In an effort to diversify its economy away from oil and secure access to strategic minerals, Saudi Arabia has established a new company that will invest in global mining assets.
According to a statement released on Wednesday, the sovereign wealth fund (PIF – Public Investment Fund) and state miner Ma’aden have signed an agreement to form a company that will be funded with up to 11.95 billion riyals (US$3.2 billion).
Ma’aden will own 51% of the new company, while the US$620 billion Public Investment Fund will hold the remaining 49%.
As a non-operating partner with minority equity positions, the new firm will invest in iron ore, copper, nickel, and lithium. Additionally, it will attempt to sign supply agreements with the companies and mines in which it invests.
Robert Wilt, chief executive officer of Ma’aden, stated that the fund will be used to acquire equity stakes in existing assets or existing companies that can provide the offtake metal required for development in the kingdom.
Invest up to US$3b in 2023
Wilt added that the company planned would seek to complete two to three transactions this year, spending approximately US$3 billion.
This new development aligns with Saudi Arabia’s goal of attracting mining investment worth US$170 billion by 2030.
Invanhoe Electric stake
Ma’aden also announced that it would acquire 9.9% of Ivanhoe Electric Inc for US$12.38 per share in a transaction valued at US$126 million.
In addition, the two businesses will form a joint venture to develop mining projects in Saudi Arabia.
Ma’aden will also form separate ventures with Barrick Gold to explore for minerals in western Saudi Arabia’s Jabal Sayid and Umm Ad Damar.
According to the kingdom, it has untapped deposits of copper, gold, and other metals are worth more than US$1 trillion.
Saudi Arabia this week is hosting a major mining conference featuring executives from BHP Group (ASX: BHP), Rio Tinto (ASX: RIO), and Trafigura Group, among others.
The world’s largest oil exporter views mining as crucial to its Vision 2030 strategy to develop non-oil-based industries.