S&P Global: Mining, metals sector to play a growing role in Saudi economic growth

S&P Global expects Saudi Arabia’s long-term economic growth to increasingly rely on the mining and metals sector, consistent with the objectives of Vision 2030 to diversify the Kingdom’s economy away from oil dependency.

Saudi Arabia possesses significant reserves of metals critical to the global energy transition, including copper, nickel, and lithium, as well as strategic minerals such as phosphate fertilizers essential for food security. This positions the Kingdom favorably amid rising global demand for these resources.

Globally, S&P Global maintains a moderately negative outlook on the metals and mining sector, reflecting ongoing cost pressures related to declining ore grades and elevated reinvestment requirements. Despite relatively high producer prices and input costs, sector profitability and cash flows have been under pressure since the inflationary surge of 2021–2022.

Nonetheless, S&P notes that demand for metals remains resilient. Physical assets such as mines, smelters, and strong balance sheets will increasingly serve as key mitigants against risks such as regulatory changes and liquidity constraints. Stable metal prices, prudent financial management, lower leverage levels, and limited merger and acquisition activity are expected to support overall credit quality despite macroeconomic headwinds.

Saudi Arabia is expected to outperform the global trend. Proactive policy measures, extensive resource endowments, and government-led investments are likely to offset sector-specific challenges. Saudi mining and metals companies benefit from significant government support, modernized regulatory frameworks—such as the Mining Investment Law—and major capital investments in domestic infrastructure and mega-projects.

These initiatives are projected to stimulate domestic mineral demand, reduce import dependency, and enhance sectoral efficiency over time. They will also strengthen Saudi Arabia’s capacity to meet increasing global demand for base and transition minerals.

S&P estimates the mining sector currently contributes approximately $400 million to the Saudi economy.

The government’s strategic objective is to increase the sector’s GDP contribution to $75 billion by 2030, up from an estimated $17 billion in 2024.

The Public Investment Fund’s commitment to invest $40 billion annually into domestic mega-projects is expected to further fuel local demand for metals and mining products. Large-scale developments such as NEOM, the Red Sea Project, Qiddiya, Roshn, and Diriyah are anticipated to accelerate urbanization and drive demand for steel, aluminum, and copper.

Integrated industrial clusters in NEOM and Qiddiya’s strategic focus on entertainment, tourism, and transportation infrastructure will also boost domestic consumption of construction materials and high-value metals.

Efforts to localize the supply chain are aimed at reducing mineral import costs, which totaled between $20 billion and $24 billion in 2024, according to the General Authority for Statistics.

Saudi Arabia’s geographic proximity to Europe, Asia, and Africa provides a competitive advantage for mineral exports. However, the sector’s expansion will require the continued implementation of predictable and transparent regulations, particularly with respect to international contracting and foreign investment partnerships.

Significant untapped mineral potential remains. The Kingdom’s mineral resource base is now estimated at SAR 9.375 trillion ($2.5 trillion), up 90% from the 2016 estimate of SAR 5 trillion ($1.3 trillion), following the discovery of rare earth elements, transition metals, and substantial increases in phosphate, copper, zinc, and gold reserves.