Mineral production amidst the economy of uncertainty: Response of metallic and non-metallic minerals to geopolitical turmoil in Saudi Arabia

The significance of Saudi Arabia's involvement in the production of non-metallic and metallic mineral resources, encompassing oil and copper, cannot be overstated. However, this pivotal role is accompanied by inherent uncertainties arising from geopolitical events. This research examines the response of oil and copper production to the economy of uncertainty, represented by decomposed geopolitical risk categorized as “threats” and “acts,” as well as Saudi Arabia's own geopolitical risks. Monthly data from January 1994 to December 2022 are employed, utilizing cross-quantilogram (CQ) and partial cross-quantilogram (PCQ) techniques. The analysis reveals a positive quantile dependence between geopolitical risk “threats” and “acts” and oil production during bearish market conditions with long memory. Conversely, this relationship turns negative in bullish market conditions, particularly at lower quantiles of oil production. Additionally, a significant negative spillover effect is observed from geopolitical “threats” and “acts” on copper production. Furthermore, Saudi Arabia's own geopolitical risks play a crucial role in impeding the production of both oil and copper with longer memory. Nevertheless, the primary contribution of this study lies in its comprehensive examination of the production portfolio of both metallic and non-metallic resources, taking into account the impact of both global and Saudi Arabia's specific geopolitical challenges, thereby representing a departure from previous research in terms of the adopted modelling approach. The policy implications underscore the criticality of addressing geopolitical issues as a means to sustain the momentum of metallic (copper) and non-metallic (oil) resource production, thereby safeguarding the attainment of a sustainable economic trajectory for Saudi Arabia.