RIYADH: Affirming Saudi Arabian Mining Co.’s strong business profile as a multi-commodity producer, Moody’s Investor Service assigned a long-term issuer rating of Baa1 with a stable outlook to the company.
In its latest report, the global credit rating agency revealed that it has also given a long-term national scale issuer rating for A3 to the firm, also known as Ma’aden.
According to Moody’s, the company’s Baa1 issuer rating indicates the company’s standalone credit strength and the expectations that it will receive support if needed from the Kingdom’s sovereign wealth fund, which is the company’s majority shareholder.
Saudi Arabia’s Public Investment Fund is one of the richest sovereign wealth funds globally, and it has assets under management worth SR2.23 trillion ($595 billion) by the end of 2022.
Moody’s gives a Baa1 rating to companies which have moderate credit risks and a high ability to pay short-term debts.
On the other hand, Ma’aden’s national scale issuer rating of A3 indicates the firm’s low-credit risk and high ability to repay short-term debts.
“Ma’aden’s rating reflects its strong business profile as a multi-commodity producer involved in the production of phosphate-based fertilizers, ammonia, aluminum and gold,” said Moody’s in the report.
It added: “The company has a leading fertilizer business and sizeable aluminum operations and is looking to expand further in base metals and new minerals. This product mix brings a degree of diversification benefit although the fertilizer business is the dominant cash flow generator of the company.”
Moody’s further noted that Ma’aden’s revenues have a high share of exports through a diversified international customer base.
The report went on and said that Ma’aden enjoys low-production costs compared to its global counterparts as it procures feedstock of molten sulfur and natural gas through long-term supply agreements with Saudi Arabian Oil Co., also known as Saudi Aramco.
“The company is also exposed to geographic concentration given that most of its operations are located in a single country and ultimately exposed to the political, economic and regulatory environment in Saudi Arabia, but this risk is mitigated by the high credit quality of the sovereign and its economic growth potential,” added Moody’s in the report.
According to Moody’s, Ma’aden is expected to use its long-successful partnership model to mitigate execution risks while undertaking large investments, particularly while investing outside its core business segments and expertise.
Ma’aden is Saudi Arabia’s primary and strategic player as the Kingdom aims to turn the mining sector into the third pillar of its economy, in line with its Vision 2030 economic diversification efforts, the agency added.
“The stable rating outlook reflects Moody’s expectation that Ma’aden will continue to pursue its prudent financial policy and maintain robust liquidity, and its credit metrics will remain commensurate with its current rating level,” the agency said.
Meanwhile, Fitch assigned a long-term issuer default rating of BBB+ with a stable outlook to Ma’aden.
“These investment grade ratings come as we undertake a major transformation program to strengthen the business and meet our long-term growth targets,” said Robert Wilt, CEO of Ma’aden, according to a press statement.
He added: “This further underlines Ma’aden’s strong financial position, boosting investor confidence and cementing our access to global capital markets. More importantly, the ratings underscore our unwavering commitment to deliver on the Kingdom’s Vision 2030 to establish mining as the third pillar of the economy.”
Ma’aden had reported a net profit of SR9.31 billion in 2022, a 78 percent rise compared to SR5.22 billion in 2021.