Saudi Arabia is bolstering its efforts to diversify the country’s revenue sources away from liquid gold, also known as petroleum, to mining actual gold and other minerals. At the end of December, a new mining law will take effect, making it easier and more financially attractive for both local and international stakeholders to invest in the mining sector.
The kingdom is trying to attract capital from investors like Qasem al-Ali, a Saudi gold investor based in London, who currently invests in Africa. Initiatives such as the new law have spurred Ali to consider investing in Saudi Arabia’s gold industry.
“I believe [the kingdom] when it says that it has ‘untapped mining potential,’” he told The Media Line.
“The [new regulations] makes investment more economically advantageous than it used to be, and the fact that the government is promoting this industry makes me feel more secure about its long-term viability,” Ali added.
Enlarging the Saudi mining sector is a major goal of Crown Mohammed bin Salman, also known as MbS, and his Vision 2030 program, a modernization plan designed to make Saudi Arabia more attractive to foreign investors as it transitions away from almost exclusively oil- and gas-based revenue.
Mining contributes $17 billion to Saudi Arabia’s gross domestic product and is responsible for 250,000 jobs, according to the government-sponsored Invest Saudi website. The hope is to double the number of jobs in mining by 2030, and more than quadruple the sector’s impact on the economy, to $70 billion.
In a recent addendum to the site, figures provided by Khalid al-Mudaifer, vice minister for industry and mineral resources, indicate the new law is expected to get the kingdom in striking distance of its goal 10 years from now, with GDP from mining expected to increase to at least $64 billion, and an additional 219,000 jobs generated specifically for Saudis as a result of the legislation. Saudi Arabia, currently the world’s fourth-biggest importer of minerals, is also expected to reduce its reliance on overseas distributors by $7 billion.
The law consists of “63 articles and is considered a major catalyst to unlock the potential of Saudi Arabia’s mining industry,” according to the addendum. The legislation includes the creation of a funding mechanism to encourage new mining operations.
The government, citing statistics from its National Industrial Development and Logistics Program, estimates the current value of minerals in Saudi Arabia at $321 billion of phosphate, $229 billion of gold, $138 billion of zinc, and $70 billion worth each of iron and uranium.
Saudi Arabia is not the only Gulf state eyeing modernization through mining. In the recently published issue of Technical Review Middle East, Martin Clark reports that Bahrain, Oman and the United Arab Emirates are also boosting their mining sectors with various national initiatives.
There has been an exponential growth within the mining industry. Although the number of industry players has been static, international mining companies have been trying hard to explore the region
Sunil Thacker, a senior partner at the Dubai-based STA law firm, who specializes in mining in the Emirates, has observed the UAE’s growth in mining close-up.
“There has been an exponential growth within the mining industry. Although the number of industry players has been static, international mining companies have been trying hard to explore the region,” he told The Media Line. “For instance, STA has been approached on numerous occasions by some of the world’s largest mining companies to acquire existing mines or to take over an existing project.
“The success is a result of government’s endeavors,” including the construction of infrastructure to facilitate mining projects, Thacker added. “For example, gold and diamonds today account for the second-largest source of revenue at the Dubai Multi Commodities Centre.”
Raw steel, dead burned dolomite, quicklime and hydrated lime, hydraulic cement, gypsum, chromite, ammonia, aluminum, are also being produced, he said, noting that the Al Nasr Coal company and Farlin Group’s Dubai subsidiary are also engaged in coal mining.
The use of coal in the UAE is a major difference between the Emirates and Saudi Arabia. While Riyadh’s new mining law does not address coal and the kingdom has not yet publicly entertained the idea of coal consumption, the Emirates is currently overseeing construction of the Hassyan Coal Power Plant in Dubai, the first in the Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE).