Mining Sector Outlook in Saudi Arabia

A Hot Tip about Metal Ores in Saudi Arabia

Last updated: 13 Mar 2011


Saudi Arabia has a long-term strategy to develop and exploit a full range of mineral resources. Saudi Arabia is the fastest growing economy in the region. It is the largest oil producer in the Gulf Cooperation Council (GCC) and accounts for almost 11% of the world’s oil production. Saudi Arabia has enjoyed three years of strong growth driven by rising oil revenues. Saudi Arabia’s economic outlook has slowed in the face of ongoing economic global financial crises. The effect of the global turmoil has been felt through the fall of oil prices and tightening of credit and liquidity in global markets. High oil revenues in 2007 and in the first six months of 2008 have stimulated massive project spending. In addition, the Saudi Arabian government has taken important steps to improve the business environment.


Some private investment growth has suffered from global liquidity dislocations, and it seems clear that the public spending on infrastructure will continue at a reasonably high rate in 2009. Saudi Arabia has abundant mineral resources. Metallic ores, such as gold, silver, copper, zinc and iron, can be found in the western half of the Kingdom. Phosphate, bauxite and gypsum deposits are found in the mineralized areas in the northwest of the country. Over the past 10 years, the Saudi government has sought to promote mining industry. In 1997, the Kingdom established Saudi Arabian Mining Company (Maaden) with a capitalization of $1 billion to lead the mining sector’s development.


Integrated production is now central to the Kingdom’s plans for the mining industry. The ultimate objective of mining sector development for the Kingdom is to attain the highest level of integration of all processes, leading to the manufacture of high-quality, high-value added products capable of competing effectively in international markets, by combining locally sourced minerals with downstream expertise, as well as capitalizing on the country's low-cost energy and proximity to key export markets.



Market Demand

Saudi Arabia is the largest economy in the Middle East and is one of the biggest of the oil producers worldwide. Oil plays a major role in the economic performance of Saudi Arabia. The Kingdom’s ambitious plan is to dramatically raise investment competitiveness with its programs designed to place Saudi Arabia among the world’s top 10 globally competitive investment destinations by 2010. This plan can be best highlighted by the announcements of six new economic cities. The economic cities will be built in Rabigh, Hail, Madinah, Jizan, Tabuk and Ras Alzour.


Saudi Arabia's wealth is not based just on oil and as the kingdom seeks to diversify its economy, the country's metallic minerals that are becoming increasingly important business propositions. More than 2,000 sites have been identified by the Saudi Geological Survey in the mountainous Arabian Shield running along the kingdom's Red Sea coast and in areas to the centre and north of the country.

International access to gold, silver, bauxite, phosphate, iron ore, copper and tantalum as well as rich deposits of limestone, dolomite, basalt, marble, gypsum and silica has been opened up by a new mining code approved in 2004. The Al Masane Al Kobra Mining Company is one of the latest ventures.


Ma'aden's long-term strategy is to develop and exploit a full range of mining opportunities. One of the biggest of these is the northern region's phosphate reserves which will allow Saudi Arabia to become a significant supplier of phosphate fertilizer and related downstream products.


The diversification of mining activities, along with the domestic processing of raw materials into semifinal or final products, will enable the industry to make a greater contribution to the Saudi mining economy. But the impetus for that to happen will have to come from the government and partially from private in the foreseeable future.


By Ishtiaq Hussain


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Posted: 28 April 2010, last updated 13 March 2011

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