As Arabian Gulf green push accelerates
A Chinese company is set to build a $1 billion lithium battery plant in Oman, a move that underscores China’s growing footprint in the Middle East’s clean energy supply chain and Oman’s ambition to become a key regional hub for green technology.
The agreement was signed between Oman’s Public Authority for Special Economic Zones and Free Zones (OPAZ) and Chinese manufacturer GCL Technology Holdings. The facility will be situated in the Duqm Special Economic Zone, one of the Arabian Gulf’s fastest-growing industrial hubs, offering direct access to shipping routes and global markets.
The project is expected to have an annual production capacity of 25 gigawatt-hours. It will manufacture lithium-iron-phosphate (LFP) batteries, which are widely used in electric vehicles (EVs), energy storage systems, and renewable energy applications. Construction is scheduled to begin in the second half of 2025, with initial production set to commence by 2027.
The move comes as China deepens its strategic investment in the Arabian Gulf region, capitalising on local efforts to diversify economies away from oil and towards green technologies.
Oman, which has historically relied on hydrocarbons for its revenue, is accelerating its Vision 2040 economic diversification plan, targeting growth in renewables, logistics, and advanced manufacturing.
“This investment reflects Oman’s commitment to building a sustainable industrial future,” said a senior OPAZ official in a statement. “It positions the sultanate as a key player in the energy transition across the Middle East and Africa.”
China is the world’s largest producer of lithium batteries and has been aggressively expanding its overseas presence in recent years, particularly in strategic locations that can serve emerging markets. Duqm offers proximity to both African and South Asian markets, which are forecast to see rising demand for electric mobility and grid-scale storage.
The lithium battery plant in Oman will also benefit from low-cost energy, strategic port access, and tax incentives provided by the Omani government to attract foreign investors. Analysts say the project could pave the way for downstream industries, including electric vehicle assembly and battery recycling.
For Oman, the deal signals growing confidence from global investors as it seeks to build new sectors that can absorb a growing youth population and address long-term economic challenges. The country has already announced a series of green hydrogen and solar projects as part of its goal to achieve net-zero emissions by 2050.
From China’s perspective, securing a foothold in the Gulf gives it access to stable manufacturing bases closer to raw material sources in Africa and emerging markets in South Asia.
The agreement follows a wave of Chinese investments in energy infrastructure across the region, from Saudi Arabia to Egypt. With rising global demand for batteries and a surge in clean energy spending, industry experts say such deals are likely to increase in the years ahead.
“The Middle East is becoming an important node in the global battery supply chain,” said an analyst at Wood Mackenzie. “China is making sure it plays a central role in shaping that future.”
The plant is expected to create hundreds of local jobs and could be expanded further depending on demand and policy developments across the region.
Hero image: Lithium-iron-phosphate batteries are widely used in electric vehicles, such as this version exhibited by Chinese automaker Rox Motor at the Make It In the Emirates trade expo held in Abu Dhabi, UAE, from May 19 to 22, 2025. Credit: Arnold Pinto
