10.29% Dividend Yield: Vedanta To Invest $2 Billion For Copper Projects In Saudi Arabia; Stock In Focus

To support Saudi Arabia's Vision 2030, Vedanta, controlled by billionaire Anil Agarwal, has announced plans to invest $2 billion in copper projects within the Kingdom. The investment will establish a greenfield copper smelter, a refinery, and a copper rod production facility.

Collaboration with Saudi Arabia

On November 26, Vedanta signed a Memorandum of Understanding (MoU) with Saudi Arabia through its subsidiary, Vedanta Copper International. This collaboration is aimed at bolstering the Kingdom's copper supply chain and exploring untapped mineral resources.

Chris Griffith, CEO of Base Metals at Vedanta, emphasized Saudi Arabia's potential, stating, "Our projects will enhance the Kingdom's self-reliance in the copper supply chain. Saudi Arabia has been a leader in oil exploration and hydrocarbons for decades, but it is now poised to tap into its unexplored mineral potential."

Expanding Copper Capacity

The greenfield copper smelter and refinery will have a production capacity of 400 kilotonnes per annum (KTPA), while the copper rod project will add another 300 KTPA. Both facilities are proposed to be set up in the Ras Al Khair Industrial City.

As per Vedanta, the copper rod project is expected to commence commercial operations by the fourth quarter of FY26. These initiatives are projected to contribute approximately $19 billion to Saudi Arabia's GDP, create thousands of jobs, and drive the development of downstream industries.

Surging Copper Demand in Saudi Arabia

The demand for copper in Saudi Arabia is anticipated to more than double by 2035, from the current requirement of 365 KTPA, which is primarily met through imports. The Vedanta projects aim to bridge this gap, aligning with the Kingdom's objective of becoming self-reliant in critical minerals.

Vision 2030

Saudi Arabia's Vision 2030, launched in 2016 under King Salman and Crown Prince Mohammed bin Salman, aims to diversify the Kingdom's economy by reducing its dependence on oil. The initiative includes investments in renewable energy, tourism, and large-scale projects like the NEOM megacity.

One of the key areas of focus is unlocking the Kingdom's estimated $1.3 trillion in mineral resources. By the end of the decade, the contribution of the minerals sector to Saudi Arabia's GDP is expected to grow from $17 billion to $64 billion. Mining, previously a minor sector in the Saudi economy, is now pivoting towards materials like bauxite, copper, zinc, phosphate, and precious metals.

The Vedanta investment is part of nine deals worth over $9.32 billion signed by Saudi Arabia with foreign companies, including China's Zijin Group. These efforts aim to attract $100 billion annually in foreign investments under Vision 2030.

Global Copper Demand on the Rise

As the world transitions to sustainable modes of transportation and increased electrification, global copper demand is expected to surge. Projects like those led by Vedanta will play a role in meeting this demand, ensuring resource availability for renewable energy and electric vehicle production.

Engagement and Planning

The partnership between Vedanta and Saudi Arabia was preceded by high-level discussions, including visits from senior officials of Saudi Arabia's Ministry of Mines and National Industrial Development Centre to Vedanta's Indian operations. These engagements laid the groundwork for the strategic collaboration announced this week.

Vedanta's shares were trading with a slight dip of 0.5% at Rs 446.4 on the National Stock Exchange (NSE) as of 2 pm on Wednesday. However, the stock has delivered impressive returns, surging nearly 120% over the past year.