Executive Summary
Supply Chain Risks
The transition to clean energy is shifting the global reliance from hydrocarbons to critical minerals and technologies, sharpening the focus on the supply chains needed to source critical minerals and manufacture clean energy technologies, and emphasising the need to diversify suppliers and build resilience against external shocks. Energy security depends on reliable, affordable access to energy sourced from diversified suppliers. However, rising demand for clean energy technologies has exposed the risks tied to the geographic concentration of critical minerals resources, and refining and manufacturing processes. Minerals such as copper, lithium, nickel, cobalt and rare earth elements (REEs) are essential for clean energy systems. Deposits are located in multiple regions around the world; however, production and refining operations remain concentrated in just a few countries. Australia leads lithium production; Chile is the top producer of copper; and the Democratic Republic of Congo dominates cobalt production. China, however, has emerged as the primary refiner of these minerals. Indeed, China dominates every stage and process in the global clean energy supply chain, posing risks associated with a heavy reliance on a single supplier, and underscoring the need for diversification.
Opportunities: Resource Development and Localisation
The MENA region is resource rich. It has dominated oil and gas production and also has the opportunity to play a pivotal role in clean energy systems. The region boasts vast reserves of critical minerals, precious metals, and industrial materials, specifically in Saudi Arabia, Jordan, the United Arab Emirates (UAE), Oman, and Egypt. As demand for metals, REEs, and other critical materials surges, these resources offer strategic opportunities for localisation, industrial diversification, supply chain strengthening, and sustainable economic growth. Through value chain integration and investing in local industries to produce and export/re-export of critical materials and components, MENA countries can enhance the resilience of clean energy supply chains and grow their role in global supply chains. This will not only strengthen said supply chains but also accelerate the energy transition within the region and increase the region’s economic resilience in a low-carbon future.
Clean Energy Components and Imports
On par with global trends, the MENA region has a high reliance on China for clean energy components. Solar Photovoltaic (PV): Total imports of panels (also known as modules) to the MENA region were valued at $2.5 billion in 2023. This is equivalent to 4% of global imports. MENA countries rely heavily on China for solar PV panels and cells. Wind Power: Though less developed than the solar industry in MENA countries, import value is on an upward trajectory, with China the dominant supplier, accounting for 78% of the region’s turbine import value. Electric Vehicles (EVs): Total EV imports to MENA increased 1.5 times in 2023 to reach a total value of $2.9 billion, representing 2% of the world’s imports. China leads among suppliers with a 70% market share. EV sales in MENA will continue to grow, driven by the development of local EV manufacturing capacity in the countries of the Gulf Cooperation Council (GCC), as well as Morocco, as part of economic diversification plans. Lithium Cells and Batteries: Non-GCC MENA countries rely heavily on China, while Saudi Arabia and the UAE exhibit greater diversification of suppliers, with the USA a key supplier in addition to China. Electrolysers: In electrolyser imports, partnerships differ. Morocco collaborates with European Union member states, specifically, Italy, Germany, Portugal, France, and Belgium, with less focus on China. China is, however, a key partner of GCC nations, including Saudi Arabia, Oman, and the UAE.
Next Steps
MENA's ability to integrate into, and lead segments of, the global supply chain will depend on adequate policies, substantial investments, robust public-private partnerships, and targeted capacity building.