The MENA region is uniquely positioned to become a key producer and exporter of critical minerals and components – helping to build more diversified and resilient global supply chains for green energy. However, capitalizing on this opportunity will require strategic investment and innovation.
As the energy transition accelerates amid growing global power competition and the prospect of trade restrictions, diversifying critical minerals and green technology supply chains – currently heavily reliant on a single supplier market – is essential.
Copper, lithium, nickel, cobalt, and rare earth elements are essential for green energy systems. Deposits of these critical resources are widespread; however, production is concentrated in a few countries – Australia leads in lithium, Chile in copper, and the Democratic Republic of Congo in cobalt. Refining, meanwhile, is dominated by China.
Additionally, China controls over 80% of solar photovoltaic (PV) panel manufacturing, overseeing every stage of production, from silicon and wafers to the final panel assembly. It is also the world’s largest producer of lithium-ion batteries, supplying 70% of the global market, aided by its control of 80% of graphite mining and its low-cost manufacturing capacity, and helping China become the world’s leading supplier of electric vehicles (EVs).
China’s dominance in critical minerals and green energy technologies production makes global supply chains increasingly vulnerable to disruptions. As the energy transition accelerates, diversifying supply chains becomes critical.
MENA’s Minerals Potential
The MENA region is rich in critical minerals. Saudi Arabia, for example, holds significant reserves of copper, zinc, iron, aluminium, manganese, and chromium and is investing heavily in domestic mining and refining. The Kingdom aims to increase its mining sector’s GDP contribution from US$17 billion to US$75 billion by 2035. Other GCC countries have similar goals: the UAE’s minerals and metals industry is expected to reach US$10 billion by 2025, while Oman is prioritizing large-scale copper mining.
These and certain non-GCC MENA countries, notably Jordan, are strategically positioned to capitalize on their vast minerals reserves – utilizing the region’s strategic geographic location and existing trade partnerships to play a larger role in production and export or re-export of critical minerals. In doing so, they have the opportunity to strengthen global supply chains, enhance the region’s economic resilience in a low-carbon future, and help achieve regional and global climate and green energy targets.
Green Energy Components Trade – Key Insights
Despite its resource wealth, MENA remains heavily reliant on imports for green energy components.
The region is on par with global trends with a strong dependence on China for solar PV panels, cells, and EVs, with China commanding around 70% of the market share. The wind industry is less developed in MENA; however, the value of wind turbine imports is rising, with China accounting for 78% of total imports. GCC nations – notably Saudi Arabia and the UAE – demonstrate greater supplier diversification than non-GCC countries, particularly in lithium-ion cells and batteries imports, with the US emerging as a major supplier alongside China.
A deep dive into the green energy component trade reveals some key insights, including –
Electric vehicles
- EVs imports to MENA countries increased 1.5 times in 2023, reaching a value of some US$2.9 billion – equivalent to 2% of the value of global imports. The market is expected to reach approximately US$8 billion by 2028. The UAE, Jordan, and Saudi Arabia are the leading EV importers in the region.
- On the other hand, GCC countries, specifically the UAE, Saudi Arabia, and Qatar, are making significant investments in EV manufacturing. For example, Saudi Arabia's EV brand CEER, backed by the Public Investment Fund, is set to debut its first vehicle in 2025.
- The region has also been active in EV exports/re-exports. The UAE, followed closely by Morocco, leads the region as the top EV exporter. The UAE targets markets within the region and neighboring areas, including Africa, while Morocco primarily focuses on exporting to European markets.
Solar PV
- In 2023, solar PV panel imports to the region increased by 57% to US$2.5 billion, making up 4% of global imports. However, exports remain modest at US$259 million – 0.4% of global exports, with Jordan and the UAE the leading exporters. Saudi Arabia and the UAE lead the solar panels trade.
Lithium cells and batteries
- The MENA region has seen consistent growth in lithium cell and battery imports between 2019 and 2023, with Saudi Arabia and the UAE as leaders. Yet, exports and re-exports remain low. Lithium imports in MENA have grown at an average annual rate of 2.2%, however, exports and re-exports have only increased by 0.8%.
- While the region, non-GCC countries in particular, relies heavily on China for lithium, Saudi Arabia and the UAE have greater diversification of suppliers – with the US being a significant supplier.
Wind power
- Although MENA's share of the global market is relatively small at 4.7%, it is steadily growing, with Saudi Arabia, Egypt, and Morocco leading imports. China dominates, contributing 78% of total imports, with particularly high shares in Lebanon, and near-total dominance in Egypt, Jordan, and Saudi Arabia (99%).
Forging the Path Forward
MENA’s ability to integrate into, and lead segments of, the global supply chain will depend on the development of robust policies, substantial investments, and strong public-private partnerships. Here are five recommendations that can help address existing challenges and unlock new opportunities:
- Diversify supply sources: Minimize dependency on single suppliers for key green energy components by diversifying supplier relationships, investing in alternative technologies, and promoting local manufacturing.
- Develop local and regional manufacturing: Incentivize local production of green energy components through tax benefits, subsidies, and streamlined regulations. This approach would create jobs and reduce reliance on imports.
- Establish free trade zones and re-export hubs: Leverage MENA’s strategic location as a global hub for green energy supply chains by importing raw materials, assembling components, and re-exporting products. Free trade zones, advanced logistics, and trade agreements help boost regional integration and global competitiveness.
- Strengthen trade agreements: Form partnerships with global leaders in critical minerals and advanced technologies to strengthen supply chain resilience and support domestic industry development. Agreements with favorable terms, like reduced tariffs and mutual investments, can boost MENA’s access to global markets.
- Invest in innovation: Promote research and development in sustainable materials and recycling technologies through cross-border collaborations and industry-academia partnerships. Innovations in efficiency and recycling support environmental sustainability, strengthen supply chains, and reduce costs.
This op-ed draws from the comprehensive report, “Strengthening MENA Supply Chains for Clean Energy.”
