Chilean mining in the sights of Saudi Arabia, UAE

Chilean mining could play a key role in Saudi Arabia's efforts to diversify its economy and increase its renewable energy and industrial production, while reducing dependence on oil, according to mining authorities and representatives of the Chilean private sector.

The Middle Eastern nation is interested in Chilean lithium and copper as essential materials to achieve its goal of becoming a hub for electric vehicle manufacturing and to advance its National Industrial Development and Logistics Program.

Saudi Arabia's minister of industry and mineral resources, Bandar Ibrahim Alkhorayef, has just left Chile after paying a visit to the country and Brazil from July 22 to July 30 with other Saudi representatives.

While in Chile, he met mining minister Aurora Williams and the heads of associations such as industry federation Sofofa, business chamber CPC and investment promotion agency InvestChile to evaluate local investment opportunities.

InvestChile also organized a business roundtable where Saudi mining authorities and representatives of Chilean state companies Codelco, Enami and Corfo and the college of geologists agreed to strengthen ties between the two nations.

The talks will enable more investment in mining and encourage the exchange of human, technological and innovation capital, Williams said in a statement.

To improve relations, Chile is in the process of reopening its embassy in Saudi Arabia, after it was closed in 1996 for economic reasons. It is expected to reopen at the end of this year or early in 2025.

In 2023, bilateral trade between Chile and Saudi Arabia was US$279 million, with average annual growth of 17.6% since 2018. In the period, no Chilean exports of mining products were recorded, outbound trade was dominated by shipments of wood and fruits. Chile imported about US$200mn of mainly iron and steel products.

SAUDI INVESTMENT

In the first half of this year, Chile reported that it had a project portfolio involving investments totaling US$34.5 billion, 24% more than a year earlier, according to data from InvestChile.

Mining was the second most important sector for investments after energy, with projects involving US$6.37bn. Although the bulk of the investments come from the US, followed by China and Canada, a Saudi Arabian infrastructure project was registered for the first time, entailing US$1.4bn.

Saudi oil company Aramco took over Esmax in March, which had been the licensee of Brazil's federal oil company Petrobras since 2017, and will rebrand its 300 service stations in Chile. 

AGREEMENT WITH UAE

In parallel, President Gabriel Boric is currently in the United Arab Emirates (UAE), where he signed a series of trade agreements, including the Comprehensive Economic Partnership Agreement (CEPA), the first of its kind between Chile and a Middle Eastern country.

“It is particularly important because the United Arab Emirates is a hub for the Middle East region, including part of the Indian subcontinent and northeast Africa,” the president said in a statement.

CEPA will guarantee preferential access to the UAE market for 97% of exportable goods from Chile, which includes the mining and other sectors, the release said.

Last year, trade between Chile and the UAE was US$260mn, with an average annual growth of 5.9% since 2018.