ALKHOBAR, 9 May 2005 — Among the delegates to the mega project forum are representatives of the Kingdom’s Deputy Ministry of Mineral Resources who hope to interest investors and mining-sector companies in opportunities on the vast Arabian Peninsula.
For domestic and international companies, the new Mining Investment Code creates a level playing field that makes exploration and investment in Saudi Arabia attractive.
Although the country is undertaking a massive, multibillion dollar effort to harvest, transport, process and ship huge phosphate and bauxite deposits, there are concessions available for thousands of square miles of mountainous and hard-rock regions containing a host of minerals from commodity materials to precious metals.
The Kingdom’s bauxite and phosphate plans include a multibillion dollar project for construction of a railroad linking northern deposits with massive aluminum- and fertilizer-producing facilities at a new Gulf seaport currently under the auspices of Maaden, essentially a public-private mineral-sector economic development engine. With low energy prices giving Saudi Arabia a cost advantage in production, the materials are expected to become important exports throughout the Middle East, the Indian Subcontinent and Africa in the coming years.
“We view the future development of the mineral sector with confidence,” said Sultan ibn Jamal Shawli, the Kingdom’s assistant deputy minister for mining investment. “Maaden’s major phosphate and bauxite projects will place the Kingdom on the world stage as a producer of downstream, value-added fertilizer and aluminum products.”
The country has gold mines, some of which they say that have been producing since the times of King Solomon.
Now under the control of Maaden, a partial public offering is planned of existing gold mines, which currently produce about 300,000 ounces each year. In the new regulatory environment, precious metals are treated the same as other minerals, creating attractive opportunities for exploration, and the Kingdom is anxious to add economic gold to the wealth of minerals used in industry and construction.
“Exploration license applications both by foreign and local companies are increasing,” Shawli said. “With the introduction of the new code, we anticipate this trend will increase. With such expanded levels of exploration, the chances for new discoveries of economic mineral deposits also are increased.”
The ministry is also giving investors access to detailed maps and 2,800 technical reports.
“The Mining Investment Service Center has been set up to provide service specifically for potential and existing investors in the mineral sector,” Shawli said. “It represents a one-stop shop for those interested in obtaining information and assistance concerning the procedures of acquiring and maintaining mineral concessions in the Kingdom.”
In the ministry’s quest to expand the mining sector, foreign investors will find systems in place that make Saudi Arabia an ideal place to conduct business.
“Domicile is not required by holders of reconnaissance licenses,” Shawli said. “However, when an exclusive document, such as an exploration license, is obtained, some form of legal representation in the Kingdom is required for transmission of official documents.”
The deputy ministry’s website, www.dmmr.gov.sa, has been launched to provide essential information to investors, including online application for license documents.
“There is no surface rental for exploration, and the rental rate for mining is limited by the regulation to a maximum of SR10,000 ($2,666) per square kilometer per year,” Shawli said of the new opportunities. “Profits and capital may be repatriated without any restriction.”
The potential the mineral resources hold for the country is great. In addition to producing materials that now are imported to Saudi Arabia, the economic stimulus should create new industries and the jobs that go with them. For international investors, the ministry has created a regulatory environment and the necessary support services to create easy access and attractive opportunities previously unimaginable in this part of the world.