The kingdom’s unused mineral resources are estimated at $1.33 trillion

The kingdom’s unused mineral resources are estimated at $1.33 trillion

$64bn boost in GDP with new mining law

The Saudi Arabian government aims to more than triple the mining sector’s contribution to the nation’s economic output and to create more than 200,000 direct and indirect jobs in the sector by 2030

July 2020

The new Mining Investment Law in Saudi Arabia, approved by the Council of Ministers last month, aims to accelerate foreign investment in the sector as part of efforts to diversify its economy away from hydrocarbons.

The new law facilitates investor access to financing and supports exploration and geological survey activities, state news agency Saudi Press Agency (SPA) said, quoting the minister of mining and industry, Bandar Alkhorayef.

“This will help attract local and foreign investors and eventually raise mining sector participation in gross domestic product (GDP),” he added.

Alkhorayef described the law as a strategic initiative that will boost the mining sector’s contribution to gross domestic product by over SR240 billion ($64 billion), reduce imports by SR37 billion, and create 200,000 direct and indirect jobs by 2030.

The Saudi government aims to more than triple this sector’s contribution to the nation’s economic output and to create more than 200,000 direct and indirect jobs in the sector by 2030.

Riyadh’s efforts to build an economy that does not largely rely on oil and state subsidies involves a shift towards mining vast untapped reserves of bauxite, the main source of aluminium, as well as phosphate, gold, copper and uranium.

The energy ministry estimates the kingdom’s unused mineral resources to be valued at SR5 trillion ($1.33 trillion).

In April, the cabinet approved setting up a state-owned, joint-stock company for mining services. Currently Saudi Ma’aden is the kingdom’s sole miner, producing gold and copper and has in recent years expanded into the production of aluminium and phosphates. It is 65 per cent owned by the kingdom’s Public Investment Fund.

Alkhorayef  said the law consisting of 63 articles is expected to achieve, in the near future, a qualitative shift in the mining sector and the mineral industry in the Kingdom, with optimal exploitation of mineral resources all over the Kingdom that are valued at a total of about SR5 trillion.

“The mining law is one of the most important goals of the program of developing the national industry and logistic services. It is also a major program that contributes to creating an attractive investment environment in the mining sector to achieve the goals of the Kingdom’s Vision 2030,” the minister pointed out.

AlKhorayef said that among the foundations of the mining and mineral industry strategy and its multiple initiatives are sector governance, enhancing transparency and increasing investor confidence in the sector, which are guaranteed in the new mining investment law.

The other goals of the law include achieving sustainability for the sector through great attention to preserving the environment, monitoring and achieving compliance with environmental, health and safety regulations for workers in the sector and local communities and motivating them to participate.

He said among the most important amendments in the new law is the establishment of a mining fund to ensure continuous financing for the sector and support the activities of geological survey and exploration programs, which will attract domestic and foreign investments and accelerate the activities in the field.

Alkhorayef said the ministry aims to make the mining sector the third pillar of the Saudi industrial sector by ensuring good governance, clear-cut regulations and a well-defined licensing system.

The new law is in line with the objectives of the National Industrial Development and Logistic Program (NIDLP), which seeks to transform the Kingdom into an industrial power and logistics hub.

NIDLP CEO Sulaiman Al Mazroua said the new law will benefit other major sectors and create job opportunities for Saudi youth.

“The approval is bound to contribute to the development of the sector and reinforce its pivotal role in bolstering the sector’s competitiveness, creating quality jobs, ability to attract lucrative investments, and enabling further downstream industries,” he said.

Al Mazroua said the new law is comprehensive and covers all aspects of the mining and metals industry. It will help transform the sector into the third major pillar of the national economy, he added.

Saudi to offer 54 mining sites over a three-year period

Earlier, in May, Saudi Arabia had announced to offer 54 mining sites for exploration to private investors within plans to restructure its massive mining industry and lure in private capital to diversity its oil-reliant economy.

The Industry and Mineral Resources Ministry will offer the sites in various parts of the Gulf Kingdom in auctions over the next three years, the Ministry’s Undersecretary Khalid AlMudaifer told the Saudi Arabic language daily Aliqtisadia.

He said the Shura council (appointed parliament) has approved the creation of a mining investment company to oversee private ector activities in the mining sector.

“The Ministry has launched 27 initiatives to support private sector investors in the mining industry and facilitate their mining activities in the Kingdom,” he said.

Mudaifer did not elaborate on those initiatives but said they involve the allocation of nearly SR180 billion ($48 billion) with the aim of “expanding the mining sector.”

In 2018, Saudi Arabia had unveiled plans to restructure its 1.3-trillion-dollar mining industry to attract private capital into the sector and expand sources of income.

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