Wa’ad Al-Shamal a major step toward an oil-free economy

King Salman, in the presence of Crown Prince Mohammed bin Salman, last month inaugurated Wa’ad Al-Shamal industrial city near Turaif. During his visit to the Northern Borders Province, King Salman launched phase one and laid the foundation stone of phase two of the world-class industrial city, which is set to become one of the largest producers of phosphate in the world.
Wa’ad Al-Shamal is part of the National Industrial Development and Logistics Program — one of the Vision 2030 Realization Programs — combining strengths in the logistics, energy, mining and industrial sectors to unleash a greater economic impact and long-term diversified and sustainable development for the Northern Borders and the Kingdom as a whole.
Wa’ad Al-Shamal, which is expected to reach full production capacity by 2024, is the largest ever industrial project in the entire Middle East region, with a total capital investment of $22.7 billion.
It is home to the Ma’aden Wa’ad Al-Shamal Phosphate Company, a $8 billion joint venture between Ma’aden (60 percent), Mosaic (25 percent) and SABIC (15 percent), with a capacity to produce 3 million tons of phosphate fertilizer per annum for global farming markets. Ma’aden has recently announced the start of construction of the third phase of its phosphate project, which will include further expansion of the Wa’ad Al-Shamal plants. Upon completion of Phosphate 3, Ma’aden will become the world’s second-largest producer of phosphate fertilizer, with a total anticipated capacity of 9 million tons per annum.
Darren Davis, president and CEO of Ma’aden, has said: “Wa’ad Al-Shamal is the new center of the Saudi phosphate industry and a world-class industrial and mining city in the Northern Borders region.” He added that: “Wa’ad Al-Shamal is a key component in the development of Saudi Arabia’s vast phosphate reserves and it is the cornerstone of Ma’aden’s integrated phosphate strategy. With our local and international partners, we’ve built state-of-the-art facilities at Wa’ad Al-Shamal, which deliver competitive production costs and efficient logistical links to world markets.”
Among the support facilities that are backing up the Wa’ad Al-Shamal phosphate project are access to a 1,500-kilometer mineral railway and a world-class port at Ras Al-Khair, which allows Ma’aden to deliver multiple varieties of fertilizer to customers in more than a dozen countries across Asia, Africa and Latin America.
In my opinion, Wa’ad Al -Shamal is a new business model that will cause a stir around the industrial philosophy of Saudi Arabia, since it represents a world-class, fully integrated industrial facilities project that includes production, transportation, industrial water treatment, housing and other facilities. Moreover, it embraces one of the most important chemicals on earth, which is considered to be the main feedstock used to manufacture phosphate fertilizer and which most countries around the world use for agricultural purposes.
Wa’ad Al-Shamal, and especially the phosphate project, will contribute significantly to the Kingdom’s Vision 2030 and its goals that focus on the diversification of the national economy away from oil. This is especially true when you consider what Davis said about Wa’ad Al-Shamal offering multiple new downstream investment opportunities in phosphate, sustainable economic development for local communities, and long-term career opportunities for thousands of Saudis.
Finally, I believe that Wa’ad Al-Shamal is another promising giant industrial center similar to Al-Jubail and Yanbu industrial cities, especially when considering the importance of the phosphate market and the fact the Kingdom has 7 percent of the world’s proven phosphate reserves. The power of Wa’ad Al-Shamal in creating jobs for about 450,000 Saudi nationals (directly and indirectly) when it is fully completed is also significant.

Talat Zaki Hafiz is an economist and financial analyst.