Saudi Arabia - Country Commercial Guide
Mining and Minerals

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2019-10-13

Overview

Saudi Arabia’s mining sector continues to expand and provides a growing opportunity for U.S. companies. The government plans to make mining the third pillar of the economy, alongside oil and downstream petrochemical production. In March 2018, former Saudi Energy Minister Khalid Al-Falih announced that the Kingdom has $1.3 trillion worth of mining resources and aims to quadruple the size of its mining, renewables and logistics sectors.  The Ministry of Energy, Industry and Mineral Resources (MEIMR) seeks to increase mining’s contribution to GDP from $3 billion (over the last five years) $64 billion by 2030 and generate more than 25,000 new jobs in the industry. 

Recent changes in Saudi Arabia’s mining laws have created conditions which allow greater access for foreign investment in the Kingdom’s mining sector. The new laws allow for companies to work either with Saudi’s parastatal Saudi Arabian Mining Company (Ma’aden) or through joint ventures with local companies. Furthermore, there are sizable domestic, regional and neighboring markets in the Middle East and Asia for high grade, industrial raw materials from Saudi Arabia.

Ma’aden continues to grow at brisk pace and has more than tripled its net income from 2017 to 2018.  Furthermore, Ma’aden’s first international acquisition of Mauritius-based Meridien is expected to close in the third quarter of 2019.

Saudi Arabia offers medium risks to investors with a quality transportation network, low utilities costs, low crime rates, and limited employment costs due to the lack of an official minimum wage. However, incoming businesses face significant labor market risks due to a small domestic labor force with basic numeracy and literacy skills, a lack of female workers and rising government focus on creating more jobs for Saudi citizens, which restricts the number of skilled foreign laborers.

Phosphate

Ma’aden’s phosphate operations consist of Ma’aden Phosphate Company (MPC) and the newly-built Ma’aden Wa’ad Al Shamal Phosphate Company (MWSPC). MPC is a joint venture with Saudi Basic Industries Corporation and represents a $5.6 billion investment operating at two primary sites: Al Jalamid in northern Saudi Arabia, home to a phosphate mine and beneficiation plant; and the Eastern Province’s Ras Al Khair, where their integrated chemical and fertilizer facility is based.

The mining and beneficiation facilities produce close to 11.6 million and 5 million tons of ore each year. At full capacity, MPC can produce 3 million tons of diammonium phosphate annually, most of which is sold internationally.

Ma’aden’s second major project is the fully integrated MWSPC - a joint venture between Ma’aden (60%), SABIC (15%) and the US-headquartered Mosaic (25%), the world’s largest producer of phosphate fertilizers. With some $8 billion of investment, the new complex includes seven large plants and associated facilities, making it one of the largest phosphate facilities in the world.

Total production capacity is close to 16 million tons per year including 3 million tons of finished products as well as 440,000 tons of downstream products. During the second quarter of 2019, 1.2 million tons of ammonium phosphate fertilizer were sold – an increase of 69% over the second quarter of 2018.

Ma’aden’s third phosphate project is on a remote Saudi plateau just south of the border with Jordan. Bechtel is managing the creation of Waad Al Shamaal City and an associated mining complex. Valued at $7.5 billion, construction began in 2013, and is expected to be completed in 2022.

Aluminum

In 2009, Ma’aden established a joint venture with Alcoa, the world’s third-largest aluminum producer, to build an efficiently integrated aluminum project in Saudi Arabia. This $10.8 billion project includes a bauxite mine, a refinery, a smelter (production capacity of 740,000 tons per year) and one of the world’s most advanced rolling mills (production capacity of 380,000 tons per year).

The aluminum project involves the development, design, construction, and operation of two sites integrated in a mine-to-metal network: Al Ba’itha in the northern Qassim province, and an integrated aluminum complex in Ras Al Khair Industrial City. The mine’s estimated production is 4 million tons per year of bauxite and is transported via the North-South railway line to Ras Al Khair.

Gold and Base Metals

The most developed and lucrative sector of the Saudi mining industry continues to be gold. Ma’aden operates six gold mines in western Saudi Arabia, including the Ad Duwayhi mine which began commercial production in 2017, and produced 275,000 ounces in 2018. Ma’aden plans to spend $67 million on new exploration in 2019, marking a three-fold increase in its investment commitment on previous years. It also launched an Accelerated Exploration Program to shorten the time needed to move new discoveries into development.

Ma’aden’s Gold and Base Metals Company (MGBM), manages the production and sale of Ma’aden’s gold, copper, silver, and zinc, with gold accounting for the largest segment. MGBM produced 415,000 ounces of gold in 2018, and aims to increase this to 1 million ounces a year under Ma’aden’s 2025 strategy.

Copper

Ma’aden Barrick Copper Company is a 50-50 joint venture between Ma’aden and Barrick Middle East. In 2018, it produced 55 million pounds of copper.  With 117 million pounds of measured and indicated copper resources, 13 million pounds of inferred copper resources, and 712 million pounds of proven and probable copper reserves, Ma’aden-Barrick expects to produce 45-60 million pounds of copper in 2019.

Leading Sub-Sectors

Ma’aden’s 2025 strategy spells out a clear growth path for phosphate fertilizers, taking into consideration Ma’aden’s potential to achieve its planned growth in line with global supply and demand.

Feasibility studies are underway to build a third large-scale phosphate fertilizer project, which will add three million tons of capacity, positioning Ma’aden among the top three producers and exporters in the world.

Feasibility studies are also ongoing for gold mining in three locations – Mansourah, Massarah, Al-Rajoum. Ma’aden is planning further investments in gold and base metal exploration as part of its 2025 strategy.

Opportunities

Saudi Arabia requires mineral processing technology, equipment, and proven expertise to develop mineral-based manufacturing. The mining industry needs consulting engineering companies, drilling and chemical testing, and related equipment manufacturers/suppliers. Industrial minerals targeted for mining include:

        Feldspar and feldspathic sand

        High purity quartz that has potential for further upgrades to produce fused quartz

        Cultured quartz, silicon and polysilicon

        White mineral fillers such as talc, silica, wollastonite, and magnesite

        Limestone, with upgrades to produce ground calcium carbonate (GCC) and products such as lime, hydrated lime, and dolime

        Basalt, with upgrades to products such as basalt fiber, composite materials, and tiles; and Bentonite

Web Resources

Business Monitor International: https://bmo.bmiresearch.com/home

Barrick: https://www.barrick.com/operations/jabal-sayid/default.aspx

Saudi Arabian Mining Company: http://www.maaden.com.sa/en

Haisum Shah, Commercial Specialist, U.S. Consulate General Jeddah, Saudi Arabia, Email: haisum.shah@trade.gov, Tel: +966-12-667-0080, Ext 4612