MINING

EXPANSION ON THE HORIZON FOR PHOSPHATE PRODUCTION

Saudi Arabia Mining Company (Ma’aden) is one step closer to completing its massive phosphate expansion.

The company said in June it has completed commissioning of utilities on a USD 900 million ammonia plant in Ras Al-Khair industrial City. It is the first project in the USD 6.4 billion ‘Phosphate 3’ expansion of Ma’aden’s phosphate fertiliser portfolio. The ammonia plant is expected to be completed by the fourth quarter of 2021.

“This is a tremendous milestone for our phosphate portfolio,” said Abdulaziz Al Harbi, CEO of Ma’aden. “The ammonia plant expansion will add over 1 million tonnes ammonia production to reach 3.3 million tonnes, making Ma’aden one of the largest ammonia producers east of the Suez Canal”.

The expansion project will boost Ma’aden’s production capacity to more than 9 million tonnes, making the company one of the top three global phosphate fertiliser producers and the second largest phosphate fertiliser exporter.

“Ma’aden’s mine-to-market phosphate business consists of three mega projects in Saudi Arabia: Wa’ad Al Shamal, the centre of the Saudi phosphate industry; Ras Al Khair, a phosphate and bauxite processing superhub; and Phosphate 3,” according to the company. “In 2019, Ma’aden expanded the reach of its phosphate business in sub-Saharan Africa through the acquisition of fertiliser distribution company Meridian Group, enabling faster and better service for local customers in Africa.”

GOLD PROJECT

Separately, Ma’aden also signed a contract in June with Jac Rijk Al-Rushaid Contracting & Services Co. for operational mining services at the Mansourah & Massarah gold mines, for an investment value of USD 880 million, making it Ma’aden’s largest and most ambitious gold project to date.

Jac Rijk Al-Rushaid Co. Ltd. will provide drilling, scaling, loading, hauling, re-handling, ore control, dewatering, and crusher feed services.

The Mansourah & Massarah site is expected to be completed by 2023, and contribute a quarter of gold production towards the company’s output goal of 1 million ounces per year by 2025.

The Mansourah & Massarah site is the latest of six mines under operation by Ma’aden and a vital plank in Saudi Arabia’s effort to boost its mining sector.

“This investment represents Ma’aden’s commitment to maximising the mining industry’s contribution to the development of local content,” according to the company. “In 2020, 74% of Ma’aden’s supply chain was placed with local suppliers, and we are now pushing beyond that number.”

Gold currently makes up 20% of the company’s portfolio, and the focus on the countercyclical commodity played an important role in ensuring that Ma’aden’s performance during the pandemic remained stable.

The company reported net profit of USD 164 million in the fourth quarter and strong cash flows, supported by the diversity of Ma’aden's product portfolio, which includes market cycle followers such as gold, phosphates, ammonia and aluminium.

The kingdom is also planning to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, with the aim to triple the mining sector’s GDP contribution to SAR 240 billion and double the number of jobs to 470,000 by 2030, according to a media report.

NATURAL RESOURCE WEALTH

The kingdom is home to at least 15 metals and minerals, and boasts reserves of untapped minerals and metals valued at SAR 4.88 trillion, with 20 million ounces of below ground gold reserves alone, according to Invest Saudi.

The kingdom is also boosting its support for the mining and metals processing industry through multiple logistics projects.

“These include a 2,750 kilometre North–South railway connecting Al-Jalamid mine with processing facilities in Ras-al-Khair Industrial city (RIC), a 'world-class metals and minerals city' with integrated industrial complexes, ports and an end-to-end ecosystem,” according to Invest Saudi.

“Waa'd Al Shamaal City includes Ma’aden's phosphate mining expansion and many other large world class facilities allowing for a production capacity of 16 metric tonne (Mt) per year. Additionally, more than SAR 90 billion (USD 25 billion) is being invested in new mining ventures and plants to process industrial ores.”

Another advantage for Saudi Arabia is its proximity to the key markets of South Asia and East Asia, which are major importers of a range of commodities. The large demand, coupled with the abundance of resources in Saudi soil, creates significant investment opportunities for private sector investors, Invest Saudi added.

COMMODITY INDEX

Global commodity markets have been surging this year. Year to date, the S&P GSCI Index, a major commodity benchmark, climbed nearly 30%.

Metal prices eased 1.2% in June, following a large drop in copper (-5.2%); iron ore and nickel gained 3.2% and 2.3%, respectively, while the other metals changed little, according to the World Bank. Precious metals were down 1.1%, led by a 7.4% decline in platinum.