Saudi Arabia is looking to boost foreign direct investment into the kingdom as a mining law approved by the cabinet last year came into effect from January 1.
The mining investment law will “enhance governance of the sector, improve transparency and increase investor confidence,” Bandar Al Khorayef, the kingdom’s minister of industry and mineral resources said in a statement carried by the Saudi Press Agency.
The law not only “clarifies the roles and responsibilities of new investors in Saudi mining projects, it also greatly improves the ease of doing business by digitising the process for issuing new mining licences, streamlining licence approvals, and transparently publishing records related to all mining licensing activity,” Mr Alkhorayef, said.
Saudi Arabia’s mineral resources are estimated to be worth about 5 trillion riyals ($1.3tn), with 20 million ounces of gold reserves below ground, according to Invest Saudi. The kingdom currently accounts for 37.9 per cent of the Middle East and Africa’s 60 billion riyals metals and mining industry market.
The new law will “ensure that mining activities create new job opportunities and support the growth of local businesses”, the minister added.
The government is also undertaking multiple projects to support the mining and metals processing industry, including a 2,750 kilometre north-south railway connecting Al-Jalamid phosphate mine with processing facilities in Ras Al Khair Industrial City. The kingdom is also investing more than 90bn riyals in new mining ventures and plants to process industrial ores.
“Simplifying and streamlining licensing processes will facilitate an easier participation in the mining space in Saudi Arabia by new investors,” Bart Cornelissen, energy, resources and industrials leader at Deloitte told The National. “On top of that, investment governance related regulation will de-risk investments for foreign as well as local investors while export rights for licencees will ensure no additional hurdles for value creation are put in place."
Saudi Arabia has a diverse range of over 48 minerals and metal resources, with at least 15 minerals that are commercially viable. The kingdom’s Maaden company, listed on the Tadawul stock exchange, is playing an important role in developing the mining sector with a focus on production and exploration of gold, zinc, phosphate, aluminium and industrial minerals.
A study by the US-Saudi Business Council in 2019 said the kingdom needs about $13bn in private sector investment to fully exploit the potential of its $1.3tn worth of mineral endowments.
Saudi Arabia’s economy is expected to grow 3.1 to 3.2 per cent in 2021 as its sovereign wealth fund, the Public Investment Fund, injects billions of dollars into the Arab world's largest economy to spur growth, according to its finance minister Mohammed Al Jadaan.
Saudi Arabia’s PIF will inject $40bn on an annual basis in 2021 and 2022 to promote growth in its economy.