Saudi Arabia & UAE: Profiting from the US-China Trade War

Keywords:

• The potential trade war between China and America has opened the door to tensions over rare or critical minerals.
• Saudi Arabia and the United Arab Emirates are making great efforts in the field of critical minerals that are important for advanced industries.
• Saudi Arabia and the UAE can represent a solution in the supply chains of these minerals for many companies, especially electric car companies.

Prelude to the upcoming US China Trade War:

Both the Kingdom of Saudi Arabia and the United Arab Emirates may find a unique opportunity to enhance their capabilities in a very vital matter in terms of industries, due to the potential US-China trade war.

Since Trump won the US presidency last November, China has collided with two things:

- President Trump's statements about raising tariffs on Chinese imports by 60%.

- The announcement of the ban on Chinese technology chip companies by the current US administration led by Biden.

A day after the Biden administration announced, China announced that it would ban the export of materials related to gallium, germanium, antimony, and high-hardness materials to the United States.

But industry observers have recently suggested that this could give both Saudi Arabia and the UAE a distinct advantage in critical minerals, whether in terms of resources, location or efforts.

First, Saudi Arabia’s position:

Saudi Arabia has made significant efforts in critical minerals, in a way that analysts say could redraw regional and global supply chains for the mining industry.

Observers said:

“Saudi Arabia is making strenuous efforts to enhance the local processing of these minerals, which are materials required for strategic industries in any country where there is a risk of supply disruption.”

These minerals include:

- Lithium is needed to make batteries.

- Platinum used in fuel cells.

- In addition to copper and bauxite, the raw material for aluminum.

Saudi Arabia can benefit from several things to strengthen its position in this very important field at the present time, the most important of which are:

- The escalation of strategic competition between the United States and China, which will create a competitive opportunity for Saudi Arabia.

- Abundant and cheap energy sources.

- Saudi Arabia’s important geographical location at the crossroads of global trade.

The Kingdom has also been making great efforts to achieve global supply chain resilience since 2022, through Manara Minerals, a joint venture between Saudi state-owned mining company Maaden and the Public Investment Fund.

Also, to develop copper, zinc, platinum and palladium smelters and refineries, Saudi Arabia signed partnerships worth more than $9 billion at the end of November 2024 with:

- Indian mining company Vedanta.

- Zijin Mining Group in China.

- Platinum Minerals Group in Canada

All these efforts undertaken by Saudi Arabia will be supported by local resources of important minerals such as copper, gold and zinc, which the Kingdom seeks to process effectively.

Second. The UAE’s position:

The UAE has ambitions in this area, with Abu Dhabi International Holding Company, through its subsidiary International Resource Holding, in talks to acquire a stake in Alphamine, a Canadian company with significant tin interests in the Democratic Republic of the Congo.

The UAE has also made a significant shopping spree for critical minerals, extracting copper in Peru, lithium in Zimbabwe, tantalum in Kenya and bauxite in Pakistan.

As for China, the leading player in the critical minerals industry, accounting for 85% of the world’s processing capacity for these minerals, Saudi Arabia has good relations with it.

Saudi Arabia can exploit this relationship by using Chinese technology, experts and expertise.

Conclusion:

Both Saudi Arabia and the UAE may benefit in this area through what was mentioned above, and exploiting the tensions between the American and Chinese giants and what the US China trade war will lead to in this area specifically, which may represent for the two Gulf states a huge ability to secure the needs of giant car companies such as Volkswagen or General Motors and others, specifically with regard to what electric cars and their batteries need.