Vedanta to invest US$2B in Saudi copper projects

Vedanta Copper, a subsidiary of India’s Vedanta, has announced plans to invest US$2 billion in copper-processing facilities in Saudi Arabia, a fresh boost to the kingdom’s aspirations to establish itself as a global hub for metals and mining.

The investment will fund the construction of a state-of-the-art smelter and refinery with an annual capacity of 400,000 tonnes, the company said. 

Vedanta also plans to develop a plant capable of producing up to 300,000 tonnes per year of copper rods —an essential component in electric cable manufacturing.

The announcement is part of nine investment deals inked by Saudi Arabia on Tuesday valued at over 35 billion riyals (US$9.32 billion). The agreements include partnerships with other major foreign companies, including China’s Zijin Group, and are considered a significant boost for Riyadh’s efforts to attract foreign direct investment to help diversify the kingdom’s economy from oil. 

Supporting Vision 2030

The announced investments align with Saudi Arabia’s Vision 2030 — a plan to unlock US$2.5 trillion in untapped mineral resources, including phosphate, copper, gold, and bauxite. It also aims to boost the mining sector’s GDP contribution from US$17 billion to US$64 billion by the end of the decade.

Saudi Arabia imports most of its copper to meet domestic demand, estimated at 365,000 tonnes annually. This figure is projected to more than double by 2035. 

Vedanta alone is expected to contribute almost US$19 billion to the kingdom’s GDP, reduce the nation’s reliance on imports and stimulate the growth of downstream industries, creating thousands of jobs.

“These projects will enhance the kingdom’s self-reliance in the copper supply chain,” Chris Griffith, CEO of Vedanta’s Base Metals division, said in a statement. “Saudi Arabia has been a leader in oil exploration and hydrocarbons for decades. Now, under visionary leadership, it is poised to tap into its vast, unexplored mineral potential.”

As part of its strategy to move away from fossil fuels, Saudi Arabia created investment fund Manara Minerals, a joint venture between Ma’aden and the Public Investment Fund (PIF), to acquire assets overseas.

Its first major move abroad was a 2023 deal to secure a 10% stake in Vale’s (NYSE: VALE) US$26 billion copper and nickel spin-off Vale Base Metals.

The kingdom is also trying to secure a stake in Pakistan’s US$7 billion Reko Diq copper and gold mine, which is half owned by Barrick Gold (TSX:ABX)(NYSE:GOLD), with the remainder equally divided between Pakistan’s federal government and the Balochistan government.

Pakistan announced last week it had set up a high-level negotiation committee tasked with finalizing the terms, valuation, and drafting a commercial agreement for the sale of a 15% stake in Reko Diq to Saudi Arabia’s PIF.

Looming supply crunch

Copper’s role as a critical material in renewable energy systems has placed the metal at the centre of global decarbonization efforts. 

According to Vedanta, global demand for the metal will rise 40% by 2040, driven by the energy transition and the shift toward sustainable transportation and electrification. 

The Indian company is just one of many miners, banks, and research houses warning of an imminent copper undersupply. BHP (ASX: BHP), the world’s largest mining company recently said it expected a global copper deficit of 10 million tonnes a decade from now. The expected shortfall has driven the company to outline plans to spend at least US$14 billion at the world’s biggest copper mine, Escondida, and other projects in Chile. 

Meeting the Paris Agreement’s climate targets, which aim to limit global warming to no more than 1.5 degrees Celsius, will require annual investments of about US$1 trillion in renewable infrastructure between 2025 and 2030, Vedanta noted.