The potential of non-oil underground resources, such as aluminum ore and other minerals, is boosting interest in the Kingdom’s mining sector.
Saudi Arabia is on the verge of a non-hydrocarbons boom, Dr Abdullah Al Dabbagh, president and chief executive officer of the Kingdom’s largest mining firm, Ma’aden, told OBG. He said there is potential at both extraction and downstream level, with value-added opportunities for a number of industries.
"Saudi Arabia is a world leader in the petrochemicals industry but the country needs to develop a chemicals industry based on minerals generated from mining," he added. "Once the chemicals industry develops, the synergy between petrochemicals and chemicals will be profound."
Dr Al Dabbagh said Ma’aden’s experience in breaking ground for other firms has demonstrated the true potential of the Saudi mining sector.
"Ma’aden has shown that the mining industry is viable here and this will encourage private companies to invest," he said. "By diversifying raw material inputs from oil and gas, we will see more industrial applications and investment."
One of Ma’aden’s major projects is a partnership with global aluminum giant Alcoa to develop a top-ranking aluminum industry in Saudi Arabia. A $10 billion project, based around an integrated industrial complex at Ras Al Zour on the east coast, will include an aluminum refinery with an initial capacity of 1.8m tonnes per year (tpy). The complex will be fed by the resources of the massive bauxite deposits at Al Ba’itha, in the north of the Kingdom, which will produce at least 4m tonnes of ore annually.
The project is picking up speed, with contracts worth around $275m awarded at the end of August to supply equipment for the plant’s rolling mill, which, along with the smelter, will be operational in 2013. The plant will use imported raw materials until the first production from the mine begins in 2014.
Also promoting the potential of downstream mining industries is Dr. Zohair Nawab, president of the Saudi Geological Survey (SGS), the state-backed organization tasked with mapping and helping to identify mineral reserves across the Kingdom.
"The discovery of new mineral resources can create entirely new industries in the Kingdom," he told OBG. "For example, our phosphate deposits have the potential to make Saudi Arabia one of the top five producers of phosphate. We are developing these deposits to produce an important commodity, diammonium phosphate (DAP) which is a fertilizer. The growing world population requires more and more fertilizers."
The Deputy Ministry for Mineral Resources (DMMR) is also a stakeholder in the sector, acting to regulate and promote investment in the Kingdom’s mining industry. Saudi Arabia also seems well placed to meet many of the region’s mineral demands, with reserves of iron ore, zinc, copper and gold along with granite, limestone and dolomite. By developing its mining industry Saudi Arabia will achieve another objective of the government – bolstering the private sector.
According to Dr Said J Al Qahtani, president of Central Mining Company Investment Ltd (CMCI), the growing private sector involvement in mining will help further diversify the economy and enhance local expertise and employment opportunities, as well as attract foreign capital.
"The private sector is focused on developing downstream industries from the mining sector and local companies have been active in seeking international partnerships to make this happen," he told OBG. "The further downstream industries are developed, the more value will be retained in the country and the more employment will be created."
Though the recent global financial crisis had an adverse effect on the mining industry in terms of attracting foreign capital, Dr Al Qahtani said he expected the investment inflow would resume and increase as the industry progressed and developed.
With massive new downstream projects such as the Ma’aden-Alcoa joint project set to come online in the next few years, together with efforts spearheaded by the DMMR and SGS to identify more commercially viable reserves and promote investment in the sector, Saudi Arabia is set to mine another rich vein of wealth.