Vedanta is set to invest $2-billion to build copper-processing facilities in Saudi Arabia, a significant boost for the kingdom’s ambitions to become a global metals and mining hub.

The firm, controlled by Indian billionaire Anil Agarwal, will build a new smelter and refinery with a capacity of 400 000 metric tons per year, according to a statement Tuesday. Vedanta also plans to set up a facility to produce as much as 300 000 t/y of copper rods, a key raw material for electric cables.

“It’s just impossible to ignore the demand for copper,” Chris Griffith, CEO of Vedanta Base Metals, said in an interview. “This project ties in very nicely, both with our own ambitions as Vedanta to grow our footprints in India and the Middle East, but also with the industrial growth strategy in Saudi Arabia their desire to secure a copper supply chain.”

The firm plans to commence operations in the kingdom with a 125 kiloton per year copper rod mill project that will require an investment of about $30-million, it said in a statement. Full commercial production is expected to start in 2026.

Vedanta’s $2-billion investment will be among the biggest by a foreign firm backing Saudi Arabia’s metals strategy, and a major boost for Riyadh’s efforts to attract foreign direct investment to help drive Crown Prince Mohammed bin Salman’s economic diversification plan.

“This part of the Middle East is where the next wave of growth is happening,” Griffith said. Vedanta hasn’t yet inked further agreements with Saudi companies but there will be opportunities to partner with local firms, he said.

The kingdom, which aims to become a hub for mining and metals processing for the Middle East and Africa, estimates it has untapped resources including phosphate, copper, gold and bauxite worth as much as $2.5-trillion. Officials are keen to build out the industry, including a push internationally.

Many of these commodities are crucial for decarbonising the world’s economies, with demand for copper expected to jump over the next few years. That’s triggered a rush for control of assets, and for the technology and money needed to turn the critical minerals from their raw state into usable products.

But the recent construction of new copper smelters in China, India and Indonesia has created major commercial strains across the industry, with processing fees that cover the cost of turning raw ores into refined metal on course to hit record lows next year. With mine supply growing less quickly than refining capacity, it’s likely that some smelters will need to curtail output due to the collapse in margins and shortages of feedstock.

Vedanta expects global annual demand for copper to increase by 40% by 2040. “I think we what we’re going to have to see in any event is much higher copper prices to incentivize new copper production,” Griffith said.