Saudi strategy will make KSA a mining hub, industry pundits believe

Saudi strategy will make KSA a mining hub, industry pundits believe
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Updated 06 February 2022

Saudi strategy will make KSA a mining hub, industry pundits believe

Saudi strategy will make KSA a mining hub, industry pundits believe
  • “There are over $3-trillion worth of minerals to be exploited in the Kingdom, which opens huge opportunities for minerals companies”

RIYADH: Saudi Arabia has in recent years been under scrutiny as a major player in the oil-based carbon economy, but it is now drawing praise for its strategic shift towards the discovery and extraction of minerals and metals.

In an online media session to discuss the implications of the Kingdom’s new mining regime, global industry leaders and specialist lawyers were unanimous in their positive view of Saudi Arabia’s anticipated role in a more sustainable global economy.

This conversation was held in the context of the Kingdom’s Mining Law of 2020 and, more recently, the Future Mining Forum, FMF, a convening of political and business leaders held in Riyadh from Jan. 11 to 13.

Ernst Muller, a South African lawyer specializing in natural resources law and environmental, social, and governance framework, known as ESG, began the discussion by pointing out that, “a global transition to new energy sources” is underway and that “the FMF was focused on what countries should be doing and what role mining companies should have in this shift.”

Peter Leon, a partner in Johannesburg-based law firm Herbert Smith Freehills, who also advised Saudi Arabia’s Ministry of Industry and Mineral Resources, MIMR, on the drafting of its new Mining Law, said that this transition “has big implications for the world mining industry.




Peter Leon

“All new technologies — wind, solar, electric vehicles, whatever — need specific minerals including lithium, cobalt and rare earth minerals. The Kingdom is rich in these and in many others.

“The World Bank recently reported that over 3 million tons of minerals and metals will be needed in the coming transition. That represents a 500 percent increase in demand for minerals. But it also means a huge supply gap.

“There are over $3-trillion worth of minerals to be exploited in the Kingdom, which opens huge opportunities for minerals companies.”

Muller described the global move to de-carbonization as “a table with three legs: First, the desire to move to sustainability; second, the minerals needed for that process; and third, an environment conducive to investment.”

All new technologies — wind, solar, electric vehicles, whatever — need specific minerals including lithium, cobalt and rare earth minerals. The Kingdom is rich in these and in many others

Peter Leon, a partner in Johannesburg-based law firm Herbert Smith Freehills

FMF came at the right time

Aldo Pennini, FMF Program Director and a corporate affairs and reputation management consultant, observed that both governments and miners “really need to reimagine the minerals industry. There is a collective desire to take action. There is a historic nature to this conversation.”

Leon added, “the Kingdom must be credited for making that conversation happen. The FMF was an important gathering to talk about the global future of mining. This was not just commercial. It was about much wider issues.

“I have two takeaways: First, the need for collective action; and second, how Saudi Arabia could be a regional mining hub for the Middle East but also for Africa.”

Sheila Khama, a Botswana-based mining consultant who was previously CEO of De Beers Botswana and a policy adviser to the World Bank and African Development Bank, pointed out that “there is an onus on governments to attract and retain investments, meaning a regulatory framework that speaks to companies and investors. The new Saudi mineral law is on track in this regard.”

Mining Industry challenges

On the other hand, according to Khama, “the mining industry needs to ramp up its communications. There’s a disconnect between the contribution of minerals to decarbonization, and the public mindset. To be able to transition we need a huge amount of minerals. Recycling just won’t be enough. And these facts need to be communicated to the general public.”

Michael Naylor, managing director and CEO of the Western Australia-based miner EV Metals Group plc, noted “$1 trillion has been invested globally in the production of EVs and batteries, but there is a lacuna in terms of the delivery of minerals to these giga factories.

“The supply is simply not there to support their growth plans. And we cannot afford failure in this transition.”

Turning challenges into opportunity

Pennini sees this as a long-term opportunity for Saudi Arabia and its Gulf neighbors. “The World Bank estimates that 75 percent of mining exploration investment goes into only 10 countries”, he observed, “and this does not include any Gulf countries. So what needs to happen?”

Leon commented that the Kingdom has taken two concrete steps in this regard: first, by investing $250 million on the Saudi Geological Survey to identify new mineral sources across the Kingdom, accompanied by a geological database with 80 years-worth of geological information. And second, by implementing the new Mining Law.

Saudi mining law

In terms of the latter, Leon said, “the mining industry needs regulatory certainty, strong rule of law and simple online application systems.

“When drafting the new law, we had a mandate from the MIMR: to follow global best practices regarding legal clarity, environmental responsibility, health and safety issues, effective dispute resolution and a fair licensing regime. Our guidelines gave effect to all of that.”

“The new law provides certainty of tenure for miners, a simple application process and a competitive timeframe for applications.”

With respect to environmental and social issues, Leon said, “mining licensees must have a plan for ESG.”

$1 trillion has been invested globally in the production of EVs and batteries, but there is a lacuna in terms of the delivery of minerals to these giga factories

Michael Naylor, managing director and CEO of the Western Australia-based miner EV Metals Group plc

Vis-a-vis dispute resolution, Leon pointed out that “Saudi Arabia’s new legislation goes beyond more developed mining jurisdictions (the previous gold standard being the Western Australian Mining Act of 1977). It is possible for mining companies to take the Kingdom to arbitration, with the previous consent of the Minister of MIMR.

“Moreover, Saudi Arabia has ratified bilateral treaties with numerous countries including Japan, South Korea, China and various European states, which provide an automatic recourse to international arbitration” in the event of a dispute between a mining company and the Saudi Government.

And in terms of the licensing regime, Leon added, “The MIMR is now legally under obligation to issue licenses within a defined timeline. In Western Australia, it takes six months to process a mining application, while in the KSA this is now 90 days. And the process is reliable and transparent.

“The new law will accelerate the development of the Kingdom’s mining sector”, Leon said. “And that needs to be communicated to international investors.”

Saudi offers what other lack

The speakers agreed that Saudi Arabia is especially well-positioned as a minerals supplier in view of wider geo-political factors.

“A lot of minerals are located in ‘difficult’ countries”, Leon observed. “These are often challenging environments with serious rule-of-law issues.

“And Lima, Peru and Chile have voted in leftwing presidents, so all bets are off regarding their new mining codes.”

There is an onus on governments to attract and retain investments, meaning a regulatory framework that speaks to companies and investors. The new Saudi mineral law is on track in this regard

Sheila Khama, a Botswana-based mining consultant who was previously CEO of De Beers Botswana

Pennini added that “there is very little exploration (for new minerals) being carried out in the developing world.”

And Naylor pointed out that, “the world needs more lithium – but it doesn’t want more lithium mines” – as indicated by public resistance to mining in many EU states.

Leon also noted, “Saudi Arabia’s corporate tax rate is 20 percent of profits, plus zakat of 2.5 percent” – relatively low by global standards.

In all these respects, the participants agreed, the KSA is doing the right thing, making the right investments and it is well placed for the future of the mining industry.

“The process is reliable and transparent”, Naylor said, “and there is a reasonable timeframe within which to work, which is crucial. The Kingdom is displaying leadership in the mining sector. Please continue these conferences. Kudos to Saudi Arabia’s Minister of mining and industries.”


Saudi-Uzbek trade exceeds $95m in the first half of 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022
Updated 17 August 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022

Saudi-Uzbek trade exceeds $95m in the first half of 2022
  • The two countries will bolster ties further with the signing of 12 new deals this week

RIYADH: The mutual trade between Saudi Arabia and the Republic of Uzbekistan reached $95 million in the first half of 2022, a substantial increase considering that bilateral trade barely exceeded $17 million last year.

According to a joint news statement, the value is expected to grow rapidly by the end of 2022. The numbers assume significance in the aftermath of the pandemic.

In fact, the number of Uzbek companies running on Saudi funds increased from about nine to 38 in the last five years. Of the 38, 19 are sole proprietors, and the rest are joint ventures.

The two nations will bolster the ties further by signing 12 new agreements on Wednesday and Thursday when Uzbekistan President Shavkat Mirziyoyev visits the Kingdom.

According to an Uzbek state agency, high-level talks will take place in Jeddah, where the two nations will discuss opportunities to enhance multilateral cooperation further.

The discussion will focus on the green economy, technology and digitalization, innovations, small business and entrepreneurship. 

Following the meeting, new agreements are expected to be signed in the energy, telecommunications, agriculture, chemical and petrochemical industries, besides encouraging ties in culture, sports and education.

The Kingdom has become one of the largest foreign investors in energy infrastructure and one of Uzbekistan’s most significant developers of green energy projects.

ACWA Power’s Uzbek interests

Recently, the Ministry of Energy of Uzbekistan and Saudi energy company ACWA Power signed several investment agreements for about $3 billion.

ACWA Power will develop and operate a wind energy project with a production capacity of 1,500 MW in the Karakalpakstan region of Uzbekistan.

When commissioned, the plant will become the largest of its kind in Central Asia and one of the largest wind power plants in the world. 

FASTFACTS

• The number of Uzbek companies running on Saudi funds increased from about nine to 38 in the last five years.

• Recently, the Ministry of Energy of Uzbekistan and Saudi energy company ACWA Power signed several investment agreements for about $3 billion.

• The Saudi Fund for Development has contributed to the implementation of many projects in Uzbekistan, including funding the Samarkand-Gozar Road project, with a total value of $30 million.

ACWA Power also signed an agreement to establish the 100MW Nokus wind farm project, the first renewable energy project to be implemented in partnership with Uzbekistan’s public and private sectors.

The power generating company also won a $108 million wind contract after proposing a tariff of 2.56 cents per kilowatt-hour, the lowest in Uzbekistan.

Additionally, the Ministry of Energy of Uzbekistan signed a 25-year power purchase agreement with ACWA Power to establish a combined-cycle gas turbine power plant in Shirin, located in Syrdarya, Uzbekistan. The deal amounts to $1.2 billion.

According to the statement, these projects will contribute to achieving Uzbekistan’s national goal of raising the total renewable energy generation capacity to 30 percent by 2030.

Saudi Fund for Development

Moreover, the Saudi Fund for Development has contributed to the implementation of many projects in Uzbekistan, including funding the Samarkand-Gozar Road project, with a total value of $30 million.

The fund also contributed to 20 projects in the republic, including building pumping stations and other projects involving sewage, chemicals, mining, building materials, water and agriculture.

According to the Ministry of Agriculture of Uzbekistan, the Saudi and Uzbek delegations have discussed issues of cooperation in agriculture, including the prospects for enhancing mutual trade in agricultural products.

Both parties will likely sign memorandums of cooperation in agriculture, veterinary medicine and livestock development at the meeting.

They also agreed to deepen cooperation in the agricultural sector to enhance trade in farming, livestock and other products between the countries.

After signing the memoranda, action plans will be prepared, including specific measures and areas for developing cooperation and joint projects.

The Saudi side invited the Uzbekistan delegation to attend its most prominent exhibition of the agro-industrial complex, which will be held at the end of October in Riyadh.


American Airlines bets on supersonic travel with Boom jet deal

American Airlines bets on supersonic travel with Boom jet deal
Updated 16 August 2022

American Airlines bets on supersonic travel with Boom jet deal

American Airlines bets on supersonic travel with Boom jet deal

CHICAGO: American Airlines Group Inc. on Tuesday agreed to buy up to 20 jets from aircraft maker Boom Supersonic, becoming the second major US airline to bet on ultra-fast passenger travel in the last two years.

The deal brings Boom’s order book to 130 airplanes, including options, valued at about $26 billion, Boom Chief Executive Blake Scholl said in an interview.

The return of interest in supersonic jets comes nearly two decades after Concorde, flown by Air France and British Airways, was retired following a deadly crash and high costs of fuel and maintenance.

Last year, United Airlines Holdings Inc agreed to buy 15 Boom Overture aircraft provided they meet certain safety, operating and sustainability requirements. A similar condition was part of the American Airlines agreement as well.

American also has an option to purchase 40 more of the jets, each of which can carry 65 to 80 passengers, the companies said.

The four-engine Overture jet can fly from Miami to London in just under five hours, cutting the nearly nine-hour flight time between the cities by about half.

American Airlines spokesperson Matt Miller said it was too early to discuss ticket prices, given the aircraft isn't expected to carry its first passengers until 2029.

Supersonic jets have come under criticism from environmentalists for burning more fuel per passenger than comparable subsonic planes.

The Overture jet, being designed to run fully on sustainable aviation fuel or a blend, will be rolled out of Boom’s Greensboro, North Carolina factory in 2025, followed by test flights in 2026.

Third Bridge senior analyst Christopher Raite sounded a word of caution on Boom’s delivery target, saying the delay in conducting test flights for Boom’s other jet, the XB-1, signaled that delivery of the Overture will be delayed.


87,467 families benefit from Saudi housing program in 2022

87,467 families benefit from Saudi housing program in 2022
Updated 16 August 2022

87,467 families benefit from Saudi housing program in 2022

87,467 families benefit from Saudi housing program in 2022

RIYADH: The number of families benefiting from Saudi Arabia’s Sakani housing options and financing solutions has reached 87,467 since the beginning of the year until the end of July. 

Some 104,492 families also received possession of their first homes during that period, the Saudi Press Agency reported. 

The program seeks to raise the proportion of housing ownership for Saudi families to 70 percent by 2030.

The Ministry of Housing and the Real Estate Development Fund formed Sakani in 2017 to facilitate homeownership in the Kingdom through the creation of new housing stock, allocating plots and homes to nationals, and financing their purchase.

Earlier this year, Sakani program announced that it aims to enable 180,000 new families to benefit from the program’s housing options and solutions during 2022. 


Oil prices drop over 1% on potential global recession concerns

Oil prices drop over 1% on potential global recession concerns
Updated 16 August 2022

Oil prices drop over 1% on potential global recession concerns

Oil prices drop over 1% on potential global recession concerns

NEW YORK: Oil prices fell over 1 percent on Tuesday in volatile trading as economic data spurred concerns about a potential global recession, while the market awaited clarity on talks to revive a deal that could allow more Iranian oil exports.

Brent crude futures fell $1.41, or 1.5 percent, to $93.69 a barrel, after hitting a session high of $95.95. West Texas Intermediate crude decreased $1.33, or 1.5 percent, to $88.08 a barrel, after rising to $90.65.

The contracts fell about 3 percent in their previous sessions.

The EU is assessing Iran’s response to what the bloc has called its “final” proposal to save a 2015 nuclear deal, and consulting with the US, an EU spokesperson said on Tuesday.

Iran responded to the proposal late on Monday but neither Tehran nor the EU provided any details on the content of the reply.

“It is still unclear what Iran has told the EU last night, so some tricky items might impact the outcome of the nuclear deal,” UBS analyst Giovanni Staunovo said.

Weak economic indicators weighed on prices.

US homebuilding fell to the lowest level in nearly 1-1/2 years in July, weighed down by higher mortgage rates and prices for construction materials, suggesting the housing market could contract further in the third quarter.

“Oil traders reacted because of concerns about an economic slowdown and housing uses energy,” said Phil Flynn, an analyst at Price Futures group. “That caught us by surprise.”

China’s central bank cut lending rates to try to revive demand as the nation’s economy slowed unexpectedly in July after Beijing’s zero-COVID policy and a property crisis slowed factory and retail activity.

State media quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy.

Barclays lowered its Brent price forecasts by $8 per barrel for this year and next, as it expects a large surplus of crude oil over the near-term due to “resilient” Russian supplies.


Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain
Updated 16 August 2022

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

Saudi Cabinet authorizes transport minister to discuss MoUs with Bahrain

RIYADH: Saudi Arabia’s Cabinet on Tuesday authorized the minister of transport and logistic services to discuss with Bahrain two draft agreements to boost cooperation in the fields of road safety and maintenance. 

During the meeting, the council of ministers also authorized the chairman of Education and Training Evaluation Commission to discuss with the UAE a draft initial agreement to cooperate in the development of assessment, measurement and accreditation tools.

The ministers also approved two agreements in the fields of employment and domestic workers with Burundi, the Saudi Press Agency reported. 

The Cabinet has also authorized the health minister to discuss a draft memorandum of understanding with the Uzbek side for cooperation in the field. 

It also approved the rules governing the competency and contractor program.