Saudi Arabia’s $2.5 Trillion Mining Sector Transformation

As oil revenues fluctuate, mining presents a lucrative alternative for boosting the economy. This strategic pivot is part of Saudi Arabia’s broader Vision 2030 initiative, aimed at diversifying its economy.

Government Initiatives and Sector Investment

The Kingdom has made considerable investments in the mining sector, increasing its estimated mineral wealth and allocating about $182 million in exploration incentives by the end of 2023.

In January 2024 alone, the Ministry of Industry and Mineral Resources issued 152 new industrial licenses, indicating a strong push towards industrial growth. These licenses cover a range of activities, including the production of non-metallic mineral products and the manufacture of formed metal products, excluding machinery.

Recent discoveries, particularly significant gold reserves found along a 100km stretch in the Mansoura and Masara mines, highlight the sector’s potential. These mines are expected to yield 250,000 ounces of gold annually. This underscores the untapped opportunities within Saudi Arabia’s mineral resources.

Eng. Khalid Al Mudaifer, Vice Minister of Industry and Mineral Resources for Mining Affairs outlined several government initiatives designed to accelerate the development of the mining sector. These initiatives include creating a more business-friendly environment, implementing the new Mining Investment Law to streamline the licensing process, minimizing environmental impacts, and enhancing benefits for local communities. Additionally, a comprehensive geological survey program has been launched to support these efforts.

Government Initiatives and Sector Investment

The Saudi Industrial Development Fund is instrumental in this transformation, covering up to 75% of eligible project costs in advanced exploration and mining projects. This fund also extends its financial support to initiatives aimed at increasing local content in the sector, alongside projects in SMEs, digitalization, and renewable energy.

The Ministry’s latest report notes a 10% increase in the number of operating factories from 2022 to 2023, with the total rising to 11,549. New industrial licenses issued in 2023 surpassed 1,300, totaling investments of over $21.6 billion. This growth reflects the active expansion and development of the industrial base in Saudi Arabia, aligning with the goals of Vision 2030.

The phased development plan of the mining sector includes initial exploration and survey operations, followed by intermediate industries focusing on refining and smelting, and finally conversion industries that manufacture end products like iron and aluminum sheets, pipes, and bars.

To bolster the sector further, the Saudi Mining Services Company (ESNAD) initiative has been launched, aiming to assist mining directorates and improve monitoring and control procedures at mines. This enhances compliance with environmental, health, and safety standards and helps in resource management.

TheSaudi Geological Survey is also making significant contributions with a national geological information program, providing detailed geological maps and data to foster investment in mineral exploration across the Arabian Shield.

The logistics sector enhances the mining sector’s appeal by offering cost-effective solutions for transporting raw materials to smelters and factories in industrial cities.

These concerted efforts are anticipated to not only redefine the mining sector but also significantly elevate its contribution to the GDP by 2030. The initiatives aim to enhance the trade balance, improve legislative frameworks, create employment opportunities, and boost non-oil revenues, positioning mining as a key pillar of Saudi Arabia’s future economy.