Mining to Saudi Arabia

Trends and opportunities

The market

Saudi Arabia possesses more mineral resources than any other country in the Gulf region. The soil in Saudi Arabia is rich in gold, copper, phosphate, and a wide array of industrial minerals. With some of the world’s largest reserves of phosphate and tantalum, and up to 20 Moz of gold in known deposits, Saudi Arabia is becoming a significant market for mineral extraction and processing which provide manufacturing opportunities to develop high value products for the growing demand of several advanced industries such as automotive, aerospace, solar and oil & gas. Investors in these opportunities will benefit from the Kingdom's competitive advantage in energy and the provided financial incentives.

The central and northern parts of the country contain large amounts of bauxite, in addition to deposits of silver, zinc, copper, magnesite, and kaolin. Over 40 types of mineral deposits have been identified so far in the Kingdom, with at least 15 industrial minerals with potential for extraction.

• In 1997, the Saudi Government established the Saudi Arabian Mining Company (Ma’aden) as a catalyst for private investment in the mining sector. Capitalized at $1 billion (SAR 3.75 billion), Ma’aden was entrusted with consolidating the government-owned mining projects and turning them into commercially viable ventures with private sector participation.
• In 2004 Saudi Arabia approved a revised mining code to further encourage investment in the mining industry. Under the 2004 Mining code, the Government aimed at simplifying private sector investment in the mining industry and enhancing its profitability through measures like:
• No requirement to pay mineral royalties;
• Reduction of corporate tax liability to 20%; and
• Mining companies may be entitled to tax-free importation of equipment and machinery
• In 2007 the government privatized Ma'aden and it is now a listed company on the Saudi Stock Exchange.
• In 2016 Saudi Arabia put in place ambitious plans to raise the value of its mining operations to reach SAR 260bn (US $69.3bn) under Saudi Vision 2030. Currently, the direct and indirect contribution of the sector to the Kingdom’s GDP is estimated to be around SAR 80bn (US $21.3bn), with the sector accounting for 265,000 jobs. The aims is to triple the contribution to the Saudi economy made by mining and minerals. The Saudi Government is aiming to raise the GDP of mining to SAR 260 billion by 2030 and to create more than 100,000 jobs for citizens
• In 2019 the Saudi Government announced the inauguration of the industry development, mining and logistics Program (NDLIP) a new platform (Taadin) to issue and renew mining licenses for construction materials quarries at an initial stage. TAADIN platform aims to facilitate issuance and renewal of mining licenses, inquire about mining sites available in the Kingdom, improve the investor experience and link the investor to electronic systems, in order to cope with the digital transformation plan targeting the mining sector. The National Industrial Development and Logistics Program (NIDLP) is one of 13 Vision Realization Programs under Saudi Vision 2030. NIDLP is focused on transforming Saudi Arabia into an industrial powerhouse and a global leader in logistical services by leading and guiding growth in four key sectors: Industry, Mining, Energy and Logistics. By 2030, the program aims to stimulate private sector investments worth more than SAR 1.7 trillion.
  
  In September, 2019 the Saudi Government announced that it was dividing the Ministry of Energy, Industry and Mineral Resources into two separate entities. The Ministry of Energy that would be led by H.E Prince Abdul Aziz bin Salman, while the Ministry of Industry and Mineral Resources headed by Bandar Alkhorayef, a private sector investor and executive. The new ministry of Industry and Mineral Resources will become fully independent from January 1, 2020. The logic behind that move was that the Ministry was too large and needed to be split up to become more functional and place the emphasis on the mining sector the government want to establish.

The development of the mining sector occupies a prominent position in Saudi Arabia's program of diversifying its economy away from oil. The Government's strategy includes establishing industries for extracting and processing the minerals, developing the transportation infrastructure to make the minerals accessible for processing and streamlining export procedures. In fact, Saudi Arabia proclaimed the mining industry into the “third pillar” of the Saudi economy after oil and petrochemicals.

To date, over 48 minerals have been identified in the Kingdom of Saudi Arabia, with at least 15 industrial minerals that could become commercially viable. The Deputy Ministry for Mineral Resources (DMMR) has identified 1,273 sites for precious metals and 1,171 sites for non-precious metals. Minerals discovered in Saudi Arabia include phosphate; bauxite; bentonite; copper; dolomite; expandable clay; feldspar and nepheline syenite; garnet; gold; zinc; granite; graphite; gypsum; tantalum; high grade silica sand; kaolinitic clays; limestone; magnesium; marble; olivine; pozzolan; rock wool; silver; and zeolites. The Kingdom plans to complete viability studies into 50 new mineral opportunities in 2020 as part of a development strategy for the sector.

The Kingdom needs to continue to uncover its abundant natural resources through more exploration, pro-actively marketing new opportunities, developing the mining services sector, and integrating with downstream industries to strengthen competitiveness and maximise value addition.

Opportunities

Operational and environmental challenges in the Saudi Mining sector is creating opportunities for innovative solutions from Australian companies that operate in similar environments in Australia and globally. The Saudi mining sector is in need of mineral processing technology, equipment and proven expertise to develop mineral-based manufacturing. The industry is also in need of consulting engineering companies, drilling and chemical testing, and related equipment manufacturers/suppliers as well as training and upskilling to fill supply chain gaps across the mining life cycle.

There is a particular requirement for environmental protection techniques and consultancy services. Development of mineral wealth is creating significant infrastructure demands including the building of the 1,300 kilometers North-South Railway Project, estimated at US$3-4 billion, linking the mining and processing in areas such as the Al-Jawf phosphate mine, via Al-Zabirah, to Riyadh, then to Jubail. Each area is generating major infrastructure projects in support of mining activity which is providing opportunities for Australian companies in the power, transport, communications and construction sectors.

A combination of Government support to investors, low cost energy for output processing and ongoing development of transport infrastructure place Saudi Arabia as an attractive mining destination.

Additionally, the mining sector in Saudi Arabia offers a wide array of investment opportunities for global companies operating across the mining value chain. The Saudi Vision 2030 goals of increasing employment and GDP contributions from mining, combined with recent successes in many upstream and midstream projects in a number of commodities, is transforming the sector.

Today, NIDLP offers investment opportunities supported by promising geologic prospects, enhanced data access, a robust and enabling regulatory environment, competitive terms, growing supply chains, and access to healthy regional and international markets.

Saudi Arabia has invested over $40 billion in fully integrated mining value chains in partnership with the private sector to build on its rich mineral resources. In addition to significant production in precious and base metals, a mine to metal aluminium value and phosphate production has propelled the Kingdom to become the third largest global supplier of fertilizer. Mining now delivers a US $17 billion contribution to national GDP.

Mining Web Resources:

• Ministry of Energy, Industry, and Mineral Resources
• Saudi Arabian Mining Company
• Deputy Ministry for Mineral Resources (DMMR)
• The Saudi Industrial Property Authority (MODON)
• Saudi National Industrial Clusters
• Saudi Industrial Development Fund

Competitive Environment

According to the Saudi Arabia Investment Authority SAGIA , Saudi Arabia is the world’s 19th largest economy, a member of the G20 and the largest economy in the Middle East North Africa (MENA) region with the third-biggest current account surplus in the world. It is the world's 16th largest exporter and the world’s 29th largest importer. The economy has grown very strongly in recent years. The Kingdom boasts some of the lowest energy prices for investment projects. It has a continuously expanding domestic market (annual population growth of 2.5%), which is adding to a young and consuming population with strong buying power. With excellent access to MENA markets, as well as the advanced and emerging economies of nearby Europe, Asia and Africa, market exposure for Saudi-based projects is not only vast but also highly diversified.

Headline inflation remains subdued at 2% in FY2015/16, and will ease to a ‘steady state’ of 2.45% in FY2016/17. A reputation for a strong, stable government with consistently large budget surpluses, a stable banking system and a stable currency all combine to offer investors a business-friendly environment. The near term economic outlook is positive and it is expected that non-oil growth will be underpinned by strong private sector activity and government spending on large projects in transportation infrastructure and housing, with inflation is expected to remain subdued.

The Kingdom’s economy ranks 4th in the world for macroeconomic stability, the economy has grown very strongly in recent years, benefiting from high oil prices and output, strong private sector activity, and increased government spending. The private sector is playing an increasingly larger role in the Saudi economy – it now accounts for 39.5% of the gross domestic product (GDP). The sector is expected to continue growing, especially as Saudi Arabia opens its doors further to foreign investment.

Tariffs, regulations and customs

Please refer to Saudi Arabia customs websites for a detailed breakdown of tariffs and import restrictions.

Saudi Arabia Customs

Marketing your products and services

Market entry

Australian products and services including consultancy, contracting, technology transfers and materials are used in the region. Providers of specialized services need to bid for projects, therefore a local presence is recommended. The bulk of materials in the region are imported through Dubai. Major importers have significant warehousing facilities and well-developed distribution networks and branches in UAE which is being used as a hub. Saudi Arabia has a strong manufacturing base and well developed relationships with suppliers in India and China. Australian companies compete best when they have a value-added product with a distinct competitive advantage. In Saudi Arabia there is a strong focus on forming relationships to do business. For this reason, in order to succeed, companies need the commitment and resources to make a number of visits to maintain relationships with their partners or establish an office.

Links and industry contacts

Government Departments and Business

• Ministry of Commerce and Investment
• Saudi Arabian General Investment Authority
• Council of Saudi Chambers (CSC)
• Saudi Ministry of Transportation
• Saudi Port Authority
• The Saudi Standards, Meteorology and Quality Organization (SASO)
• Australia Saudi Business Council

Australian Success Stories

Since the establishment of Ma’aden in 1997, Australian mining expertise played a pivotal role in developing, and evolving the Saudi Mining industry.

Example of top 10 Australian Suppliers to Ma’aden 2012-2017

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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