Leading companies in Oman, Abu Dhabi and Saudi Arabia are planning to launch metal trading companies, as the region taps into growing demand for metals while it looks to diversify beyond oil and gas.
Abu Dhabi-based International Resources Holding, a mining company that is part of a conglomerate chaired by powerful Emirati royal Sheikh Tahnoon bin Zayed al-Nahyan, has already built out a 60-person trading unit to handle energy and metals.
Minerals Development Oman, the state-owned mining company, is also in the process of hiring a top executive to lead a 25-person trading team, according to MDO’s chief executive, Mattar Al Badi.
The trading plans come as many oil-dependent Gulf states seek to position themselves in the global supply chain for the metals needed for the energy transition, such as copper, lithium and iron ore.
“These countries want to diversify from oil, and they are exploring every opportunity to do so,” said JF Lambert, founding partner of consultancy Lambert Commodities.
Many of the world’s biggest oil traders, such as Vitol, Mercuria and Gunvor, have also recently expanded their metal trading operations.
Over the past five years, commodity trading activity has gradually shifted away from the traditional hubs of London and Geneva towards the Middle East, particularly Dubai, where there has been a surge of new trading offices.
Oman, whose oil production is modest compared with neighbouring Saudi Arabia and UAE, will establish a trading company under MDO, which has recently revived copper extraction from its Lasail mine after a three-decade hiatus.
Al Badi, MDO chief executive, said the trading company would help organise Oman’s fragmented exports of chromite and gypsum, and help the country get a better price for its resources.
“Oman is one of the biggest countries in exporting gypsum, but the market is not organised,” Badi said. A trading company would help Oman “ensure that we maximise the margin” from its goods, he added.
MDO is in talks with six international commodities firms — Trafigura, Glencore, Traxys, IXM, Mercuria and Gunvor — over a potential offtake arrangement for its processed copper and partnership in its trading unit.
In Abu Dhabi, one of the world’s top 10 oil producers, IRH has already hired a trading team in oil and gas, as well as metals, and has been in discussions about potential trading opportunities with international traders, including Mercuria.
IRH said it was trading commodities from third parties across base metals, energy products and iron ore, as well as developing a “proprietary trading portfolio spanning global commodities and structured transactions”.
Part of national security adviser Sheikh Tahnoon’s sprawling International Holding Company, IRH burst on to the mining scene in late 2023, agreeing to buy a 51 per cent stake in Zambia’s Mopani copper mine for $1.1bn.
In another sign of the Gulf’s pivot towards metals and minerals, Abu Dhabi upped its bet on mining last week. Sovereign investor ADQ announced a $1.2bn joint venture with specialist metals investor Orion Resources, which will focus on copper, iron ore and other materials. Both sides will initially invest $600mn.
Philip Clegg, managing partner of the joint venture, said on top of buying stakes in miners, the investments were being made to secure the long-term supply of critical minerals.
The Gulf was “becoming a much more dynamic place, and much more strategic in the way that players within the region are thinking about how to invest in the sector”, he said.
Saudi Arabia, the region’s biggest economy and the world’s largest oil exporter, is investing heavily in developing its domestic mining sector, and the government sees mining as a third pillar of the economy, alongside oil and petrochemicals.
State-owned miner Ma’aden and sovereign Public Investment Fund have a jointly managed mining investment fund, Manara. Bob Wilt, Ma’aden chief executive, said last year that Manara was planning to build a trading team, and that Manara’s purpose was to “secure offtake of critical minerals” to meet the needs of Saudi Arabia.
However, according to several traders, Manara could not receive metals produced in 2024 by Vale Base Metals, in which it owns a 10 per cent stake, because its trading team was not ready yet.
Manara and Mercuria declined to comment.