Gulf States turn to critical minerals as a growth lever
Mining executives are witnessing a sharp upswing in investor interest from the Middle East, a trend that aligns with regional ambitions to diversify economies and participate more deeply in the global supply chain for critical minerals. From copper and lithium to nickel, cobalt and the 17 rare earth elements, Gulf capital is increasingly framing partnerships, acquisitions, and project development as a core strategic priority.
The term “critical minerals” refers to materials deemed essential for the energy transition, yet prone to supply disruptions. The increase in interest from Middle East financiers comes as policymakers and business leaders gather in Riyadh for the Future Investment Initiative (FII), a conference that has earned the nickname the “Davos in the Desert.” The event’s theme, The Key to Prosperity: Unlocking New Frontiers of Growth, underscores diversification goals that extend beyond traditional oil revenues into manufacturing, technology, and advanced materials.
Downstream opportunities attract capital
Industry executives say Gulf investors are increasingly eager to take part in downstream activities—processing, refining, and manufacturing—rather than only funding upstream mining. Tony Sage, CEO of Critical Metals, a U.S.-listed rare earths miner, noted the extraordinary level of interest in rare earths from the region despite limited local mining capacity. “I didn’t expect it because there aren’t discoveries in this area, but they want to participate somehow in the downstream,” he said during a business trip through the Middle East.
Royalty-free access to raw materials matters less than the potential for value creation through processing and finished products. In Saudi Arabia, for example, Critical Metals has teamed up with Obeikan Group to construct a large-scale lithium hydroxide processing plant—an investment that signals a broader push to build a regional rare earths and battery materials ecosystem. Such partnerships align with Gulf strategies to become more than energy exporters and to embed themselves in the global supply chain for critical minerals.
Strategic investments and regional diversification
Analysts at the International Institute for Strategic Studies (IISS) describe Gulf states as leveraging financial capital and geographic location to capture a bigger share of critical minerals markets. A series of targeted acquisitions and international partnerships are central to this approach, positioning the Gulf as an alternative to traditional Western suppliers. The shift is also seen as a way to reduce exposure to supply disruptions in other polities and to fuel technology-driven industries, including robotics and AI software and hardware that rely on rare earths and related materials.
Market observers like Kevin Das of New Frontier Minerals tie the Middle East’s interest to the AI boom, arguing that an increasing demand for rare earths will accompany the rise of robotics and other automation technologies. Das noted that while the Gulf states have not historically been heavy producers of these minerals, demand for high-grade components could drive meaningful participation in the global value chain, provided the region can mature its technical capabilities and secure reliable partnerships.
Barriers and balanced expectations
Despite the enthusiasm, several barriers temper the optimism. Saudi Arabia and other Gulf states often rely on foreign expertise to accelerate mining ventures, leading to long lead times and questions about whether regional capacity can scale quickly enough to compete with established producers. Asna Wajid, a research analyst at IISS, cautioned that even ambitious plans may unfold over many years and that Western buyers may remain wary of replacing dependence on China with Gulf dependence, given the current dominance of Chinese processing facilities and control over supply chains.
China still dominates the critical minerals landscape, producing about 70% of the world’s rare earths and processing nearly 90% of them. The balance of power in this market matters to the United States and allied nations as they reassess strategic dependencies amid ongoing geopolitical tensions and a push toward sustainable energy alternatives. In this context, Gulf states’ investments could become a meaningful buffer rather than a direct substitute for Western partners, offering alternative routes to secure supply while diversifying regional economies.
What comes next for investors and miners
As Gulf states pursue a broader role in the critical minerals supply chain, expect a continued blend of public policy, private capital, and international collaboration. Projects like the lithium hydroxide plant in Saudi Arabia demonstrate how regional and global players can converge on processing capacity, while ongoing conversations around rare earths, battery materials, and downstream manufacturing will likely intensify. The current environment suggests a new era where Middle East capital helps global miners accelerate development, diversify risk, and support the energy transition—without compromising the strategic balance that defines today’s geopolitics.
