Saudis invested in tech and in Swiss banking. Got severely burned. Now opting for the Global South
Spotlight: Saudi Arabia's LatAm strategy
BnamericasPublished: Tuesday, August 01, 2023
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Saudi Arabia's investment ministry officials are touring Brazil, Chile, Costa Rica, Argentina, Panama and Paraguay amid attempts to diversify its economy away from oil production.
Among the first stops of investment minister Khalid Al-Falih was a forum at the headquarters of São Paulo state industries federation Fiesp, in which federal officials also took part.
The forum celebrated the 50th anniversary of Saudi Arabia opening an embassy in Brazil and was used to sign 25 MOUs in the petrochemicals, healthcare, tourism and other sectors.
"The Saudis are interested in assets in a very diversified way in the region, ranging from those linked to the energy transition and mining to agriculture and logistics," Carlos Daltozo, head of equity analysis at Eleven Financial Research, told BNamericas.
“Saudi Arabia’s regional investment model also differs from China’s, [which] usually prefers to take control of assets and projects. Saudi Arabia [prefers] to seek local partners for investments in the region,” added Daltozo, who also participated in the event.
An MOU between civil construction company OEC and the investment ministry involves the former opening a regional headquarters in Saudi Arabia to explore opportunities in consortium with Saudi companies, the ministry said in a statement.
Before the forum, miner Vale announced an accord to sell a 13% stake in its VBM copper and nickel division for US$3.4bn to Manara Minerals, a JV between Ma’aden and Saudi Arabia’s investment fund, the company said in a statement.
The delegation’s tour will end on August 9 in Panama, where other “high-level business-to-business roundtables which will provide the opportunity to explore the potential to deepen existing partnerships” will take place, according to the ministry.
"The visit reflects growing economic ties between Saudi Arabia and the Americas. Last year saw the first Saudi-Caribbean investment forum held in the Dominican Republic while earlier this year, a senior Saudi delegation … visited Costa Rica, the Dominican Republic, Panama and Colombia," it added.
According to the ministry, Saudi Arabia’s non-oil sectors are growing strongly as the country seeks to unlock more than US$3tn in investment through a national strategy – which Brazil wants to take advantage of.
“We need development combined with sustainability. Brazil is committed to combating climate change, to preserving the largest tropical forest in the world, and by making this [energy] transition, we will see several opportunities for investment and partnerships arise,” vice president Geraldo Alckmin said at the forum.
Saudi Arabia, meanwhile, wants to be prepared for lower fossil fuel demand. Peak demand has been reached, with expected further reductions through 2050, BP said in its energy outlook.
"The future of global energy is dominated by four trends: a declining role for hydrocarbons, rapid expansion in renewables, increasing electrification, and growing use of low-carbon hydrogen," the report said.
Pictured: Saudi Arabian and Brazilian federal and state representatives at the forum.
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