SAUDI GOLD RUSH: MA’ADEN STARTS ITS LARGEST PROJECT

Saudi Arabia’s mining industry is set to produce an additional quarter of a million ounces of gold soon.

The Saudi Arabian Mining Company, or Ma'aden, awarded a contract to Outotec and Larsen & Toubro consortium to complete the engineering, procurement, construction, pre-commissioning, commissioning and start-up assistance for its Mansourah & Massarah project in the country’s central region.

The project will be the company’s largest ever gold undertaking, producing an average of 250,000 ounces of the yellow metal per year over its lifetime. Total investment in the mine is expected to reach SAR 3.3 billion. Ma’aden is 65.43% owned by the Public Investment Fund, the kingdom’s sovereign wealth fund, while the remaining stake is owned by public shareholders.

Located in the mineral-rich central Arabian gold region, the project is expected to be completed in 2022, and will include training services to develop national cadres on project engineering, operations and maintenance.

In another landmark move for the region’s mining industry, the plant will have the capacity to produce four million tonnes per annum of the complex refractory ores contained in the deposit – the first time such ores have been mined and processed in the Middle East.

“Mansourah & Massarah deposit are purely Ma’aden sole discovery where no previous work have been implemented in that area by any previous mission, and we are proud of this project which was discovered through the activities of the Ma'aden Exploration Team, which carries out extensive mining exploration programmes, as announced earlier this year," said Darren Davis, chief executive officer of Ma’aden.

The project will increase the company’s gold production to one million ounces a year. Another key highlight of the development is that it will be the first in the country to utilise solar power as an energy source.

The project will also benefit from treated wastewater through a 430-kilometre pipeline from the municipality of Al Ta’if to the remote and water-scarce region where the mine will be located, according to the company.

Ma’aden already operates six gold mines in the kingdom, including the Ad Duwayhi, which produced roughly 250,000 ounces of gold last year. The company has budgeted to increase its investment threefold this year to SAR 295 million compared to the previous year, as it aims to develop new exploration concessions.

Ma’aden has also launched an Accelerated Exploration Programme to shorten the time needed to move new discoveries into development. The Ma’aden Gold and Base Metals Company (MGBM) manages the production and sale of the company’s gold, copper, silver and zinc, with gold accounting for the biggest segment.

Saudi Arabia’s mining sector is gaining attention with 11 new foreign companies receiving licenses in the first quarter of 2019, compared to only three in the same period last year, according to the Saudi General Investment Authority.

In April, Ma’aden made its debut international acquisition with an 85% stake in Mauritius-based Meridian Group in an all-cash deal.

The purchase will provide one of the Middle East’s largest phosphate producers with 3,000 staff and a network of operations across southern Africa, from Malawi to Mozambique, Zambia and Zimbabwe. Phosphate is used to produce fertiliser, which is essential in replacing the phosphorous mineral that is removed from soil when agricultural plants are harvested.

“This acquisition marks a very important step in Ma’aden’s strategy to build global distribution channels for our fertiliser products,” said CEO Davis. “As we continue to build one of the largest producers and exporters of phosphate fertilisers in the world, ensuring an efficient route to key growth markets is critical to our success.”

The stake marks a gateway into the African market, and can play a role in reducing poverty, boost intra-Africa trade and rapid industrialisation.

“The southeast African market, like most of the African continent of one billion people, is witnessing increased demand for phosphate fertilisers that industry analysts expect to continue growing by 5% annually over the next decade, fuelled by population growth and increasing education in the use of fertilisers,” the company said.

As part of the deal, Ma’aden will acquire the remaining 15% of Meridian’s equity over four years on agreed terms linked to the performance of the African company, which distributes approximately half-a-million tonnes of fertiliser through its network of granulation and blending plants, warehousing complexes and port facilities.