Saudi miner Ma’aden lifts off as profits rocket

A 70 percent year-on-year increase in gold production helped boost Maaden's profit by 120 percent in the first quarter. Getty
Updated 03 May 2018

Saudi miner Ma’aden lifts off as profits rocket

  • Profits rise on increased gold production, revenues rise 32 percent
  • Ma’aden mines gold, copper, aluminum and phosphates in Saudi Arabia

LONDON: Saudi mining company Ma’aden cheerked the market on Thursday with first quarter figures significantly ahead of analyst expectations, sending the Tadawul-listed stock 2 percent higher.

Gold was the standout feature as production rocketed to 118,000 ounces, up 70 percent year-on-year — a quarterly record.

It has been a good time to lift production of the yellow metal, seen as a hedge against global geopolitical uncertainty.

Group net profit surged over 120 percent in the first three months of 2018 against the same period in 2017, and sales were up 32 percent.

“By continuing to generate greater production from our assets whilst maintaining pressure on costs, we were able to capitalize on the generally positive commodity price environment,” said CEO Khalid Al-Mudaifer.

Ma’aden, which mines gold, copper, aluminum and phosphates — all at sites in Saudi Arabia — is ramping up production across many of its operations. Investors have piled into the shares, which trade on 25 times forward earnings making them highly-rated, but relatively expensive.

The company’s portfolio includes a joint venture with Barrick Gold of Canada.

In an interview with Arab News, Youssef Husseini, mining analyst at broker EFG Hermes in Cairo, said: “These results are exceptional with the cost profile impressive after a cost-cutting program — the margin came in 400 basis points up from where we thought.”

Al-Mudaifer pointed to a 36 percent increase in earnings before interest, tax, depreciation and amortization (Ebitda), a key market measure.

Ma’aden’s new phosphate operation at Wa’ad Al-Shamal was said to be progressing well as was the next phase of growth at its largest ever gold mine, the “Mansourah Massarah project”. An investment decision on further expansion was expected in the second quarter.

Commodity price volatility was forecast to be a feature of 2018 “but as the first quarter results show, we are well placed to deliver strong profitability built on the basis of strong underlying trends in our core commodities,” said Al-Mudaifer.

The only potential fly in the ointment, said Husseini, was the possibility of higher energy costs if Saudi Electricity upped its charges before the year is out. “We shall have to wait and see,” he said.

Al-Mudaifer said the first quarter saw a drop in the price of aluminum but the price trend remained favorable compared to 2016 and 2017 and “we continue to believe in the long-term fundamentals for this metal.”

He added: “Phosphate prices remained robust as did gold and copper although the latter dropped slightly in the quarter after a year of solid gains in 2017.”

Cash generated from operations was SR543 million ($144.7 million); a decrease of 28 percent compared to the first quarter of 2017, primarily due to increased working capital requirements, said the company.

Ma’aden’s liquidity position remained strong with cash and equivalents topping SR6 billion.


Egypt’s creative solutions to the plastic menace

Updated 24 August 2019

Egypt’s creative solutions to the plastic menace

  • Egyptian social startups are taking alternative approaches to fostering awareness and reducing waste
  • While initiatives around the world are taking action to combat this problem, some Egyptian projects are doing it more creatively

CAIRO: Global plastics production reached 348 million tons in 2017, rising from 335 million tons in 2016, according to Plastics Europe. 

Critically, most plastic waste is not properly managed: Around 55 percent of it was landfilled or discarded in 2015. These numbers are extremely concerning because plastic products take anything from 450 to 1,000 years to decompose, and the effects on the environment, especially on marine and human life, are catastrophic.

While initiatives around the world are taking action to combat this problem, some Egyptian projects are doing it more creatively.

“We’re the first website in the Middle East and North Africa that trades waste,” said Alaa Afifi, founder and CEO of Bekia. “People can get rid of any waste at their disposal — plastic, paper and cooking oil — and exchange it for over 65 products on our website.”

Products for trading include rice, tea, pasta, cooking oil, subway tickets and school supplies.

Bekia was launched in Cairo in 2017. Initially, the business model did not prove successful.

“We used to rent a car and go to certain locations every 40 days to collect waste from people,” Afifi, 26, explained. “We then created a website and started encouraging people to use it.”

After the website was launched, people could wait at home for someone to collect the waste. “Instead of 40 days, we now could visit people within a week.”

To use Bekia’s services, people need to log onto the website and specify what they want to discard. They are assigned points based on the waste they are offering, and these points can be used in one of three ways: Donated to people in need, saved for later, or exchanged for products. As for the collected waste, it is given to specialized recycling companies for processing.

“We want to have 50,000 customers over the next two years who regularly use our service to get rid of their waste,” Afifi said.  

Trying to spread environmental awareness has not been easy. “We had a lot of trouble with initial investment at first, and we got through with an investment that was far from enough. The second problem we faced was spreading this culture among people — in the first couple of months, we received no orders,” Afifi said.

The team soldiered on and slowly built a client base, currently serving 7,000 customers. In terms of what lies ahead for Bekia, he said: “We’re expanding from 22 to 30 areas in Cairo this year. We’re launching an app very soon and a new website with better features.”

Go Clean, another Egyptian recycling startup dedicated to raising environmental awareness, works under the patronage of the Ministry of Environment. “We started in 2017 by recycling waste from factories, and then by February 2019 we started expanding,” said founder and CEO Mohammed Hamdy, 30.

The Cairo-based company collects recyclables from virtually all places, including households, schools, universities, restaurants, cafes, companies and embassies. The customers separate the items into categories and then fill out a registration form. Alternatively, they can make contact through WhatsApp or Facebook. A driver is then dispatched to collect the waste, carrying a scale to weigh it. 

“The client can be paid in cash for the weight of their recyclables, or they can make a donation to a special needs school in Cairo,” Hamdy explained. There is also the option of trading the waste for dishwashing soap, with more household products to be added in the future.

Trying to cover a country with 100 million people was never going to be easy, and Go Clean faced some logistical problems. It overcame them by hiring more drivers and getting more trucks. There was another challenge along the way: “We had to figure out a way to train the drivers, from showing them how to use GPS and deal with clients,” said Hamdy.

“We want to spread awareness about the environment everywhere. We go to schools, universities, companies and even factories to give sessions about the importance of recycling and how dangerous plastic is. We’re currently covering 20 locations across Cairo and all of Alexandria. We want to cover all of Egypt in the future,” he added.

With a new app on the way, Hamdy said things are looking positive for the social startup, and people are becoming invested in the initiative. “We started out with seven orders per day, and now we get over 100.”