Contracting giant Bechtel is looking to target more work in the mining and metals sector in Saudi Arabia as the government attempts to grow the sector as part of its diversification plans.
Mining and metals is something that is of extreme interest to us, said Abdulrahman Al Ghabban, who was appointed as Saudi Arabia country manager for the US-based construction company last month.
We see the government is going in the right direction in terms of putting in the right framework for companies to come and invest. And we believe mining and metals is [an] untapped sector here in Saudi.
Bechtel, which is a privately-owned construction company with a turnover of more than $30bn per year, already has experience of working on major metals projects in the kingdom, having delivered the $4bn aluminium refinery at Ras Al Khair Industrial City in the north of the country four years ago.
It is also overseeing construction work at the huge Waad Al Shamal Industrial City project near the kingdom’s border with Jordan, where a phosphate mining project is under way. Earlier this month, Saudi Arabia Mining Company, Maaden, said that it had begun initial production of phosphate at the $7.5bn city, where it will gradually ramp up production over the coming months.
Saudi Arabia’s construction market has undergone a difficult couple of years as government projects were put on hold and payments to contractors were frozen ahead of the formulation of the new National Transformation Plan and the creation of a National Programme Management Office (known as Mashroat) to oversee project spending.
Bechtel was appointed to set up and run Mashroat in February this year, and as part of this role it is currently advising ministries and municipalities on the establishment of their own Enterprise Project Management Offices.
The mandate so far is to establish and help these PMOs to be up and running, he said. It’s too early if the scope will include managing projects, but right now the focus is capital programme improvements and efficiencies.
Mr Al Ghabban said that Bechtel is bringing in more staff to help run Mashroat, but added that these are existing staff who are being redeployed from other parts of the business rather than fresh hires in the kingdom.
He also declined to say how many staff were working on Mashroat, citing client confidentiality, but said that Bechtel currently employs about 2,200 staff in the kingdom.
Most of these are working on the $23bn Riyadh Metro projects, where Bechtel is leading the BACS consortium building lines 1 and 2 of the six-line metro system.
About 370 staff are also working on its long-standing contract with the Royal Commission for Jubail and Yanbu on the development of Jubail Industrial City and Ras Al Khair Industrial City.
In infrastructure as well,
we are watching the market direction towards IPPs [and] PPPs, said Mr Al Ghabban. We are watching and trying to understand more in the infrastructure sector. We also believe oil & gas and chemicals is something evolving now. Oil prices are now much better than before and we see some major investment coming from Sabic and Aramco as well.
A study published last week by Global Infrastructure Hub and Oxford Economics stated that Saudi Arabia is facing an infrastructure investment gap of about $115bn by 2040, with an investment of $613bn required to meet the needs of a rapidly growing and urbanising population, but current investment trends estimated at $499bn.
Urban population proportion in KSA is expected to increase from 83 per cent in 2015 to 94 per cent in 2040, the report said.