Saudi Arabia’s Ma’aden refinances $4.1bn worth of debt

Loan rearrangements and rescheduling sees $1.8bn owed to the Public Investment Fund transferred to Public Pensions Agency

Riyad Bank has been one of the early investors in the kingdom's FinTech sector, with a 100 million riyal fund announced last year. Reuters

Saudi Arabian Mining Company (Ma’aden)’s phosphate subsidiary signed new agreements to reschedule and refinance about $4.1 billion (Dh15bn) in debt as the company looks to strengthen its cash position.

The Ma’aden Wa’ad Al Shamal Phosphate Company (MWSPC), which oversees a phosphate mine and an adjoining industrial complex, signed new financing deals valued at $2.3bn to pay down existing loans, the company said in a statement on Sunday. It will also reschedule and transfer a $1.8bn loan previously provided by the kingdom's sovereign fund, the Public Investment Fund, which will now be held by the Public Pension Agency as part of the new agreement.

“The new financing facilities provide attractive and flexible corporate loan terms and conditions in place of the more restrictive project financing terms and conditions originally put in place,” the company said.

“The 'covenant-lite' terms of the refinancing arrangements, combined with an extended debt repayment schedule, are a step towards significantly strengthening the long term cash flow position for Ma’aden as part of its strategy to pursue new growth and development projects,” it added.

MWSPC owns and operates the integrated phosphate fertiliser production complex at Wa’ad Al Shamal Minerals Industrial City, which is one of the biggest industrial projects of its kind in the world. Construction of the $8bn complex, which is a joint venture between Ma’aden, Sabic and the US-based Mosaic Company, began in 2013 and full commercial production is expected to be reached by 2022.

A number of local and international lenders took part in the refinancing, including Alinma Bank, National Commercial Bank, Al-Rajhi Bank, Bank Albilad, Riyad Bank, Saudi British Bank, Bank AlJazira, Samba Bank and Saudi Fransi Bank, according to the statement.

“With abundant phosphate deposits in the north of Saudi Arabia, Ma’aden is well placed to build on its position as a leader in the global phosphates market and make Saudi Arabia a major contributor to global food security,” Ma’aden’s chief executive, Mosaed Al Ohali, said.

Saudi Arabia is pushing ahead with plans to develop its mining sector. The kingdom recently approved a new mining law to attract more local and foreign investment into the indusry.

“The mining sector is the ‘Third Pillar’ of Saudi industry and is considered one of the most important sectors for achieving the goals of Vision 2030, alongside the petroleum and petrochemicals sectors, as it strongly supports economic growth and job creation in remote areas,” Mr Al Ohali added.

Saudi Arabia has a diverse range of over 48 minerals and metal resources, with at least 15 minerals that are commercially viable.

A study by the US-Saudi Business Council in October last year said the kingdom needs about $13bn in private sector investment to fully exploit the potential of its $1.3 trillion worth of mineral endowments.