Mining Production
First Phase: Sweeping economic and structural reforms
Just to quickly recap what has been discussed so far, at its core, Vision 2030 is a 15-year blueprint divided into three phases of five years, that rests on three pillars: a Vibrant Society, a Thriving Economy, and an Ambitious Nation. The first phase introduced key economic and structural reforms to lay the foundation for national transformation and set the stage for a diversified economy. The National Industrial Development and Logistics Program (NIDLP), launched in early 2019, was one of the most crucial steps in this journey towards a more diversified economy.
The NIDLP is like an ingenious umbrella, working as a catalyzer and enabler of the growth and diversification of the economy under the “Thriving Economy” pillar. The NIDLP integrates four key sectors: industry, mining, energy, and logistics into a cohesive strategy to maximize impact. Let us think about it and its logic: mining brings resources to the surface; the industry gives them form, transforms them, and gives them value; energy fuels the entire process; and finally, logistics ensures these products reach global and national markets.
In 2019 there were already echoes about mining becoming the third pillar of Saudi Arabia’s economy, alongside oil and petrochemicals. Yet, mining was still grouped with other energy-related industries, limiting its potential. The solution was clear: mining needed to stand on its own.
On August 30, 2019, the Ministry of Energy, Industry and Mineral Resources was split into two entities. The Ministry of Energy retained its focus, while the new Ministry of Industry and Mineral Resources was born. Bandar Ibrahim Alkhorayef was then appointed as its Minister, signaling a new emphasis on a sector poised to become the third pillar of the country’s industrial economy. By the end of 2019, KSA had a clear vision of what it wanted to be, and its leaders were both shaping and assembling the puzzle pieces to make this vision fit.
The roadmap was defined with step-by-step strategies to build a diversified economy and a robust framework emphasizing the synergies between sectors to achieve the nation’s ambitions. However, one piece was missing in this puzzle: a robust legislative framework.
From the perspective of a private mining company, geology is just one piece of the puzzle. Without support from the government and society, mining cannot happen. As Alan Davies, CEO of Moxico Resources, a company advancing the Khnaiguiyah project close to construction, explained: “We are not entirely jurisdiction agnostic a robust local legal framework and promising geology must go hand in hand.”
The old mining law dated back to 2005, and did not fit the purpose of a fast- paced industry. For Ayman Badirah, CEO of Masharef Advanced Company, a local consultancy and service company, this was an impediment to the evolution of the sector: “Before Vision 2030, Saudi Arabia’s focus was predominantly on oil & gas, with mining largely overlooked despite its significant potential. Over the years, the government has made strides in improving policies and guidelines, significantly easing international investors’ participation process. Previously, unclear regulations created barriers for investment, but today, Saudi Arabia boasts robust regulations aligned with international standards.”
Recognizing the lack of new mechanisms to drive modern investments to unlock mining’s potential, KSA introduced the Mining Investment Law, approved by the Council of Ministers in June 2020 and entering into force on December 20 of the same year. Among the changes, the new law created a framework to develop and update a National Geological Database in coordination with the Saudi Geological Survey (SGS), an online repository that centralized geological, topographical and exploration data to provide investors with easy access to relevant information and to encourage exploration. The law also established the region’s first “Mining Fund,” a financial instrument to ensure the sectors’ growth, addressing the challenges of such a capital-intensive industry, especially at the beginning of the lifecycle.
The reforms extended to licenses. The New Law maintained the three-tier classification of minerals, now labeled as Class A (metallic minerals, precious and semiprecious stones), Class B (non-metallic and industrial minerals), and Class C (construction materials), but introduced some updates. For instance, exploration licenses could now be granted for 15 years in 5-year terms, a significant increase compared to the previous 10-year limit.
Grahame Nelson, partner and head of the KSA office at Al Tamimi & Company, the largest law firm in the Middle East, commented that by opening an office in Al Khobar in 2017 the “energy bastion” of KSA they saw an opportunity to grow in energy and mining law. He also provided GBR with some interesting insights on the country’s evolution: “The government has introduced a new mining law with many of the features embedded in the mining laws of other countries with a lot of mining activity and is now actively encouraging investment in the sector. However, while the regulatory framework is robust and the Ministry of Industry and Mineral Resources is keen to grow the sector, so far there does not appear to have been substantial foreign investment in the sector,” said Nelson, to which he added: “Since the new mining law came into play, things have been moving more quickly, but there is definitely much more potential.” Second phase: What is there, and how can it be harnessed? Vision 2030’s first phase, which ran from 2016 to 2020, set the foundation for the work that is currently underway. The second phase, which will conclude in 2025, focuses on launching new programs. As Nelson pointed out, Saudi Arabia needs to attract investors and facilitate business growth in the mining sector.
One of these initiatives, which began even before the second phase in 2019, is the Taadeen Platform, launched alongside the previously mentioned NIDLP. The platform’s goal is to streamline mining investment procedures by connecting them with digital and electronic systems.
According to a document published by Taadeen, KSA’s geology can be classified into two main areas: the western province, dominated by the Arabian Shield, and the eastern province. Investors are primarily focused on the Arabian Shield, which forms the eastern part of the larger Arabian-Nubian Shield (ANS), split by the Red Sea and that extends into Africa. The Arabian Shield is, from a geological point of view, complex, making it prospective for a wide range of minerals, and, as noted by the platform, both provinces contain a “plethora of minerals crucial for global industries,” including precious and base metals, bauxite, and uranium.
Saudi Arabia increased its mineral endowment estimation in 2023 to SAR 9.4 trillion (US$2.5 trillion). Additionally, the sector generated over US$410 million in revenue in 2023. This 88% increase in Saudi Arabia’s mineral endowment was made possible through the efforts of a consortium consisting of the Saudi Geological Survey (SGS) and various international and local private and governmental entities, along with their geological survey program, which now covers more than 85% of the Arabian Shield.
According to the government, within this US$2.5 trillion endowment, phosphate is the most valuable resource, with a gross insitu value of SAR 4,669 billion. Iron and limestone deposits collectively have a value of SAR 1,295 billion, followed by gold, with a value of SAR 1,114 billion. Copper comes next, with an estimated value of SAR 512 billion, followed by zinc at SAR 322 billion, niobium at SAR 315 billion, and rare earth elements (REEs) at SAR 238 billion. Other minerals include bauxite (SAR 80 billion), silica (SAR 15 billion), and silver and uranium (SAR 10 billion each). Breaking down Saudi Arabia’s mining market
It is said that mining in the Arabian Shield dates back 5,000 years to the era of King Solomon at Mahd Ad Dhahab (Cradle of Gold), a mine currently owned by the Saudi Arabian Mining Company (Ma’aden). Today, several gold mines are in operation, with more expected to come online in the coming years, along with additional mines extracting other commodities. The history and mineral wealth are rich, yet the Saudi mining industry remains consolidated. In fact, the production sector is primarily dominated by three companies: Ma’aden, Saudi Gold Refinery, and Al Masane Al Kobra Mining Company (AMAK).
Ma’aden stands as the national “Titan”, leading in gold production and other minerals such as copper, phosphate, bauxite and aluminum. Formed as a Saudi joint stock company in March 1997 to facilitate the development of the Kingdom’s industry, the Saudi government still retains 50% of its shares while the remaining 50% is listed in the Saudi Stock Market known as Tadawul. Since its inception, Ma’aden has made different joint ventures and partner-ships to accommodate its business units into five “Strategic Business Units”, as the company called them: Gold and Base Metals, Phosphate, Industrial Minerals, Aluminium, and Exploration. In contrast, AMAK, the first private mining company in the industry, was founded in 2008, and Saudi Gold Refinery was established around 10 years ago.
Precious metals and base metals
Ma’aden Base Metals and New Minerals Company (BMNM) is a wholly owned subsidiary of Ma’aden, focused on base metals and copper, which it refers to as the “new minerals.” BMNM operates seven gold mines Ad Duwayhi, Al Amar, Bulghah, Sukhaybarat, As Suq, Mahd Ad Dhahab, and Mansourah-Massarah as well as a copper mine, Jabal Sayid. The copper mine is part of a joint venture with Barrick Gold under Ma’aden Barrick Gold Copper Company (MBCC).
If the Mahd Ad Dhahab mine is the oldest gem in the collection, then Mansourah-Massarah and Jabal Sayid are the newest additions. In July 2019, Ma’aden awarded a SAR 2.27 billion (approximately US$606 million) EPC contract to a consortium between Metso Outotec (now Metso) and Larsen & Toubro to develop the Mansourah-Massarah gold mine. Final plant commissioning was completed by the end of 2023, with commercial operations having started in January 2024.
According to Ma’aden’s annual report, Mansourah-Massarah is set to become the largest gold mine in the country, processing 4 million tons of ore per year (t/y) and producing an average of 250,000 oz/y. Even though the mine is not yet at full capacity, its impact is already noticeable: by the end of 2023, it accounted for 36% of total gold output, contributing 146,000 oz to BMNM’s total production of 407,000 oz. “Today, Mansourah-Massarah is a flagship project in Saudi Arabia,” commented Dip Kishore, board member, ECOM member & advisor to CMD development projects & metals & minerals at Larsen & Toubro, who also added: “Saudi Arabia fosters an environment for large scale projects. For example, even with the challenges of the COVID-19 pandemic, Ma’aden’s Mansourah-Massarah gold project was seamlessly executed and completed as per the client’s timelines.”
For its part, Jabal Sayid is an underground copper mine developed by MBCC (the JV between Ma’aden and Barrick Gold). It started production in 2016 and, in 2023, produced 130 million pounds (lb) of copper. While Ma’aden stands as the giant of Saudi Arabia’s mining industry, incorporating cutting-edge technology, the private sector has also been actively developing the Kingdom’s non-oil natural resources. According to Geoff Day, CEO of AMAK, the company has been a pioneer in this space: “AMAK was established in 2008 as Saudi Arabia’s first private-sector mining company, pioneering the development of the Kingdom’s non-oil natural resources. We began operations at the Al Masane site, marking the first commercial mining project in the country to integrate base and precious metal production. Since then, AMAK has grown steadily, combining traditional mining practices with advanced technologies to enhance efficiency and output.”
AMAK began commercial production of copper and zinc concentrates in 2012 from the underground Al Ma-sane mine (ALM), which consists of three main zones: Saadah, AlHoura, and Moyeath. The Al Masane copper and zinc operation is complemented by the Guyan gold mine, an open-pit mine that started operations in late 2020. Guyan has an annual throughput capacity of 400,000 t and produced 21,009 oz of gold in 2023.
One of AMAK’s recent developments is the expansion of ALM, which includes the growth of the Moyeath orebody: “Developing the Moyeath orebody has presented AMAK with complex underground mining challenges, including intricate geological conditions and the need for specialized processing techniques. To address these, we have leveraged advanced mining technologies and constructed a cutting-edge processing plant. This facility adds 400,000 t/y of ore processing capacity, contributing to an 80% annual production increase in zinc concentrate and 40% in copper concentrate,” added Day. Aluminum and phosphate, a vertically integrated industry
Aluminum production in KSA is the perfect example of a vertically integrated business where Ma’aden, once again, shows off its size. The core is the Al Ba’itha mine, an open-pit operation with the capacity to produce 4 million t/y of bauxite. This raw material is transported to the Ras Al Khair Industrial City, for refining and smelting.
The operation was initially established in 2009 as a joint venture between Ma’aden and Alcoa, creating a fully integrated mining and aluminum complex with two entities: Ma’aden Bauxite and Alumina Company (MBAC) for bauxite mining and alumina refining and Ma’aden Aluminium Company (MAC) for smelting and casting.
Consulting and engineering firm Hatch has worked in this integrated facility by providing what they call “multicell jacketed pipe-heater technology”. Roy Dabbous, regional manager Middle East at the company, shed some light on the process: “Refining bauxite into alumina involves a vital stage called digestion. Hatch’s Tube digestion allows conventional shell and tube heat exchangers to be replaced by jacketed pipe heaters, which allows for a greater range of the bauxite feedstock. This technology also simplifies the digestion plant with only a single stream flowsheet used for the refinery.” In September 2024, Alcoa announced it would sell its 25.1% stake in the joint venture.
Similar to aluminum, phosphate has a vertically integrated business model in Saudi Arabia. Ma’aden mines phosphate at the Al Jalamid and Al Khabra sites, which produce approximately 10 million and 12 million t/y of phosphate ore, respectively. Ore from Al Jalamid is transported 1,200 km to Ras Al Khair for processing into phosphate fertilizer. Meanwhile, ore from Al Khabra is processed into phosphate concentrate at the Wa’ad Al Shamal industrial city.
In the phosphate segment, Ma’aden’s Phosphate 3 shines. Described as the industry’s “jackpot” for its scale and value by Mehmetcan Akyüz, founder and managing director of Tomarok Engineering, it represents a significant milestone for the sector. In 2023, Ma’aden made its investment decision for Phase 1 of the project and awarded EPCM services to Worley and JESA International. This first phase will add 1.5 million t/y of phosphate capacity by 2026, increasing the current capacity from 6 million to 7.5 million t/y. Phase 2, expected to be completed by 2029, will boost production by another 1.5 million t/y, bringing the total capacity to 9 million t/y of phosphate products.
Article header image by JackBoiler at Adobe Stock