Vision 2030: Mining to add $1.3t to Saudi construction boom’s already massive one trillion dollars
ALBAWABA – Saudi Arabia is looking to invest billions in the minerals and mining sector to tap into an estimated $1.3 trillion worth of metals, amid the ongoing Saudi construction boom that is already bringing in over one trillion dollars in property and infrastructure investments.
For almost 80 years, Saudi Arabia has relied on oil to drive its economy. But today, in the aftermath of Crown Prince Mohammed bin Salman’s ascension to power, the Kingdom is looking for other ways to grow, economically and as a nation, apart from oil.
Two of the Crown Prince’s Vision 2030 most important components are real estate and construction development and mining and mineral resources, which is the program’s third pillar. The other two are petroleum and petrochemicals.
So far, bin Salman has managed to kick-start the massive Saudi construction boom, with the latest achievement reported Monday, as the Cityscape Global 2023 exhibition in Riyadh kicks off with billions in new property investments.
In the meantime, Saudi Arabia has been working on identifying the quantities and qualities of the various minerals buried across the countries.
The Saudi government announced there are $1.3 trillion worth of metals in the country, including copper and zinc, Bloomberg reported.
Renier Swiegers, a Namibian who works for British mining firm Moxico Resources Plc, is a believer. He’s helping Saudi Arabia establish a new zinc and copper open pit mine about 200 kilometers west of the Saudi capital, Riyadh.
“I’ve done projects all over Africa, and I know the geology and where is good to mine,” he told Bloomberg, as he pointed to copper deposits in the samples he extracted, glittering in the sun.
“This site is just like those,” Swiegers said.
Copper extraction site in the region of Coquimbo in Chile - Shutterstock
By 2025 the Khnaiguiyah site he’s working on will be producing some 100,000 tons of zinc and 10,000 tons of copper a year in its first phase, the New York-based news agency reported.
Even though these amounts are miniscule, as they are equivalent to Chile’s copper output in about 18 hours of work, this is just the first phase and the aim is to double the volume. And notably, this is only one of several other projects across the Kingdom.
Steps taken to realize Vision 2030 goals, apart from Saudi construction boom
Mining is an integral part of Saudi Arabia’s plan, perhaps even more than as it is for the country to develop its real estate sector to the next level, which it seems to have done, so far.
In July, Saudi Arabia announced its first big push into international mining.
It took part in a $3.4 billion deal in Brazil, buying a stake in Vale SA’s base metals unit alongside investment fund Engine No. 1, according to Bloomberg.
This was the first such move by Manara Minerals, a vehicle established by Saudi Arabia’s the Public Investment Fund, or PIF, and Saudi Mining Co., also known as Maaden.
The agreement gives the kingdom, which beat off competition from Japan and Qatar, a 10 percent slice in one of the world’s most crucial suppliers of nickel and copper.
Looking forward, these are essential metals needed to decarbonize.
Zinc and copper are essential minerals for decarbonization - Shutterstock
Apparently, the plan is to use government subsidies and lending by state-controlled funds to position the Kingdom as an alternative supplier to China for metals and minerals vital to the global energy transition. These material are used in various critical sectors, such as batteries for electric cars.
Dirty old mining is one of the pillars of the clean new future, as described by Bloomberg.
“Saudi Arabia needs more than one engine to achieve its vision,” Khalid al-Mudaifer, vice minister of mining affairs, said in an interview. The kingdom’s plan is to transform itself into an economic and industrial powerhouse, he said. “For that we need minerals.”
Much of the Saudi plan will hinge on how successful projects like the one at Khnaiguiyah are at getting from identifying specific locations of mineral deposits to commercial production.
Ajlan & Bros, the local investor developing Khnaiguiyah along with UK-based Moxico Resources, has earmarked $14 billion to invest in developing mines and processing facilities by 2030.
Saudi Arabia is also partnering with the Chinese Geological Survey on a $207 million contract to help identify minerals in the so-called Arabian Shield area of the kingdom where most deposits are, officials said at a Saudi-China business conference in June. The government in Beijing has also led efforts to identify the Kingdom’s uranium deposits.
What is Saudi Arabia doing beyond the Saudi construction boom
Additionally, Canada’s Barrick also operates a copper mine on Saudi Arabia’s southwestern coast near the Red Sea. It has also been in talks with the PIF about a potential stake in a copper project in Pakistan, which would bring in Saudi money and political influence, unnamed sources told Bloomberg.
The government is offering substantial incentives for companies to start mining.
The Saudi Industrial Development Fund will offer financing for up to 75 percent of a project. Not to mention there’s a five year grace period on royalty payments, a cap on taxation and a commitment not to levy windfall taxes. Whereas all government income from mining will go into a special fund to be reinvested in the industry.
The industry would eventually employ more than 250,000 people and contribute some $75 billion to Saudi gross domestic product by 2030, Bloomberg reported.
Mining is an integral component of Saudi Arabia’s Vision 2030 - Shutterstok
For the next few years, Manara’s two shareholders will initially provide about $3 billion for two or three international deals a year, and more funding will be provided if needed, the sources said.
More so, apart from developing local mines, there’s also another element to the plan that industry insiders told Bloomberg is less speculative and quicker to get up and running. Saudi Arabia wants to buy up resources from elsewhere to be refined and processed at new facilities inside the kingdom.
The main metal of interest to companies is copper, but Saudi Arabia also wants to mine uranium and phosphates for its nascent nuclear program.
Saudi Arabia has repeatedly pledged that its atomic program is strictly for peaceful purposes, but the Crown Prince has said the kingdom would develop a bomb if Iran did so, according to Bloomberg.
Better late than never: India responds to Belt and Road with Mideast-India railway-corridorBut experts have reportedly said that uranium will likely not be commercially feasible and only to be found in small to medium-sized areas. It makes them less attractive to mine than the deposits that stretch down the through the Andes in Latin America, providing the bulk of the world’s supplies, or the sedimentary-rock formations in places like Central Africa.
