The GCC governments have been keen to promote themselves as reliable partners, as well as ‘neutral’ or ‘non- aligned’ in geopolitical terms, but it will still require a great deal of careful diplomacy to manage some of the potential objections. China’s dominance of critical mineral processing is well documented, for example it controls 90% of rare earths refining, and 70% of lithium and cobalt processing, and in many cases dominates the related supply and manufacture of advanced technology and equipment, not only for processing, but also the supply of renewable energy. The latter will be critical given a likely very sharp increase in power demand from the industrial sector, as well as environmental regulation considerations from consumers, above all in the EU.
GCC'S NEUTRALITY IS CHALLENGED BY CHINA'S DOMINANCE IN CRITICAL MINERALS AND ADVANCED TECHNOLOGY SUPPLY ESSENTIAL FOR FUTURE ENERGY AND ENVIRONMENTAL NEEDS.
Per se, there is and will be a need to develop robust partnerships and joint ventures with China both to access its advanced technologies, as well as obviate potential tensions as the GCC in effect challenges China’s dominance. It should be added that it will take many years, if not decades before the region makes a small dent in that dominance. By that stage, China will more than likely have diversified and widened its related export demand base for related products and see the competition from the GCC region as also being complementary. Greater tension may emerge from the increasingly concerted effort to source and secure upstream resources, already evident for instance in Saudi Arabia’s stake in Brazil’s Vale and partnership with China Geological Survey to explore the ‘Arabian Shield’. Likewise, UAE sovereign wealth funds or state backed entities have agreed or are in negotiations about joint mining ventures in the likes of DR Congo, Zambia and other African countries, in some cases partnering with US investment companies.
For Europe and the USA, the considerations are rather different. They will to an extent be wary of replacing a dependency on China with the GCC region. On the other hand, outright ‘onshoring’ of processing or refining of raw materials comes up hard against barriers on energy costs (above all Europe) or being able to produce competitively locally on a long-term non-subsidized basis, let alone regulatory or trade (tariff and non-tariff) hurdles. Ultimately whatever European or North American governments would like to happen in terms of restoring some of their previous resource processing and manufacturing has, and will have to contend with commercial realities, as the private sector will bear the burden of funding such investments. As such there is a substantial opportunity for the GCC economies to develop and grow in this sector, even if perhaps not on the scale of their pivotal role in the energy sector.
Marc Ostwald E:
marc.ostwald@admisi.com T: +44(0) 20 7716 8534
17 | ADMISI - The Ghost In The Machine | Q3 Edition 2025
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