Saudi Arabia Seeks Alternatives to the Dollar and Strengthens Relations with China

Global finance is undergoing major changes, and Saudi Arabia is one of the countries that is changing course. The country is investing heavily in mineral extraction, strengthening ties with China and creating new strategies for trade. Commodities could be the foundation of a new financial order, writes Alex Deluce in The Gold Telegraph.

Saudi Arabia is accelerating a process aimed at making the country’s economy less dependent on oil, and mineral extraction is part of that process. It is one of the cornerstones of the Saudi Vision 2030 strategy.

Saudi Arabia is creating the conditions to become a global player in the extraction of important minerals, which are the basis for the development of future technologies and energy.

The kingdom is looking for ways to exploit the resource-rich Arabian-Nubian Shield. The Arabian-Nubian Shield is a vast geological formation that is rich in minerals.

Saudi Arabia is estimated to have around $2.5 trillion worth of untapped minerals

This could make it a world leader in this field.

In 2023, the kingdom began looking with the United States for ways to secure access to key metals from Africa, showing that the Saudis are not only interested in their own resources, but also want to develop the same direction abroad.

Key Minerals

The minerals in question are key to human development. Saudi Arabia is trying to make mineral extraction one of the most important pillars of the country’s economy. In particular, the focus is on minerals that are very important in the transition to green energy. These include:

• Lithium
• Copper
• Nickel

So how is it done? The country’s largest oil company – Saudi Aramco – is getting into the business of mining lithium. Lithium is a key metal in the production of modern batteries.

Meanwhile, state mining company Ma’aden is in talks to acquire a stake in a copper mine in Zambia, further expanding its global reach.

In 2024, Saudi Arabia’s mining minister announced that the kingdom had no objections to doing business with Canadian companies. Canada is home to a number of mining companies that mine key minerals around the world.

Canadian companies could help the Saudis expand their global mining reach

To pursue its mining ambitions, Manara Minerals has been formed with the support of Ma’aden and the Saudi National Investment Fund. The joint venture has announced that it will invest $15 billion in overseas mines, indicating that the kingdom is keen to secure an ever-increasing share of its mining potential on the global stage.

Saudis Join China’s Cross-Border Payments Project

In addition, the country has announced that it is ready to settle in other currencies instead of the US dollar. In 2024, Saudi Arabia joined the mBridge project, a cross-border payment project for central bank digital currencies created by China.

It is important to note that 135 countries and currency unions, representing 98 percent of the global economy, are actively looking for ways to start using central bank digital currencies (CBDCs).

There is currently a theory circulating that mBridge could start settling trade deficits in gold, offering an alternative to other currencies, particularly the US dollar.

Who is participating in the mBridge project?

Source: mBridge/Alex Deluce

Changes in the Gold Market

What makes this interesting is that China is rapidly increasing its gold reserves. The country is the world’s largest gold producer, the world’s largest gold consumer, and the world’s largest gold importer.

Central banks have been aggressively building up their gold reserves for years. Another intriguing fact is that since March of last year (the previous year being 2024), nearly half of central bank purchases have been unreported. That is, the buyers have not been identified.

Read more on the topic here: Do Central Banks Buy Gold Bullion

In addition, the United Arab Emirates has overtaken London (United Kingdom) in terms of gold reserves, helped by strong demand from Asia. This is currently creating a new “gold corridor” between the BRICS countries.

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These are very critical developments because the so-called petrodollar has been key to Americans. Since 1971, the so-called petrodollar standard has been in place, helping the US dollar maintain its status as the world’s reserve currency.

Anonymous sources speaking to Bloomberg said in July last year that Saudi Arabia in the Middle East had threatened to sell off some of its European bonds if the G7 countries decided to fully seize Russian assets frozen in the West. However, transfers under the mBridge project will be able to use the code on which China’s e-yuan is built.

Saudis Open to Using Yuan

In September last year, a senior Saudi Arabian government official announced that the country was open to other solutions, such as selling oil in yuan.

Who is the world’s second largest oil producer? Saudi Arabia. Who is the world’s largest oil importer? China.

As China’s currency becomes more widely used in production of oil and oil trade, the yuan will also become an increasingly international currency

Of course, this change will not happen overnight, but these steps will gradually undermine the dollar’s position. Trade will become increasingly local, and countries will have an incentive to increase the share of neutral reserves – such as gold.

Saudi Arabia’s Public Investment Fund (PIF) has signed deals worth a total of $50 billion with six Chinese institutions, further strengthening ties between the two countries. The world of finance and mining is changing rapidly, and Saudi Arabia is trying to position itself accordingly.

The world is watching closely because Saudi Arabia is not only changing the foundations of its economy. They are also challenging the current financial world order and economic growth. The Saudis want to have a large and decisive power in a changing world, whether it is energy, finance or global trade.

The question is no longer whether change is coming, but how quickly it will happen. One thing is clear: at the centre of it all will be gold.