JEDDAH, 2 May 2006 — The Council of Ministers yesterday decided to increase the capital of Saudi Arabian Mining Company (Maaden) to SR8 billion and float 50 percent of its shares for public subscription by the end of this year, the Saudi Press Agency reported.
The Cabinet, chaired by Custodian of the Two Holy Mosques King Abdullah, allocated a stake of five percent each for the Pension Fund and the General Organization for Social Insurance (GOSI) if they intend to invest in the company, SPA said.
The Cabinet meeting entrusted the present board of directors the task of completing the company’s privatization process within a specific timeframe. Earlier, the Cabinet approved alterations to Maaden’s basic law.
According to Maaden Chief Executive Officer Abdullah Dabbagh the privatization program will cover 50 percent of the company’s gold, bauxite and phosphate operations. Maaden originally planned to sell off its operations in stages, starting with its gold unit.
But Dabbagh said executives had decided to include the bauxite and phosphate operations in an initial private offering at the end of 2006. “There is a change in plan. At the last board meeting they wanted to privatize all of Maaden,” Dabbagh said.
Maaden’s gold mining unit produces around 300,000 ounces of gold a year. The company plans to exploit phosphate reserves in the north of the country to export fertilizer by 2008, and to mine bauxite for aluminum production shortly after that.
“We are ready today to privatize the gold company,” Dabbagh said. “Phosphate, we will be ready for that in six months but it would take longer than that for aluminum,” he said in press comments published last year.
The government last month approved the construction of an SR14.086 billion ($3.76 billion) aluminum smelter plant, a Maaden project with an annual capacity of 623,000 tons. The plant will be located in the Ras Al-Zour industrial zone in eastern Saudi Arabia.
Maaden says its $1.8 billion Jalamid mine project will yield enough phosphate for annual production of three million tons of di-ammonium phosphate. The Az-Zabirah mine will provide bauxite for production of 1.4 million tons of alumina to feed the aluminum smelter plant.
The company signed an SR900 million deal yesterday with a coalition led by Al-Qahtani Group to build three sulfuric acid plants in Ras Al-Zour. Al-Dabbagh said the plants would have a daily capacity of 13,500 tons.
He described the project, which will be ready within 34 months, the largest in the world. The new sulfuric acid plants are part of a di-ammonium phosphate complex, which is estimated to cost SR10 billion.
Briefing SPA on the Cabinet decisions, Culture and Information Minister Iyad Madani said the Cabinet meeting reviewed the positive outcome of King Abdullah’s decision to cut petrol prices by more than 30 percent from 90 to 60 halalas per liter and diesel prices from 37 to 25 halalas per liter.
The Cabinet said the royal gesture would reduce the financial burden on citizens and residents and increase their purchasing capacity. The country’s 600,000 farmers will also benefit from the price reduction.
“It will have direct and quick impact on transport costs, encourage more investment in the transport sector and strengthen the competitive edge of Saudi industrial products,” SPA said, quoting a Cabinet statement.
The Cabinet also applauded another decision taken by the king on Sunday, approving establishment of 16,000 low-cost houses for the poor. King Abdullah has allocated SR10 billion from budget surplus for projects aimed at providing decent housing to less fortunate citizens across the country.
The Cabinet vested the authority of issuing municipal licenses for commercial, industrial and professional projects as well as for sports and recreational projects to the Ministry of Municipal and Rural Affairs.
However, the ministry should wait for the approval from concerned authorities before issuing municipal licenses for recreational, sports, health, and educational and other projects.
The Cabinet endorsed the memorandum of understanding signed with the Philippines on Oct. 1, 2005 for expanding cooperation in technical education and vocational training. It also approved the united industrial law for GCC countries.
The meeting authorized the governor of Saudi Arabian General Investment Authority (SAGIA) to sign an agreement with Ukraine for the promotion and protection of joint investment. Riyadh Governor Prince Salman yesterday emphasized the government’s plan to provide wider powers to the consultative Shoura Council.
“The idea of granting greater powers to the Shoura has always been in the minds of our leadership,” he said, stressing the need for coordination between the Shoura and regional councils.
Addressing the Shoura, Salman disclosed plans to expand the King Fahd National Library in Riyadh.
“I am ready to accept any constructive proposals from the Shoura members,” he said.
