"The U.S. and Saudi Arabia are in talks to secure metals in Africa needed for both countries' energy transitions, as the White House tries to curb China's dominance in the electric-vehicle supply chain and the kingdom looks to buy $15 billion in global mining stakes, people with knowledge of the talks said.
Any agreement could entail Saudi Arabia giving the U.S. a boost in its attempt to play catch-up with China in the global race for cobalt, lithium and other metals that are processed into rechargeable lithium-ion batteries to power electric cars, laptops and smartphones. Chinese companies refine three-quarters of the world's cobalt supply and produce about 70% of the world's lithium-ion batteries, raising concerns in the West about reliance on Beijing.
If completed, the U.S.-Saudi partnership would mark a positive step for two countries that have had strained relations since President Biden took office and promised to make the Gulf kingdom a "pariah" for its human-rights record. Since events in Ukraine, the U.S. has been critical of Saudi Arabia's alignment with Moscow to keep oil prices high and wary of its embrace of China, though Washington-Riyadh relations have begun to thaw, with increasing commercial cooperation.
Under the ideas being discussed with the Biden administration, a state-backed Saudi venture would buy stakes in mining assets in African countries such as the Democratic Republic of Congo, Guinea and Namibia, some of the people said. U.S. companies would then have rights to buy some of the production from those Saudi-owned stakes, the people said.
U.S. automakers have long sought better access to critical minerals for lithium-ion batteries and increasingly have gotten into the mining business. But much of the world's cobalt lies in difficult business environments such as Congo, where Western companies' business practices have resulted in Justice Department allegations of bribery.
Saudi Arabia would likely have more flexibility to invest in countries where corruption is rampant, insulating U.S. companies from that risk. The kingdom is also less bound by environmental, social and governance concerns that crimp other investors' ability to deploy capital there.
The effort would jump-start plans by Saudi Arabia, long the world's dominant oil power, to delve into the world of mining, digging for its own minerals and metals at home and buying up stakes in projects around the world. It is part of an economic diversification effort that involves building its own EV industry, creating massive solar farms and setting up high-tech industries such as artificial intelligence.
The White House is seeking the financial backing of other sovereign-wealth funds in the region, but talks with Saudi Arabia have progressed the farthest, people familiar with the matter said.
The mining conversations are part of a larger initiative by the Group of Seven countries to invest in global infrastructure projects in developing countries, some of the people said. The White House on Saturday said it would support the development of a corridor connecting Congo and Zambia to global markets via Angola's Port of Lobito, and announced an intercontinental economic corridor linking India to Europe through Saudi Arabia.
China has built up its position in the EV supply chain primarily by buying up production in African countries like Congo. China's main advantage has been its companies' willingness to outbid other firms, and Saudi Arabia is willing to do the same, some of the people said." [1]
1. World News: Saudis, U.S. Speak On Securing Key Metals. Said, Summer; Steinberg, Julie; Kalin, Stephen.
Wall Street Journal, Eastern edition; New York, N.Y.. 11 Sep 2023: A.18.
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