The Scoop
A US-based investment firm and a Saudi family-owned conglomerate plan to raise a “multibillion-dollar” fund to invest in critical minerals projects in Africa and secure offtake for processing in America and Saudi Arabia, the firm’s leaders told Semafor.
Cove Capital and Tariq Abdel Hadi Abdullah Alqahtani & Sons (AHQ) will formally launch the fundraising in June, targeting sovereign wealth funds, institutional investors, and governments. They will seek out investments in copper, lithium, cobalt, and rare earth mines, and are already considering several potential deals, Pini Althaus, chairman and chief executive of Cove Capital said in an interview.
“The goal is to reinforce US and Saudi national security by building safe corridors for the materials crucial for the global high tech economy,” he said.
The two firms will be general partners in the fund, Abdulmalik Tariq Alqahtani, AHQ’s chief executive, said. AHQ will also invest in developing three new critical minerals processing facilities in Saudi Arabia, he said.
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The US and Saudi Arabia signed an agreement in November to cooperate on critical minerals supplies, and US President Donald Trump has made securing US supply of materials vital for industry from technology to defense a key part of his agenda. Washington has grown increasingly concerned about China’s stranglehold over certain minerals and is looking to develop alternative sources.
For Saudi Arabia, Crown Prince Mohammed bin Salman wants to make mining a third pillar of the Saudi economy. The government says it has over $2.5 trillion of mineral reserves to develop domestically, and wants to position itself as a processing hub for mines across the Middle East, Africa, and Asia.
Maaden, the Saudi mining firm controlled by the sovereign wealth fund, signed an agreement with MP Materials to build and operate a rare earth refinery in Saudi Arabia that would supply magnets to the US. The deal was one of the first fruits of the partnership between the two countries.
More private sector investment will be required to meet both country’s objectives, said Althaus. “State run monopolies won’t be able to match the speed and transparency that the private sector can bring,” he said.
Still, Cove Capital has close ties to the Trump administration. It is developing a tungsten project in Kazakhstan in a deal that was announced by the US government.
It’s partnering with AHQ because of the Saudi firm’s experience investing in Africa and developing infrastructure projects on the continent, Althaus said. The Saudi firm was established in the 1940s as a trading business and has since expanded into industries including manufacturing, oil and gas and water treatment.
Gulf investors are increasingly betting on African mining as part of plans to diversify their economies and shape themselves into vital cogs for the high-tech manufacturing industries of the future. By investing in African mines, they want to secure materials for processing plants in their own countries that can then be either exported or sold to domestic manufacturing plants.
“We are aiming to build a powerhouse investor in scaling African resources into the global market,” Alqahtani said.
Notable
- Gulf states are likely to continue hedging their critical minerals strategies between the US and China, according to Ahmed Aboudouh writing for the Dubai-based think tank Observer Research Foundation.