Gulf Sovereign Wealth Funds Target Critical Minerals Supply Chains

A New Alliance in the Race for Strategic Materials

The U.S. International Development Finance Corporation has formed an unusual partnership with Abu Dhabi's sovereign wealth vehicle ADQ and Orion Resource Partners to establish a critical minerals fund. The collaboration pairs American development finance with Gulf capital and mining expertise to secure materials essential for semiconductors, electric vehicles, and AI infrastructure.

The arrangement reflects a broader strategic shift. Gulf states are channeling oil revenues into global supply chains for copper, lithium, cobalt, nickel, and rare earths—the raw materials that underpin modern technology. For Washington, which faces a supply chain heavily dominated by Chinese processing capacity, Gulf investment offers a realistic path to diversification that domestic policy alone has struggled to achieve.

Why it matters

China currently controls most of the world's mineral refining capacity, creating a structural dependency for any nation building AI data centers, power grids, or advanced manufacturing. Gulf sovereign wealth funds possess both the capital and the risk tolerance to finance mining projects in developing countries where Western investors have hesitated. Their participation creates non-Chinese supply routes for materials the U.S. technology sector cannot do without.

The Gulf Investment Strategy

Saudi Arabia now estimates its untapped mineral reserves at $2.5 trillion, a 90 percent increase since the Vision 2030 economic diversification program launched in 2016. The kingdom targets $63 billion in annual mining GDP and $27 billion in new mining investment by 2030, positioning itself among the world's top seven mineral processors by leveraging some of the cheapest solar and wind power available globally.

The UAE pursues a parallel strategy through funds like ADQ, acquiring stakes in mines and processing facilities abroad to compensate for the absence of domestic mineral deposits.

Recent transactions demonstrate the scale of Gulf ambitions. Manara Minerals—a joint venture between Saudi Arabia's Public Investment Fund and Ma'aden—paid $2.5 billion in 2024 for a 10 percent stake in Brazil's Vale base-metals business, securing long-term access to nickel and copper output. In Zambia, the UAE's International Resources Holding invested more than $1.1 billion for a majority stake in Mopani Copper Mines. Qatar's sovereign fund committed $500 million to Ivanhoe Mines this year.

Each deal establishes supply lines that bypass Chinese processing infrastructure.

The Risks and Trade-Offs

Gulf states lack both domestic mineral deposits and deep mining expertise. Tony Sage, chief executive of U.S.-listed Critical Metals, noted that Gulf states "can't mine it," highlighting their dependence on partnerships and acquisitions. Chinese processors still control the majority of global refining capacity, and Gulf funds maintain commercial relationships with Beijing alongside their Western partnerships.

Geopolitical friction adds uncertainty. During this year's Iran conflict, Saudi Arabia's initial refusal to allow U.S. military operations from its bases strained the relationship, even as UAE-U.S. economic cooperation deepened. The Gulf states themselves are working through regional tensions, including the Saudi-UAE rift over Yemen.

Yet Gulf sovereign wealth funds offer a critical advantage: patient capital. Unlike publicly traded mining companies answerable to quarterly earnings, these funds can absorb the 10- to 15-year timelines required for mining projects to generate returns—the same approach China used to build its current dominance.

In exchange for their investment, Gulf states gain access to American capital markets, security backing for their assets, and the legitimacy of partnership with Washington rather than operating as competitors.

The Path Forward

Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, has argued that Gulf states "should be a central part of U.S. efforts to create resilient supply chains," given their capital and access to resource-rich markets where U.S. engagement has been limited.

Ben Black, chief executive of the DFC, described securing critical minerals as "a paramount matter of U.S. strategic interest and economic prosperity."

The most effective approach involves co-investment structures where the U.S. participates alongside Gulf funds in specific projects, pre-commits to purchasing production shares, and extends the same loan guarantees and tax incentives currently offered to domestic semiconductor facilities. The DFC-ADQ-Orion fund represents an initial test of this model.

The alternative—subsidizing chip factories while leaving raw material supply chains in the hands of governments with divergent interests—addresses only half the strategic challenge.

These details were first reported by Ken Silverstein for Forbes.