Saudi Arabia To Boost Bilateral Relations With Brazil And Chile

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 the 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 its economy and transform the Kingdom into an industrial and economic powerhouse. The delegation will engage in strategic meetings with senior government officials from various ministries in both countries.

In Brazil, key meetings will include discussions with the Brazilian Mining Association (IBRAM), Vale, Minerva Foods, JBS, and BRF SA. These entities 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, along with leaders from The Federation of Chilean Industry (SOFOFA) and mining giants Codelco and Antofagasta.

Brazil's diverse economy presents numerous opportunities for strengthened trade ties. Saudi Arabia already holds several active FDI portfolios in Brazil. For instance, 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.

Chile's global standing as the second-highest producer of lithium aligns with Saudi Arabia's direction towards expanding electric vehicle (EV) production. This visit offers an opportunity for both countries to exchange knowledge in solar and wind energy fields. In June 2024, Carlos Cosín of Almar Water Solutions announced plans to partner with Codelco on its "Maricunga" project to produce lithium.

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 has increased the estimated value of Saudi Arabia's mineral reserves from $1.3 trillion to $2.5 trillion.

Attractive Investment Incentives

The revamped Mining Investment Law in 2019 has positioned Saudi Arabia as a leading mining jurisdiction globally. The Mining Journal World Risk Report 2023 highlighted Saudi Arabia as a standout performer regionally and globally. The Kingdom’s scores have risen sharply in terms of de-risking mining investments over five years.

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.

Youthful Workforce

Saudi Arabia's youthful demography offers significant growth potential in emerging sectors. With two-thirds of the population under 35, the Kingdom boasts a vibrant workforce supported by substantial government investment in education. Combined with its strategic location and robust infrastructure, Saudi Arabia is a prime investment destination for Brazil and Chile.

The visit is expected to culminate in signing key agreements that will enhance bilateral relations focusing on mutual growth through shared investments and sustainable development. These agreements aim at economic diversification particularly within the mining and industrial sectors.

With inputs from SPA