Sunday April 26, 2020
Bandar Al-Khorayef. (Supplied)
RIYADH: The Saudi minister of industry and mineral resources, Bandar Al-Khorayef, has issued seven decisions relating to the largest allocation process for mining-reserve sites in the Kingdom. They include 54 sites covering an area of approximately 4,000 square kilometers. The decisions are part of the leadership’s goal to develop the mining sector.
The sites — which contain a variety of ore, including gold, copper, silver, zinc, lead, iron, quartz and tin — are in the regions of Riyadh, Makkah, Madinah, Asir, Hail and Najran.
The identification of the mining sites comes as the ministry aims to offer an attractive environment for local and international businesses to invest in the sector, and provide the data needed to attract the interest of the private sector. The Saudi Geological Survey plans to carry out a thorough study of the mining reserves, the results of which will be used to promote investment opportunities.
Abdulrahman Al-Rashed, a member of the Shoura Council’s finance committee, said the Kingdom is rich in natural resources, especially minerals, and the decisions will open up the mining sector to investors. Other mineral sources in the country have not yet been opened up for investment, he noted, and added that mining companies around the world recognize the importance of these opportunities.He also commended the transparency of the decisions, which delineate clearly the responsibilities of the authorities and local or foreign investors. The Ministry of Industry and Mineral Resources drafted the laws regulating the mining industry after studying international experiences in the sector, said Al-Rashed, a former chairman the Council of Saudi Chambers. They are in line with global mining laws and offer investors many concessions, he noted. In addition, he said it is highly likely the authorities will offer incentives to attract investors, just as they were offered to petrochemicals and gas investors in the 1970s.
He added that he expects international businesses to register an interest in investing in the sector given the quality of the Kingdom’s mineral reserves.
Economic adviser Abdullah Al-Barrak said the infrastructure needed to attract investment in the mining sector has been improved in recent years and the prices of precious minerals have been rising of late, making investment more attractive than ever.
“This is the right time to open up the mining sector for investment,” he said. “In fact, the government started thinking seriously about this sector about eight years ago but decided to go ahead now because the opportunities are more favorable for local and foreign investors, besides which the mining infrastructure is robust and ready for vital investment.”
Fadhel Saad Albuainain, an economic analyst, said Saudi Vision 2030 targets the development of a number of vital sectors, including mining, to diversify the Kingdom’s economy, create new industries and increase GDP. The Saudi mining sector is potentially huge but requires massive investment and input from experts with considerable experience in the field.
“Privatization is instrumental to the mining sector,” he said. “Still, special attention should be given to the nature of contracts and the government’s return on these investments. The future production variables and profit maximization should be taken into consideration so as to allow the government to have a share of the future returns.”
The privatization of the mining sites should be carried out based on a fair assessment of the reserves that meets the needs and interests of both the investor and the government, Albuainain said. However, a degree of hedging in allocation contracts is important to allow for variations in capacity and prices, he added.