Saudi Arabia To Boost Economic Ties With Brazil And Chile For Vision 2030

Saudi Arabia is gearing up for a crucial economic mission as Minister of Industry and Mineral Resources Bandar Ibrahim Alkhorayef and Vice Minister for Mining Affairs Khalid Saleh Al-Mudaifer plan to visit Brazil and Chile. This high-level visit aims to strengthen bilateral ties, attract investments into Saudi Arabia, and explore mutually beneficial opportunities in both mineral and industrial sectors.

The delegation will travel from July 22-30, visiting major cities in Brazil such as São Paulo, Brasília, Rio de Janeiro, and Santiago in Chile. This visit aligns with Saudi Arabia's Vision 2030 goals to diversify the economy and transform the Kingdom into an industrial powerhouse. The delegation will engage in strategic meetings with senior government officials from various ministries in both countries.

Key meetings in Brazil will include discussions with the Brazilian Mining Association (IBRAM), Vale, Minerva Foods, JBS, and BRF SA. These companies are significant players in mining, food processing, aviation, and other strategic industrial sectors. In Chile, Alkhorayef will meet with his counterpart, the Minister of Mining, and key leaders from The Federation of Chilean Industry (SOFOFA), mining giants Codelco and Antofagasta.

Brazil and Chile are renowned for their vast mineral resources. Brazil has a longstanding bilateral relationship with Saudi Arabia spanning over 50 years. Their ties are largely based on energy products, minerals, agricultural products, and fertilizers. Brazil's diverse economy presents numerous opportunities for strengthened trade ties.

Saudi Arabia already holds several active foreign direct investment portfolios in Brazil. Recently, Manara Minerals secured a 10% stake in Vale Base Metals through a joint venture between the Public Investment Fund (PIF) and Ma’aden. Additionally, the Saudi Agricultural and Livestock Investment Co. (SALIC) acquired 180 million equity shares in BRF SA.

This acquisition represents 10.7% of BRF's outstanding shares valued at SAR 1.27 billion. On the other hand, Chile is the second-highest producer of lithium globally. Lithium is a key mineral used in manufacturing electric vehicles (EVs), aligning with Saudi Arabia's direction towards expanding EV production.

Exploring Renewable Energy

The visit presents an opportunity for both countries to exchange knowledge and technical expertise in solar and wind energy fields. In June 2024, Carlos Cosín of Almar Water Solutions announced plans to partner with Chilean mining giant Codelco on its "Maricunga" project to produce lithium.

Cosín stated that Almar Water Solutions focuses on water treatment solutions to produce renewable energy. The company wants to leverage its technologies in extracting lithium used in battery manufacturing—a process requiring large amounts of water.

Saudi Arabia’s Mineral Wealth

Saudi Arabia’s rich geological endowment is a significant draw for investors. The Kingdom offers 80 years of accessible geological data to aid informed investment decisions. Recent mapping of the Arabian Shield increased the estimated value of Saudi Arabia's mineral reserves from $1.3 trillion to $2.5 trillion.

The revamped Mining Investment Law introduced in 2019 has positioned Saudi Arabia as an attractive mining jurisdiction globally. The Mining Journal World Risk Report 2023 highlighted Saudi Arabia as one of the best-performing mining jurisdictions regionally and globally.

Incentives for Investors

The refined law includes competitive incentives such as 75% co-funding for CAPEX, a five-year royalty fee exemption, discounts for local downstream processing up to 90%, a 20% corporate tax rate, and 100% foreign direct business ownership.

In April 2024, the Ministry introduced the Exploration Enablement Program (EEP) with an allocation of $182 million to de-risk investments in exploration. This program aims to accelerate greenfield exploration, identify new mineral potential, expand local talent, and advance key objectives within Saudi Arabia's mineral industry.

Youthful Workforce

Saudi Arabia’s youthful demography offers significant growth potential in emerging sectors. With two-thirds of the population under 35 years old, the Kingdom boasts a vibrant workforce supported by substantial government investment in education.

The visit to Brazil and Chile is anticipated to culminate in signing key agreements that will enhance bilateral relations focusing on mutual growth through shared investments and sustainable development particularly in mining and industrial sectors.

With inputs from SPA