JEDDAH — Diversification, away from dependence on oil exports, has long been a major Saudi government objective. Given that aim, it is more than fortuitous that the Kingdom turns out to be endowed with significant mineral resources other than hydrocarbons.
Exploration activities in the Kingdom have identified the presence of over 50 gold and numerous base-metal deposits as well as valuable industrial minerals. As a result, Maaden was established in 1997 to bring together a number of diverse mining interests and develop the mineral resources of Saudi Arabia on commercial lines.
The materials Maaden will produce are going will be the basis for another massive downstream sector on top of the petrochemical one. It will create vast numbers of jobs for Saudi nationals, create local service industries and offers the chance to create new businesses and partnerships for Saudi and international companies alike. The catalyst for all this potential is the mining and processing of two minerals - bauxite and phosphate.
Bauxite is chiefly used for the production of aluminum but can also be used in the production of cement. Aluminum, which is to be produced directly by Maaden in a mega project with international mining giant Rio Tinto Alcan, has a range of uses - from construction, aerospace and transportation to packaging. Phosphate, which will be produced by another Maaden mega project (this time with local joint venture partner SABIC), will be used to make fertilizers. Phosphate is also used in several industries including food and beverages, pharmaceuticals and cosmetics.
In the last 30 years, the Kingdom has spent on mineral exploration the equivalent of what Canada spends in just one year across its regions, an area comparable in size and geology to the reserves available in Saudi Arabia. It is obvious that the surface has barely been scratched in terms of the minerals that can be developed and therefore industries and even whole industrial sectors that can be grown.
Given the importance of the role facing Maaden, the company has quickly become regarded as the growing third pillar of Saudi industry, following the oil industry led by Saudi Aramco and the petrochemicals industry led by SABIC. As a result of Maaden’s two mega projects the company will become a major source of export revenue for Saudi Arabia and will add to its competitive advantage. Abdullah Al-Dabbagh, president and CEO of Maaden commented that, “it is very rare to find a location in the world that has both energy and raw materials. Saudi Arabia is very unique in this regard.”
Although Maaden already operates as a commercial entity and is scheduled to issue an IPO soon, it will continue to operate in accordance with Saudi strategic objectives. The government will remain the company’s largest shareholder. Maaden has already allied itself with local and international partners. It has signed agreements with Korea’s Hanwha Engineering and Construction Corp. and China’s Guizhou Hongfu Industry and Commerce Development Co. to develop the plants that will operate in the world’s largest fully integrated phosphate fertilizer complex.
Other contractors involved on this project include Dragados of Spain, Litwin of France and Outotec of Finland. Contractors working on developments at Maaden’s industrial complex in Ras Al-Zour include Samsung Engineering and locally contracted ABB Contracting.
Maaden has also created two strong alliances with SABIC, which has experience in international fertilizer markets and with Rio Tinto Alcan. The latter’s specialized knowledge, technology and experience will be of immense importance in helping develop what will be the world’s largest fully integrated mine to metal aluminum project.
Maaden’s powerful alliances and partnerships have opened the doors for technology and knowledge transfer from several industry leaders and countries. They will also generate training and employment opportunities for young Saudis who will then contribute greatly to the economy. This is in line with Maaden’s commitment to ensure high levels of Saudization from the start. Dabbagh says: “Our plans are to start production with 50 percent or more Saudis, which is quite high considering we don’t currently have experience in the areas of these mega products.
