest in the sector. Mechanisms and incentives have been put in place for enterprises to invest in resources other than fossil fuel. These initiatives come at a crucial time as the Ukrainian war disrupt global supply chains.
UAE taking initiative
For a while, the UAE has recognised the importance of diversifying its resources. Assistant Under-Secretary for Oil, Gas and Mineral Resources, Ahmed Mohammed Al-Kaabi dubbed mineral resources a “strategic treasure”. Seen as a corner stone to the UAE’s healthy economy in a post-fuel era, many sectors, such as building material, would benefit from a thriving mining sector.
The UAE has launched a revamped strategy that take a refreshed and comprehensive look at the mining industry. One of the seven strategy goals of the Ministry of Energy and Infrastructure is “developing the energy, water and mining sector to ensure its security and sustainability”. The ministry is introducing five key initiatives that include capturing geological data for periodical reporting.
In addition, the UAE has published the first of its kind Arabic reference guide and an atlas covering more than 600 million years of the country’s geology. These publications serve as a wealth of sources for academics and researchers working in the field who can connect with industry to identify key investment opportunities.
GCC follows suit
Other GCC countries are following suit. Saudi Arabia, for example, has devised policies that drive the sector in the oil-reach country. The Ministry of Energy and Natural Resources has set key initiatives that align with the Kingdom’s 2030 Vision that diversify national income beyond fossil fuel.
Saudi Arabia sits on more than 5300 scalable sites that are valued at just over SAR 5 trillion and comprise of precious resources such as gold, zinc, granite, phosphate, and copper. In 2021, Saudi’s minerals exports hit SAR 26 billion (or USD 7 billion). The mining industry has contributed more than SAR 64 billion (USD 17 billion) to the national GDP; it continues to grow with more than 2054 new licenses being issued by last March.
Similarly, Oman’s mining industry is flourishing. More than 60 million tonnes valued at OMR 230 million (USD 600 million) has been produced, highlighting the importance of this sector to the Sultanate’s diversification strategy. Just over 4200 person works in the sector under 22 licensed enterprises.
Generally, the above shows the Gulf states’ strategic interest in the mining industry as they implement policies and plans to drive growth and revenue. This in turn creates a favourable ecosystem for foreign investment to establish their business for the long run, strengthening the GCC’s post-oil economies.
Robust partnership
An important question follows from the above: how can the public and private sectors synergise their resources to capitalise on the big potential of a rapidly growing sector? In recent years a new form of partnership has been forging between the two sectors, dubbed private-public partnership (PPP). This unique arrangement has seen big success in other sectors, such as construction, and could inform emerging enterprises in the mining sector in areas of administration, contract management, leasing, tenders, and more.
Moving forward the growing partnership between the private and public sectors could thrive in a hospitable ecosystem that facilitates surveying and drilling operations, mineral recycling and reproduction, and making licensing and access to data easier.
Thus, the GCC countries have already introduced key changes to their economic strategies to capture the promising mining industry. They are investing in surveys, launching online platforms to enhance data and information accessibility to attract more investors, streamlining laws and frameworks, and offering incentives to drive investment in the sector.
A key player in the sector as well are Small & Medium Enterprises (SME) who bring innovation and entrepreneurial edge. They could offer governments and global corporations trailblazing technologies that might revolutionize the mining process through out, from surveying to post processing.
In summary, the mining industry in the Gulf has a big potential to take on global competition. With the right policies and plans in place it could take a considerable slice of the global market. As Gulf Arabian states gear towards post oil economies, today is the time to invest in capabilities, technologies, and ecosystems that facilitate innovation, investment, and growth. Seeing how global supply chains are hypersensitive to crises such as wars and pandemics, the Gulf states would be right in looking to diversifying their economies beyond oil for a sustainable and more secure future.
