The United States and Saudi Arabia are discussing a key metals deal in an attempt to challenge China's dominance of electric vehicles

According to the Wall Street Journal on September 10, the United States and Saudi Arabia are committed to promoting the energy transition to occupy an important position in the global electric vehicle field. To this end, the two governments hit it off and are negotiating cooperation on obtaining key minerals from Africa.

According to people familiar with the matter, according to the content of the negotiations, Saudi companies are considering spending $15 billion to buy global mining stakes in Africa and other countries, while the Biden administration will have the right to produce part of the production from Saudi Arabia's shares, and the details are still under discussion. The Wall Street Journal believes that the US move is aimed at curbing China's dominance in the electric vehicle supply chain. If reached, it would mark a positive step in U.S.-Saudi relations.

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Cobalt mine in Congo under exploitation, pictured from the Wall Street Journal

U.S. automakers have long sought better access to key minerals for lithium-ion batteries and are increasingly entering mining operations. But most of the world's cobalt is located in "hostile business environments" such as the Democratic Republic of the Congo, Guinea and Namibia, where the U.S. Justice Department has repeatedly accused Western companies of bribery.

Saudi Arabia may have more flexibility when investing in countries where corruption is rampant, shielding U.S. companies from being charged with risk. In addition, Saudi companies prefer to acquire stakes in local companies over building processing plants, making them popular investors in African countries.

According to people familiar with the matter, the White House is seeking financial support from other countries' sovereign wealth funds, but negotiations with Saudi Arabia have gone the most smoothly.

For Saudi Arabia, the move would kick-start plans to delve into the mining industry, mining its own minerals and metals domestically and acquiring stakes in projects around the world. It is part of efforts to diversify Saudi Arabia's economy, including building its own electric vehicle industry, building large-scale solar farms and building high-tech industries such as artificial intelligence.

In June, the Saudi Public Investment Fund approached the Congolese side to invest in key metal minerals, including cobalt, copper and tantalum, through the Saudi company Manara Minerals, a joint venture between Saudi Public Investment Fund and Saudi mining company Ma'aden. The Democratic Republic of the Congo provides 70% of the world's cobalt.

A DRC official said the Democratic Republic of the Congo had discussed building factories in the country to process the metal into batteries, not just for export.

As Saudi Arabia pushes for its energy transition, Manara is focusing on acquiring stakes in other minerals such as iron ore, nickel and lithium around the world. In July, the company struck its first mining deal, acquiring a 10 percent stake in a Brazilian mining company. Manara plans to acquire more than $15 billion in mining assets globally over the next few years, officials briefed on the plans.

When asked about negotiations with the United States, Manara said minerals and natural resources are strategically important to Saudi Arabia's economic transformation goals, and the company has access to long-term funds that it plans to use to accelerate the development of world-class mining assets. Saudi Minister of Industry and Mineral Resources Bandar Khuraev said the kingdom was looking to help solve the shortage of minerals used to make electric vehicles and renewable energy.

In January, the Saudi Public Investment Fund and Saudi mining company Ma'aden formed Manara, a joint venture

Saudi Arabia's negotiations with the United States come as it works to secure more battery metal supplies to gain a prominent position in the global electric vehicle sector.

The Wall Street Journal said the U.S. move is aimed at curbing China's dominance in the electric vehicle supply chain, and any deal could lead to Saudi Arabia helping the U.S. catch up with China in the global competition for cobalt, lithium and other metals. Chinese companies refine three-quarters of the world's cobalt supply and produce about 70 percent of the world's lithium-ion batteries, raising concerns in the West about dependence on China.

In addition, if a deal is reached, it will mark a positive step in the bilateral relationship between the United States and Saudi Arabia. Saudi Arabia has been a close ally of the United States for decades, but relations between the two countries have been strained since Biden took office over the murder of Saudi journalist Jamal Khashoggi and Ukraine. Biden declared in 2019 that he would retaliate against Saudi Arabia over the Khashoggi case after taking office, turning Saudi Arabia into a "pariah state" in the international community.

In order to save Saudi Arabia, Biden "clashed" diplomacy with the Saudi crown prince in July last year. The picture is from The Paper

Some people familiar with the matter said the U.S.-Saudi talks were part of a larger initiative by the Group of Seven (G7) to invest in global infrastructure projects in developing countries. On September 9, the United States, India, Saudi Arabia, and the European Union signed a memorandum of understanding announcing the construction of the India-Middle East-Europe Economic Corridor (IMEC). This ambitious "modern spice road" was seen by foreign media as intended to "confront" China's "One Belt, One Road" initiative.

"China's power is growing so fast that many countries feel the need to have alternatives." Independent analyst Rada Kumar told Al Jazeera on the 9th. However, in her view, due to the different countries and regions covered by the two, this new project will not necessarily have a "disruptive" impact on the Belt and Road Initiative.

In response to a question on infrastructure initiatives, Foreign Ministry spokesman Wang Wenbin said that China believes that there is broad space for cooperation in the global infrastructure field, and there is no problem of competing or replacing various related initiatives. What the world needs is bridges, not bridges; It's interconnection, not decoupling and building walls; It is mutual benefit and win-win, not closed exclusivity. China welcomes all initiatives that will help pool efforts to promote global infrastructure construction. Any calculation to advance geopolitics in the name of infrastructure construction is unwelcome and will not succeed.

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