Saudi Geological Survey signs contracts worth over $530m

The program takes a three-pronged approach that includes advanced atmospheric geophysical surveys, multicomponent geochemical surveys and production of detailed geological maps. (SPA)
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Updated 19 October 2020

Saudi Geological Survey signs contracts worth over $530m

  • Six-year long program will help boost the Kingdom’s mining sector

RIYADH: The Saudi Geological Survey (SGS) on Sunday signed several contracts with international organizations and consultants to carry out projects related to the geological survey general program.

It is one of the largest geological surveys in the world, with the budget for all its stages amounting to SR2 billion (over $530 million).

The signing ceremony was held under the auspices of Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef and was attended by Investment Minister Khalid Al-Faleh, Transport Minister Saleh Al-Jasser, foreign envoys and representatives of the international firms awarded the contracts.

Alkhorayef said signing these contracts marks the beginning of the Kingdom’s massive data collection efforts. “It is the first step toward making the mining sector the third pillar” of the Saudi industrial landscape, he said.

The minister said the program will ensure gathering more reliable and accurate data about the Kingdom’s mineral resources, which will help the relevant authorities tap into the vast mineral wealth and lay a solid foundation for a sustainable national economy.

The program takes a three-pronged approach that includes advanced atmospheric geophysical surveys, multicomponent geochemical surveys and production of detailed geological maps.

Providing details about the contract in a statement, the SGS said one of the contracts includes a technical partnership deal with a consortium including International Geoscience Services Co. and Geological Survey of Finland.

A multicomponent geochemical survey contract for the Arabian Shield has been awarded to China Geological Survey. It is aimed at collecting and analyzing more than 110,000 samples of valley sediments and heavy metals in the Arabian Shield over the next 6 years.

Dr. Zhong Ziran, China’s vice minister for geological survey, said that the contract marked the beginning of a great cooperation between Saudi Arabia and China.

The SGS awarded the contract for advanced aerial geophysical survey contract for Sector No. 1 of the Arabian Shield to Sander Geophysics Ltd.

Under the deal, the company will collect and analyze geophysical data, produce various digital geophysical maps, and identify rock formations and evidence of mineralization in the region.

The program currently aims to survey nearly 600,000 sq. km. of the mineral-rich Arabian Shield region.

The other three contracts were awarded to Xcalibur Airborne Geophysics to carry out advanced aerial geophysical survey of sectors 2 and 3 of the Arabian Shield.

Simon Bush, CEO of Xcalibur, said: “It gives me great pleasure to work with the Saudi Geological Survey.”

All these programs seek to boost the contribution of the mining sector to the Kingdom gross domestic product and create 220,000 new jobs.

Oman’s bond market return a key test for reform path

Updated 21 October 2020

Oman’s bond market return a key test for reform path

  • After becoming ruler in January, Sultan Haitham made shaking up and modernising state finances a top priority

DUBAI: Oman’s return to the international bond market this week will be a test of its ability to convince investors that long-awaited fiscal reforms have started to put it on a sustainable financial footing.

Oman, rated below investment grade by all the major credit agencies, announced on Monday plans to issue bonds with maturities of three, seven and 12 years, in what would be its first global debt sale this year.

Sultan Haitham, who became Oman’s ruler in January, has made shaking up state finances one of his priorities.

But investors would like to see more concrete steps being taken and, after a further sovereign downgrade last week, may require the new bonds to offer a significant premium over the country’s existing debt.

“The new sultan has done some good things — rationalizing the number of ministries, the implementation of VAT, plans to generate additional tax revenues, and they still have sovereign assets,” said Raza Agha, head of emerging markets credit strategy at Legal & General Investment Management.

“There is positive momentum but it will take time for that credibility to build.”

According to a bond prospectus, Oman has begun talks with some Gulf countries for financial support.

“I don’t think this will actually be taken into consideration by investors unless there is a tangible announcement from Gulf countries with a tangible support package,” said Zeina Rizk, executive fixed income director at Arqaam Capital.

Oman will likely price the new three-year bonds in the high 4 percent area, the seven-year tranche in the high 6 percent and the 12-year in the mid-to-high 7 percent area, implying a premium of at least 50 basis points (bps) over its existing curve, she said.

Two other investors, who did not wish to be named, said the paper could carry a 25 bps premium over existing secondary trading levels.

Sources have previously told Reuters Oman would target over $3 billion with the new deal.

“If they take $3 to 3.5 billion, you will have a market indigestion for Oman, and I’m sure people will ask to be compensated for this risk,” Rizk said.