Why Chile is crucial in Saudi Arabia's turn from oil to green energy

Chile's mining industry has piqued the interest of Saudi Arabian mining authorities, as the Middle Eastern country is planning to transform its petro-economy.

Saudi officials recently visited Chile to gauge the local mining industry's potential for projects and trade related to strategic minerals like lithium and copper.

Ahmad Suleiman, public relations officer at the Saudi Arabian embassy in Santiago, told BNamericas that the bilateral relationship "is in an exploratory stage, seeking cooperation ties in industrial and mining sectors to promote technological transmission and innovations."

In this framework, "reciprocal investment opportunities in the production of minerals, especially in lithium, copper and iron ore, are being evaluated," said Suleiman, who is also an international studies researcher at Universidad de Chile.

Brazil was the only other country in the region that industry and mineral resources minister Bandar Ibrahim Alkhorayef, deputy mining minister Khalid Saleh Al-Mudaifer and other officials recently visited to that end.

In Chile, they met representatives of state miner Codelco, which is the global top copper producer, and the world's second largest lithium producer, SQM, as well as with ministers and other industry officials.

The visit aimed at securing key minerals for a post-oil economy and maintain financial stability.

Saudi Arabia's plans come amid tensions in the Middle East, geopolitical changes and potentially lower hydrocarbons demand by the end of the decade.

The relationship started gaining traction after Saudi Arabia's Aramco, one of the world's largest oil companies, bought the Chilean license of Brazil's federal oil company Petrobras, planning to convert over 300 local fuel service stations to Saudi standards and become the main competitor of Chilean holding Copec.

As part of its own transformation, Saudi Arabia wants to become a mineral processing epicenter, open one of the biggest electric vehicle factories in the Middle East and develop renewable energies, for which it needs key mineral inputs, Al-Mudaifer told CNN Chile.

He added that the country needs specifically lithium and copper to develop energy storage and electric conductivity solutions.

Al-Mudaifer said Manara Minerals, the joint venture between Saudi state mining company Ma'aden and public investment fund PIF, is willing to invest in the Chilean industry.

In April, Manara bought 10% of the Brazilian copper and nickel producer Vale for US$2.5 billion.

Suleiman said Saudi Arabia could help grow Chile's desalination portfolio in the mining and other sectors, since "it has experience that can contribute a lot [of solutions] to the water scarcity in the macro-central zone and northern Chile. The possibilities for investment, bilateral cooperation and commercial exchange between both countries are enormous."

Latin America is interesting for Saudi investment due to the absence of wars and the need for funds. On the other hand, Saudi Arabia needs investors for its technological modernization and carbon neutrality goals.

Al-Mudaifer praised the technologies used in local mining operations and called on sector players to participate in the Future Minerals Forum to be held in January 2025 in Riyadh.