Maaden subsidiary awards 2.3bn riyals gold project in Saudi Arabia

Kingdom Tower in Riyadh, Saudi Arabia. The kingdom is working to reduce the Middle East’s biggest economy’s reliance on oil. Bloomberg

Saudi Arabian Mining Company (Maaden), the biggest mining company in the Arab world, said one of its subsidiaries awarded a 2.3 billion Saudi riyals (Dh2.2bn) contract to set up a gold production project in the kingdom.

The lump sum turnkey contract for the Mansourah & Massarah gold project includes engineering, procurement, construction, pre-commissioning, commissioning, start-up assistance and training services, Maaden said in a statement to the Saudi Stock exchange, where its shares trade. The company did not identify the contractor who won the construction project.

The Mansourah & Massarah project will produce an average 7,087 kilograms of gold per year throughout the life of the associated gold mine.

The construction has started following the signing of the agreement on Monday and the initial production is expected to begin in the second quarter of 2022, with commercial production starting the following quarter, Maaden said.

“The company will announce in due course the financing details and any further information related to the project,” it said.

Maaden operates several extraction sites in the kingdom and mining is a key component of Saudi Arabia’s drive to attract foreign direct investment as laid out in the Vision 2030 plan, which aims to reduce the country's dependence on hydrocarbon revenue. The kingdom, Opec’s top oil exporter, aims to more than triple the mining sector’s contribution to the nation’s economic output by 2030.

The kingdom has rolled out several initiatives and projects to develop the sector in the wake of the collapse of oil prices in 2014 that have since rebounded to about $75 at present.

In November, King Salman inaugurated the Waad Al Shamaal project, a 440-square-kilometre city for mining industries in the country’s northern region. The planned 85bn riyals development will create 10,000 jobs. Saudi Arabia estimates the region holds 500 million tonnes of phosphate ore, about 7 per cent of global proven reserves

Saudi Arabia’s Energy Ministry estimates the country’s unused mineral resources could be valued at 5 trillion riyals. The kingdom plans to spend 100bn riyals this year as part of a massive new industrial strategy, to create 1.6 million jobs and attract as much as 1.6 trillion riyals in investment by 2030.

The National Industrial Development and Logistics Programme covers 42 initiatives for creating local commercial activity in key sectors that include mining, and various other industries.

Saudi Arabia has so far invested $40bn (Dh147bn) in mining over recent years in partnership with the private sector. The industry has contributed $17bn to the Saudi economy, according to the government data released in January.