Saudi Arabia shortlists three finalists for mining exploration licences at Khnaiguiyah

The mineral-rich site is the largest in the kingdom with 25 million tonnes of zinc and copper ores deposits

The Riyadh skyline. Saudi Arabia is aiming to attract investments worth $32 billion to its mining and minerals sector. Ali Jarekji / Reuters

Saudi Arabia on Thursday announced the final list of three competitors for a mining exploration licence for the kingdom’s largest mining site, Khnaiguiyah, approximately 175 kilometres west of Riyadh.

The three companies that will enter the final stage of the licence application are all consortiums — one of them consisting of Alara Saudi Ventures, Resources and AlTasnim Enterprises, another comprising Saudi Arabian Mining Company “Maa'den” and Ivanhoe Electric Inc, and the third between Moxico Resources and Ajlan and Bros Mining Company.

The Khnaiguiyah licensing process is part of a programme by the Ministry of Industry and Mineral Resources to transform Saudi Arabia’s mining sector.

Authorities are pursuing investments to tap the potential of the kingdom's geological assets and to create an overall mining ecosystem that operates more efficiently, transparently and fairly, the ministry said.

"The ministry received numerous inquiries and six proposals from companies around the world seeking to explore the site, and the ministry is looking forward to the third and final stage of the licence application process, which will kick off on September 4,” it said.

In addition to the elements directly related to exploration and mining experience — and another important demonstration of the ministry’s transformation efforts and focus on environmental, social, and corporate governance — bidders highlighted their social programmes in support of their proposals.

This included improvements to the local community healthcare and education infrastructure, and commitments to create jobs and develop training programmes for local residents.

The finalists for the Khnaigiuyah licensing round are benefiting from Saudi Arabia’s position as one of the most competitive mining jurisdictions in the world, the ministry said

“In addition to the fair and transparent application and review process, the kingdom offers unrivalled incentives to attract investors across the entire integrated mining value chain," it said.

This includes co-funding of up to 75 per cent of capex through the Saudi Industrial Development Fund (SIDF), a five-year royalty holiday for miners, and a 30 per cent reduction on royalty payments for further downstream processing of production.

The Khnaigiuyah site covers more than 350 kilometres with an estimated resource of about 25 million tonnes of zinc and copper ores, at 4.11 per cent zinc, and 0.56 per cent copper.

“Developing the site will mark an important milestone in transforming the sector into the third pillar of the national economy under the National Industrial Development and Logistics Programme and Saudi Arabia’s Vision 2030,” the ministry said.

Saudi Arabia, the Arab world’s largest economy, aims to attract $32 billion of investment to its mining and minerals sector through nine new projects.

Expanding the kingdom’s industrial and mining sectors is an important part of its Vision 2030 strategy, aimed at reducing reliance on oil and diversifying the economy.

The kingdom currently accounts for about 37.9 per cent of the Middle East and North Africa’s $16bn metals and mining market, official data show. Its mining industry has grown 27 per cent annually to reach more than $194 million — achieving its highest revenue last year.

In 2020, the Saudi Arabia approved a mining law to boost foreign direct investment in the sector. The law, which came into effect in January 2021, will help the country explore mineral resources worth about $1.3 trillion, Invest Saudi- reported.

Saudi Arabia aims to attract $170bn to its mining sector by 2030. The Gulf country is aiming to tap into growing demand for metals that are used to produce batteries — an integral component in electric cars.

The kingdom is also ramping up its mining activity in anticipation of a surge in demand for minerals required for the energy transition.