Saudi Arabian Oil Group (Saudi Aramco) will increase its investment in lithium production to establish a supply chain for this critical metal.
Three sources close to Saudi Aramco revealed that the world’s largest oil company is expected to announce this decision later today, marking a part of Saudi Aramco's strategy to become a mining hub and diversify its business beyond oil.
Earlier, Saudi Arabia’s Minister of Industry and Mineral Resources, Bandar Alkhorayef, told the media that the country aims to develop facilities for the commercial processing of lithium within three to five years and plans to refine and export the metal.
Bandar Alkhorayef stated, “Saudi Arabia holds a very favorable position in the processing field, thanks to multiple advantages, including energy competitiveness, industrial cities, ports, and other infrastructure.”
Media analysis suggests that, due to oversupply leading to a recent drop in lithium prices, some Western companies see little profitability in the sector. However, Saudi Arabia, with its strong financial strength and chemical expertise, has the ability to tap into this market, which has enormous potential for returns.
According to the International Energy Agency (IEA) Net Zero scenario, demand, including from electric vehicles, will push global lithium demand to seven times its current level by 2040.
Notably, Saudi Arabia is constructing an electric vehicle manufacturing hub at King Abdullah Economic City (KAEC) on the Red Sea coast. The country has set an industrial goal to produce 300,000 cars by 2030, with plans to export them to neighboring countries.
In 2023, Saudi Arabia’s wealth fund, the Public Investment Fund (PIF), which has a majority stake in the U.S. electric vehicle maker Lucid, announced the establishment of a factory in Saudi Arabia. PIF also plans to launch its own electric vehicle brand.
Since the launch of Vision 2030, Saudi Arabia has taken a series of measures to vigorously develop its non-oil economy. In 2023, the non-oil sector accounted for 50% of Saudi Arabia’s GDP, marking an all-time high.
Last month, Saudi Aramco, the Saudi startup Lihytech, and the Saudi mining company Ma'aden announced that the country had successfully extracted lithium from brine samples taken from oil fields and planned to soon launch a pilot commercial project for direct lithium extraction.
However, media analysis points out that the "Direct Lithium Extraction" (DLE) process is still in its infancy and has not yet been proven on a commercial scale.
The new lithium projects face the challenge of needing "vertical integration," meaning producers must have control over raw materials, distribution, and sales to achieve economic feasibility.
