Saudi Arabia needs about $13 billion (Dh47.7bn) in private sector investment to fully exploit the potential of the kingdom’s $1.3 trillion worth of mineral endowments, a new report has said.
The study into the country’s mining sector by the US-Saudi Business Council describes the outlook for the sector as “very favorable”, 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 government has also earmarked 14.3bn riyals (Dh14bn) “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”.
“The main aspect the government is attempting to drive is private sector participation. This has been a significant challenge as [Saudi Arabian Mining Company] Ma’aden has been the sole entity responsible for the development of the mining sector,” the report’s author, economist Albara’a Alwazir, told The National.
Ma’aden is majority owned by the Public Investment Fund, the kingdom’s sovereign fund. PIF’s governor, Yasir Al Rumayyen, recently became chairman of Ma’aden. The company earned 1.9bn riyals in profit in the first nine months of the year on revenue of 10.3bn riyals.
The mining and quarrying sector made up 30.1 per cent of the kingdom’s nominal gross domestic product last year, but that figure included oil and gas extraction. Excluding this, the sector contributed 1.4 per cent of GDP. Although small, this figure has been growing at a compound rate of almost 5 per cent a year as Ma’aden has undertaken huge projects in the north of the country mining bauxite for an aluminum smelter and phosphates for fertiliser use.
Under the Saudi Arabia’s Vision 2030 economic diversification plan, the Ministry of Industry and Mineral Resources is looking to increase contribution of mining to GDP to 240bn riyals in 2030, up from a stated 17bn riyals.