Saudi Arabia's Energy Minister, Abdulaziz bin Salman, has declared that oil is no longer the primary focus of energy security. Speaking at the annual Future Minerals Forum in Riyadh, he emphasized a shift in the energy landscape. “Oil is no longer an energy security challenge – it’s going to be gas, electricity, predominantly minerals,” he stated, as quoted on CNBC.
The Rise of Critical Minerals
The minister pointed to the growing global race to secure critical minerals essential for the energy transition and advanced technologies. These include lithium, cobalt, nickel, graphite, manganese, and rare earth elements. No wonder, rare earth mineral exchange-traded fund (ETF) VanEck Rare Earth/Strategic Metals REMX has gained 8.1% so far this year (as of Jan. 15, 2025).
These critical mineral resources are vital for manufacturing electric vehicles, batteries, renewable energy systems, and modern electronics. Some nations hold up to 50% ownership of these critical minerals, creating intense competition for access. China currently controls approximately 60% of the world’s rare earth minerals production and refines 95% of the global supply of manganese.
This monopoly has raised concerns among Western nations, as these minerals are linked to national security and global economic stability. The minister warned that this increasing competition to secure rare earth minerals could lead to increased emissions, soaring metal costs, and higher energy prices. SPDR S&P Metals & Mining ETF XME may benefit from this rush.
Rising Energy Demands from Emerging Technologies
Artificial intelligence (AI), data centers, crypto mining and other energy-intensive industries are driving unprecedented electricity demand. Global electricity demand is surging, fueled by industries like AI, factories, and electric vehicles, as well as longer, hotter summers. For instance, the U.S. power grid may face an additional 25 gigawatts of data center demand by 2030, according to recent energy reports, as quoted on CNBC.
Saudi Arabia’s $100 Billion Mining Initiative
In response to the critical minerals challenge, Saudi Arabia has announced a $100 billion investment to develop its mining sector. The kingdom aims to position itself as a global hub for mining, extraction and mineral processing.
The initiative includes exploring domestic reserves of lithium and other critical minerals. This effort is a key component of Saudi Arabia’s Vision 2030, which seeks to diversify its economy and reduce reliance on oil. Such initiatives put the spotlight on ETFs like Global X Lithium & Battery Tech ETF LIT.
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