Saudi Arabia Looks To Mining As Way To Diversify Its Economy

By Joseph Hammond

Saudi Arabia is known around the world for its vast petroleum resources, its vast mining potential recieved little attention — until now. Zenger News sat down with Khalid Al-Mudaifer the Vice Minister for Mining Affairs, Ministry of Industry and Mineral Resources to discuss the development of the mining sector in Saudi Arabia — including a partnership to develop phosphate mining with an American country.

Khalid was the CEO of Saudi Arabian Mining company (Ma’aden) during a period when revenue grew 20 times over to nearly 4 billion US Dollar. He spoke to Zenger News ahead of the Future Minieral Forum, an investment conference in Saudi Arabia set to take place later this month.

Question: Australia is one of the most mature mining markets in the world and you have taken a number of trips there. What can Saudi Arabia learn from Australia?

Answer: Australia is one of the leading mining countries and one of the largest producers of minerals in the world. While the geographical distance between the two might not make it a likely candidate for emulation, we share an aspiration of growing the mining market and implementing sustainable practices.

Mining in Saudi Arabia is a key part of the economic diversification that is part of Saudi Vision 2030. After oil and gas, as well as petrochemicals, we see mining as a potential third pillar of our industrial growth.

For this to happen, we will require expertise and know-how, and there is no better place than Australia to look for it, where mining is 10% of GDP. South Africa is also a great example of a country where mining is well-developed.

Q: The development of Saudi Arabia’s petroleum industry has been state-driven and owned. Do you foresee a similar model in driving the growth of Saudi Arabia’s mining sector?

A: We see the growth of mining in Saudi Arabia to be largely private sector-led and that is in line with the Saudi Vision 2030 to maximize the profit of the mining sector. As will be codified under Saudi law, the mining sector in Saudi Arabia will be open to all participants. We’re currently undertaking an ambitious geological survey, to confirm estimates that suggest there is $1.3 trillion in mineral reserves in Saudi Arabia.

The process of applying for a license is being streamlined and digitized. Information relevant to the investment ecosystem will be made available online. In crafting our new mining law, we have learned from Australia and Canada, as well as global best practice.

The results speak for themselves, as shown by Saudi Arabia’s major transformation with bauxite and aluminum and coal. We also know Saudi Arabia has significant deposits of coal, copper, zinc, phosphates, uranium and gold. Potential phosphate reserves alone amount to 7.3 billion tons. In fact, we’re working with a U.S. company on developing the Kingdom’s phosphate potential.

Q: Saudi Arabia will soon be hosting the Future Minerals Forum. What’s your vision for this?

A: The simple fact is that we will need more minerals if we are going to lead a transition to a less carbon-intensive economy. We need to produce new tools and produce them more sustainably. We believe the Future Minerals Forum will become the most important mining event for our super-region, which includes Africa, the Middle East, and West and Central Asia. A place for dialogue between investors, managers, NGOs to agree on the future agenda for mining. Unless we regain trust from the world, we cannot have the luxuries we want. Our goal is for this to be an international and pre-eminent global forum.

Q: Saudi Arabia isn’t as established as other mining markets – how do you make the pitch to potential investors?

A: Saudi Arabia is undergoing a powerful transformation. Mining is one part of this and something that we believe can be the third pillar of our industrial growth. Saudi Arabia is underexplored in terms of mining and has high potential. Saudi Arabia is a G20 economy. It’s safe and secure, with a great educated workforce that is very welcoming to foreign businesses interested in mining. The Saudi ecosystem, the ease of doing business, makes ours one of the best choices for miners and mineral processing. We have five years’ incentive grace period for new mines and other incentives as well.

Q: There is a current push toward sustainability in mining. How is that impacting the Ministry?

A: We are positioning the Kingdom to be in line with the current push toward renewable energy. For example, the development of “green hydrogen” for the production of “green steel”. Our location is also a unique one with easy access to Europe, Africa and Asia – that puts hundreds of millions of consumers a short flight away. Less travel is less emissions. So I stress to investors the potential we have here, and we are not stopping. We are working on having new regulations to make mining investment an easier proposition and also environmentally sound. So there is all of this benefit in one jurisdiction with demand for minerals increasing.

Another important aspect of the “green economy” is electrical vehicle batteries, the manufacturing of which can be a complex process. There are a number of parties interested in mining materials for electric vehicles here in Saudi Arabia. We aim to produce 300,000 cars and vehicles each year, in line with Vision 2030. We are engaged currently in 10 megaprojects involving green steel and aluminum. So there is all of this benefit in one jurisdiction with an increasing demand both from within Saudi Arabia and the greater region.