SAUDI SHINES SPOTLIGHT ON ITS MINERAL RICHES

Saudi Arabia requires close to USD 13 billion in private sector investment to be able to tap its USD 1.3 trillion worth of mineral reserves, according to a new report.

The report by the US-Saudi Business Council characterises the outlook for the sector as “very favourable”, citing government initiatives to encourage investment.

“These include a planned update of the kingdom’s mining investment code to make it more investor-friendly and the development of a National Geological Database marking out exploration opportunities,” the report noted.

The government has also earmarked SAR 14.3 billion “with the aim of making it easier to conduct business and improving data quality to reduce the risks associated with investing in new mining properties”.

Last year, the kingdom created a new ministry for industry and mineral resources, separating it from the energy ministry, underscoring its importance to the kingdom’s economic diversification plans by 2030.

“It shows you how serious we are about the mining industry,” the minister said in a media interview last year.

Over the past five years, Saudi Arabia has increased its gold production by more than 150% to 10,850 kilograms (kg) by 2018, while silver output has grown more moderately by 8.8% to 5,322 kg, according to the Ministry of Petroleum and Mineral Resources. Copper production surged 44% to 70,450 tonnes during the period.

The country also discovered 2,53 metallic minerals site, including 849 sites for gold, 594 for copper and 258 for silver in 2018, while sandstone (546 discoveries), marl (363) and ore (327) led the non-metallic mineral sites, latest available data from GSTATS show.

Overall, the government issues 2,045 mining licenses in 2018, compared to 2,019 the year before, data shows.

Ma’aden, Saudi Arabia’s Mining Co. has taken up the task of driving the country’s mining and metals production, creating a full-fledge industry that attracts investments from the private sector and foreign investors, as it generate high-paying jobs for Saudi nationals.

As part of its ‘Ma’aden 2025 Strategy, the company aims to spend over SAR 100 million (USD 27 million) for exploration activities in Saudi Arabia and are focused on brownfield drilling, assessment of potential greenfield targets and continued drilling at dozens of prospects.

The company aims to produce one million ounces of gold each year, from its current level of 417,000 tonnes.

“The Ma’aden 2025 strategy also emphasises on diversification of our industrial minerals portfolio. So we are assessing bentonite, graphite, kyanite and diatomite to be included in our portfolio. In the short term, copper and zinc will also receive greater focus in line with our growth strategy,” according to the company.

To date, 48 minerals have been identified in the kingdom over an area of 600,000 square kilometres, of which 15 minerals are commercially viable.

Saudi Arabia’s desire to increase production from its mineral reserves will generate export revenues, but also reduce its import of key metals. The kingdom is the world’s second largest importer of precious metals, third largest in copper, and fifth largest in ceramic tiles, according to the Saudi Arabian General Investment Authority.

Saudi is also a major consumer of phosphate, sodium carbonates, steel and aluminium. The focus on higher production is driven by local demand, primarily in construction materials, with more than 65% of licenses for building material quarries.

“Saudi Arabia has many valuable deposits, including precious and base metals and phosphate. These deposits are currently under-explored and under-extracted when compared to the rest of the world,” said SAGIA. “Which opens the window for large and lucrative investment opportunities for the private sector investors to tap into and serve the under-supplied market.”

The kingdom aims to increase the production of steel to meet long-term demand and achieve more than 80% self-sufficiency in flat products. It will also increase fertiliser production to over 7.5 million tonnes (P205 basis) to become one of the world’s Top 3 phosphate producers.

In addition, Saudi Arabia has ambitious plans to raise its base metals output 10 times, create fully integrated value chains, emerge among the Top 10 in aluminium production, and increase the capacity of conversion industries, according to SAGIA.

Separately, the Saudi Industrial Development Fund (SIDF) announced the expansion of financing in the mining sector, as part of its efforts to boost funding for the National Industrial Development and Logistics Program (NIDLP). The fund aims to contribute to financing mining projects for all types of minerals with a financing rate of 75% of the project's costs eligible for financing.

“The funding has also been expanded to include the final stage of the delineation process, which includes drilling and mining, in addition to backing support services companies that contribute to raising the added value and the sustainability of the sector in the kingdom, “ SIDF noted.