Vedanta Plans to Invest $2 Billion in Saudi Copper Projects

Vedanta is set to invest $2 billion to build copper-processing facilities in Saudi Arabia, a significant boost for the kingdom’s ambitions to become a global metals and mining hub.

(Bloomberg) — Vedanta is set to invest $2 billion to build copper-processing facilities in Saudi Arabia, a significant boost for the kingdom’s ambitions to become a global metals and mining hub.

The firm, controlled by Indian billionaire Anil Agarwal, will build a new smelter and refinery with a capacity of 400,000 metric tons per year, according to a statement Tuesday. Vedanta also plans to set up a facility to produce as much as 300,000 tons per year of copper rods, a key raw material for electric cables. 

“It’s just impossible to ignore the demand for copper,” Chris Griffith, chief executive officer of Vedanta Base Metals, said in an interview. “This project ties in very nicely, both with our own ambitions as Vedanta to grow our footprints in India and the Middle East, but also with the industrial growth strategy in Saudi Arabia their desire to secure a copper supply chain.”

The firm plans to commence operations in the kingdom with a 125 kiloton per year copper rod mill project that will require an investment of about $30 million, it said in a statement. Full commercial production is expected to start in 2026.

Vedanta’s $2 billion investment will be among the biggest by a foreign firm backing Saudi Arabia’s metals strategy, and a major boost for Riyadh’s efforts to attract foreign direct investment to help drive Crown Prince Mohammed bin Salman’s economic diversification plan.

“This part of the Middle East is where the next wave of growth is happening,” Griffith said. Vedanta hasn’t yet inked further agreements with Saudi companies but there will be opportunities to partner with local firms, he said.

According to government estimates, Saudi Arabia has untapped resources including phosphate, copper, gold and bauxite worth as much as $2.5 trillion. Many of these commodities are crucial for decarbonizing global economies, which has triggered a rush for control of assets, and for the technology and cash needed to turn the minerals into usable products.

But the recent construction of new copper smelters in China, India and Indonesia has created major commercial strains across the industry, with processing fees that cover the cost of turning raw ores into refined metal on course to hit record lows next year. 

With mine supply growing less quickly than refining capacity, it’s likely that some smelters will need to curtail output due to the collapse in margins and shortages of feedstock.

Higher Copper Prices

Vedanta expects global annual demand for copper to increase by 40% by 2040. “I think what we’re going to have to see in any event is much higher copper prices to incentivize new copper production,” Griffith said.

Executives from the firm are set to visit Ras Al Khair, home of a mining complex in Northern Saudi Arabia, to scope potential sites for the copper development, he said. Vedanta is also in discussions with Saudi authorities about potential incentives that could be offered to help fund the plants.

The kingdom has been trying to lure companies to help develop the mining industry as part of its efforts to become a hub for the sector in the Middle East and Africa. The Saudi Industrial Development Fund, for example, will offer financing for up to 75% of a project.

Saudi Arabia on Tuesday announced deals worth $9.3 billion as part of its plans to become a global supply chain hub, including an agreement with GlassPoint to develop a factory for renewable energy components used to decarbonize industrial heat production. 

The plant is the first stage of a $1.5 billion project with Saudi Arabian Mining Co., known as Maaden, to use solar-to-heat technology to help reduce emissions in aluminium production.

—With assistance from Mark Burton.

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