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Saudi Arabia is planning a second lithium processing plant as it seeks to capture a piece of the energy transition pie.
The plant will be a joint venture between Saudi industrial major Obeikan Investment Group and Australian startup European Lithium, the Financial Times has reported, with first production expected in 2026.
The lithium produced at the new facility will be supplied to Germany’s BMW under an already existing agreement.
“A lot of the world is fearful about what would happen if China switched off its [lithium] exports,” Tony Sage, executive chair of European Lithium, told the FT. “It would be a disaster for the energy transition.”
Many observers of the transition argue that the disaster is already looming because of the physical lack of enough raw materials, including lithium. Others, however, appear to be exclusively focused on China’s dominance in the area with plans being drawn in Europe and the United States for new supply chains independent of China.
The opportunity for Saudi Arabia lies in its low-cost, abundant energy, which makes it a good destination for energy-intensive businesses such as lithium processing, the FT noted in its report.
The Kingdom is already in on the EV game: earlier this year, it signed a deal with Australian EV Metals—a battery tech developer partly owned by Riyadh—for the construction of a lithium hydroxide plant.
Saudi Arabia is also the biggest investor in Lucid Motors—a luxury EV maker—and has planned for local EV production in the near future. Lucid has not exactly been doing well in the past few years and just announced it would raise $3 billion in fresh funding this week. Most of the money would come from the Saudi sovereign wealth fund.
Besides, Saudi Arabia is looking for greater participation in the mining industry. Earlier this year, reports emerged that the Kingdom has formed a venture between the sovereign wealth fund and state-owned Ma’aden, the mining company, to buy stakes in mining projects around the world.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.