Currently, investments in Saudi Arabia’s mining sector are valued between SR170 and SR180 billion (US$45.3 to $47.96 billion). Khaled Al-Mudaifer, the vice minister for Mining Affairs at Saudi Arabia’s Ministry of Industry and Mineral Resources, expects this figure to grow an additional 150 percent within a decade.

In order to boost its mineral production and move towards its 2030 vision of economic diversification, Saudi Arabia is investing heavily in its mining sector. While the official Saudi Press Agency reports that more than 1,290 factories are currently producing mineral products in Saudi industrial cities, the kingdom also plans to auction off three new mining licenses in 2022 in hopes of creating more than 200,000 direct and indirect jobs in the sector by 2030. For Olivier Pasquier, former Energy & Industry attaché at the Embassy of France in Saudi Arabia, there is no doubt that the mining sector is going to see explosive growth – a development that’s fully in line with the kingdom’s 2030 ambition.

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“The mining industry is the first brick of all the economic diversification. The minerals will be used for the creation of heavy industries in all fields: automobile, fertilizer, battery. The mining sector acts as a foundation for diversifying the entire economy,” Pasquier explained to Inside Arabia.

Saudi Arabia’s relationship with mineral resources goes back to the very creation of the kingdom when it conducted numerous mining survey campaigns to take inventory of the rich Saudi subsoil. After numerous partnerships with geological survey institutions, such as the French Bureau de Recherches Géologiques et Minières or the US Geological Survey, the country finally created its own Saudi Geological Survey in 1999.  According to Olivier Pasquier, for a long time, Saudi Arabia did not take advantage of its rich mineral supply because it was focused on exploiting hydrocarbon and fossil fuels.

Currently, Saudi Arabia’s mining activities remain marginal, focusing on phosphate, gold, and bauxite.

Currently, Saudi Arabia’s mining activities remain marginal, focusing on a few minerals including phosphate, gold, and bauxite. However, the country’s hopes to develop its mining sector further are promising. Abdullah bin Muftar Al-Shamrani, CEO of the Saudi Geological Survey, claimed that past mining operations have identified over 5,300 mineral locations and at least 48 different minerals in the country, some of which are essential, such as cobalt, lithium, and titanium, and may be exploited in order to meet the increasing global demand.

Since the 2030 vision was initiated in 2016 by Saudi Crown Prince Mohammed Bin Salman, the country’s economic policy has changed considerably. Today, Saudi Arabia intends to significantly increase its production of new minerals in order to develop Saudi subsoil production and extraction processes and avoid expensive mineral imports that would eventually be needed to develop new industries. In short, the kingdom wishes to export a finished product and avoid a rent economy subject to the price fluctuations associated with the oil industry.

To support this outlook, Pasquier referred to the numerous bauxite reserves, demonstrating how the country is trying to avoid transplantation of the oil rent economy to the mining sector.

“After collecting bauxite from the country’s many mines, refineries turn it into aluminum. With this material, the country hopes to produce automobile parts and develop an entire car industry. In the long term, the country is looking to build an entire internal value chain to diversify its economy as much as possible,” Pasquier said.

“The country is looking to build an entire internal value chain to diversify its economy as much as possible.”

It should also be noted that Saudi Arabia is interested in utilizing strategic resources, such as uranium. The country intends to build two nuclear reactors, with unit power of between 1 and 1.6 GW, to enrich its uranium and either use it in its own energy sector or export it abroad.

Several countries have already responded to Saudi Arabia’s numerous tenders, including the China National Nuclear Corporation, which has worked with the Saudi Geological Survey to prospect for uranium resources. Although there is no official data on the amount of uranium in Saudi soil, some reports have estimated that the country has enough resources to provide the kingdom with fuel for nuclear reactors and export the surplus.

In addition to creating a whole value system that allows the country to diversify its economy and exploit its strategic minerals, Saudi Arabia is also intent on becoming a regional investment hub. With this in mind, the country has introduced a new mining law to replace the former 30-year-old code which did not contribute to international investment objectives and was not fiscally encouraging.

In this regard, Pasquier warns of the bureaucratic problems attached to implementing the new code. “This legal change is the first step in attracting foreign investment. The problem remains the slow pace of all reforms to achieve [the 2030 vision]. For example, the new mining code, which should have come into force in 2017, was only implemented in December 2020.”

The kingdom’s other major project is to open the mining market up to foreign investors.

The kingdom’s other major project is to open the mining market up to foreign investors by privatizing the country’s mining companies. This is notably the case of the state-owned mining company Ma’aden, where half of the state’s shares in the company have been listed on the Saudi stock exchange Tadawul.

Today, according to Pasquier, the company is responsible for 70 percent of the country’s mining operations. Its privatization has created a more competitive mining sector to attract foreign investors. By the end of the decade, the country aims to entice $170 billion in mining sector investments and fully take advantage of its mineral supply, which the kingdom estimates to be worth $1.3 trillion.

According to the National Industrial Development and Logistics Program, the country would have at least $321 billion in phosphate, $229 billion in gold, and $222 billion in copper in its soils, as well as $70 billion each in iron and uranium.

However, despite its reforms in the mining sector and the privatization of major mining companies, Saudi Arabia is still struggling to attract foreign investors. The coronavirus epidemic, coupled with delays in the implementation of reforms open to foreign investment, prevents international mining companies from settling in the country.

For this reason, Pasquier thinks that Saudi Arabia is still caught working on finding tenders to pursue mining exploration and has yet to reach the stage of developing a whole secondary industry based on the transformation of raw materials.