The Saudi Pivot: Oil to Minerals | Australian Markets
Saudi Arabia has a closing window of alternative to faucet into its oil wealth and develop new industries earlier than these riches ‘potentially’ run dry as renewables take additional market share. James Cooper explains why mining provides the answer.
Expensive Reader,
This text from Reuters caught my consideration:
‘Codelco, Saudi, in talks on copper investment.’
For those who’re not conscious, Codelco is the state-owned Chilean copper miner and a main producer of the crimson metallic.
However why the heck is Saudia Arabia, the world’s largest exporter of crude oil, cosying up to the world’s largest copper producer?
Unfolding Story: The Saudi Pivot is Underway
This development highlights Saudi Arabia’s effort to diversify its oil-dominated economic system.
Even when oil demand doesn’t collapse within the years forward (from competing renewables), diversifying its oil economic system wouldn’t be a unhealthy concept:
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Supply: Saudi Central Financial institution |
As you possibly can see within the pie chart to the left, direct oil gross sales (inexperienced) make up about two-thirds of the nation’s complete income!
And that doesn’t embody all of the spill-over income that exists because of its oil-focussed economic system: finance, engineering and the like.
Mining Memo’s Take
Saudi Arabia has a closing window of alternative to faucet into its oil wealth and develop new industries earlier than these riches ‘potentially’ run dry as renewables take additional market share.
However for many years, Saudi royalty has been hooked on mega-yachts, luxurious and hanging out with Hollywood celebrities.
However for the primary time (in a long time), a royal chief has come to energy with a will to provide some direction to a nation that has grown fats by pumping infinite volumes of oil.
Crown Prince Mohammed bin Salman is a realist who understands these riches gained’t final ceaselessly.
But Salaman has wasted years (and billions) flirting with far-flung ‘visionary’ initiatives, like NEOM, a futuristic metropolis on the Purple Coastline, in a bid to draw vacationers.
Quite a few epic failures.
However there was one industry rising as a reasonable substitute for Saudi oil… Mining.
Commercial:
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The nation already holds a pool of oil-trained geologists, engineers, and technicians that may be re-skilled for ‘hard-rock’ mining.
And on all accounts, Salaman appears to be lastly recognising this, doubling down the nation’s efforts to give attention to mining initiatives.
That was on full show this week on the Future Minerals Discussion board in Riyadh, Saudi Arabia.
In solely its fourth 12 months, this important mining occasion has already pumped about $30 billion into the arms of worldwide mining corporations pitching to Saudi royals.
And that’s the important thing alternative right here…
Saudi oil money is quickly turning into a source of new liquidity for world mining. And that has the potential to grow exponentially within the years to come back. From producers to explorers.
However there’s one other angle to this story too…
Worldwide miners trying to seize mining leases WITHIN Saudi Arabia.
Huge tracts of arid panorama, as soon as solely the main target of oil, are set to be re-opened for mineral exploration.
A new frontier is opening up!
And that’s an alternative price analyzing. I count on we’ll see loads of new ASX performs seeking to get in on this rising land grab!
Keep tuned for more.
Regards,
James Cooper,
Editor, Mining: Part One and Diggers and Drillers
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All advice is common advice and has not taken into consideration your personal circumstances.
Please search unbiased financial advice concerning your own scenario, or if doubtful in regards to the suitability of an investment.
James Cooper has been a working geologist in mines throughout Australia, Canada, and Africa for the reason that early 2000s. He’s led the operations of tiny explorers by means of to large producer outfits. He’s seen booms and busts firsthand and he additionally understands the cyclical nature of particular person commodities. For instance, James was proper there when Barrick Gold launched an monumental $7.5 billion takeover bid for Equinox. That was the height of the final cycle.
Along with his background as a geo and finance skilled, he brings a distinctive insight and expertise to Fats Tail Funding Analysis. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Part One.
James’s Premium Subscriptions
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