IM Editorial Director Paul Moore has met in person this year with Saudi Arabia’s Minister of Industry & Mineral Resources, His Excellency Bandar Ibrahim Alkhorayef, on two occasions – at the inaugural Future Minerals Forum held in January 2022 in Riyadh (with the follow up event coming up soon in early 2023) – and also at this week’s IMARC show in Sydney 2-4 November, 2022 where he gave a welcome address in the Plenary session which was themed Promoting Opportunities, Minimising Disruptions & Building Resilience. On both occasions he has talked in depth about the country’s current drive to open up and speed up its mining and minerals industry for the benefit of the country in diversifying its economy, but also the wider region. The following summarises some of the discussions.
What is different about the latest push for Saudi Arabia into mining and minerals growth, as it is not the first time it has been on the agenda?
Saudi Arabia used to have a five year planning system – from 1970, every five year plan had a goal to diversify our economy away from domination by oil. But this didn’t fully materialise – so what is different this time? To begin with I would say that it is the vision itself. Vision 2030 is the starting point – a vision of Crown Prince Mohammed bin Salman, whereby the Kingdom aims, by 2030, to more than triple mining’s contribution to GDP, and in this process, create more than 200,000 direct and indirect jobs. But as we are redrawing the plan we are also executing it at the same time – it is one thing to talk about something and another to carry it out.
As Peter Drucker said – strategy is a science but implementation is art. With mining we started with a strategy, which laid down the groundwork for us to understand the different stakeholders and interests better; and to make sure that while we are developing the mining sector, we can actually drive it forward in such a way that it will contribute to our economic diversification and complexity. So the strategy was built but then the strategy also put in place several pillars for implementation. One of them was a new Saudi Mining Investment Law, which came into force January 2021 – to better encourage and facilitate mining investment. Another was the Saudi Geological Survey, especially improving the detail, quality and availability of the mineral exploration information. And a third was manpower and human resources – how we can link a growing minerals sector with our industries. So, there has been a sequence of events that together are making for a full picture.
Another area of progress is the new Ministry of Industry and Mineral Resources itself which is not yet three years old – this was carved out from the Energy Ministry and the decision was clear – to bring mining and industry together. These progress areas all make me confident that we are going to reach our goals, along with the clarity and depth of the plan. Look at our industrial strategy for example – it is far more detailed than before, right down to refined final products and right the way back upstream into mining. The Future Minerals Forum, soon into its second year, is also playing a part. One of the things we looked at was the fact that the region lacked leadership and the right type of cooperative approach to unlock the potential value of the mining sector. And note I said region, because I am not just talking about Saudi Arabia but the wider area from East Africa to the Middle East and Central Asia as well – when your region is strong then you are also stronger. The region needs to build logistics, infrastructure, talent, financing – a whole suite that cannot just be built in one country. It has to have a critical mass, and we believe that Saudi Arabia with its neighbours can do that.
Saudi Arabia’s Minister of Industry & Mineral Resources, His Excellency Bandar Ibrahim Alkhorayet, speaking during the IMARC 2022 Plenary Session
Mines are not developed overnight – it can take multiple years, even decades to find the resource and see it through to a commissioned operation, including at the end ensuring you have enough skilled people and the right equipment. How are you speeding up this process in Saudi Arabia?
You are right, a long development time is a reality of both the mining and the industrial sector. You need time…but there are ways for us to help ensure that at least some results are seen more quickly. One move is streamlining exploration and licensing under the new Ministry of Industry and Mineral Resources. But in exploration we also identified certain areas that we already know to be very mineral rich – to the point of having sufficient resources to be commercially and financially viable. These are the subject of special licence rounds with a bidding process for development rights in these areas – to give you an example of the speed of development – we have awarded 466 licenses in the first half of 2022 alone.
Only 170 km from Riyadh we have the Khnaighuiyah area very rich in zinc and copper – we estimate 26 Mt of these ores combined, with the license just awarded recently to a consortium of Moxico Resources PLC and Ajlan & Bros after a competitive process. We also recently announced new gold and copper ore deposits in the Madinah region and in a number of other areas. Then we have our existing mining companies where we also see evolution growth – Maaden is expanding rapidly with large new mines like Mansourah Massarah but you also have Barrick’s growing Jabal Sayid copper mine, which is a JV between Barrick and Maaden. And those valuable cooperations continue – a consortium of Barrick and Maaden just won the Umm Ad Damar exploration license. This is 300 km northeast of Jeddah and 25 km northwest of the city of Mahd al-Dahab, on the Jabal Sayid mining belt, and includes copper, zinc, gold and silver deposits. Plus one of our other existing mining majors Al Masane Al Kobra Mining (AMAK) was recently awarded four exploration licenses for copper and gold in Al-Dawadmi.
You are here at the IMARC show in Sydney – what can the Kingdom learn from Australian mining and equally what opportunities does Saudi Arabia offer to Australian companies?
Australia stands out as having a great track record in developing a very mature mining sector, creating great local capabilities, an ecosystem of large corporates but also small and medium sized enterprises – not only mining companies but also mining services and technology companies. Having this type of ecosystem could help our industry grow. So we can learn a lot from Australia. From our side we are also here to highlight the huge potential in Saudi mining for Australian mining and services companies that comes from our Vision 2030 initiative, particularly as many Australian delegates were unable to attend the first Future Minerals Forum which was held around the time that travel bans were only just being lifted. I would also say that Australia is known for having a very strong junior miner sector, which is very interesting for us – giving room to entrepreneurs and academic-driven companies for example, to play their part in mining industry development in addition to the large corporates. And finally from a national perspective – the last Ministerial level delegation from Saudi Arabia to Australia was almost ten years ago – a long time for two countries with such good trade relations.
Do you see technology playing an important role in Saudi’s mining industry – from automation to the latest mineral processing techniques?
We are undoubtedly looking to the latest technology both in industry and in mining. We believe it is an area which will really let us leapfrog ahead in some cases. In industry we are seeing a big shift from lower paid, labour intensive roles to high skilled roles. A lot of this has happened naturally thanks to investment by the Kingdom in IT infrastructure over the past five years, as an example. Actually it was largely this that helped us get through the pandemic – nothing actually stopped in Saudi. Schooling, industry and government all continued. Talking about mining specifically, I believe Saudi Arabia represents a great opportunity to pilot some of the latest technologies that have not yet been finally commercialised – and our regulations are allowing for that. There will be a particular focus on technologies that help us cut the amount of water usage, as an example. Water is a necessity not a luxury so we need to manage it more carefully. In our SIDF Industrial Development Fund, there is a clear package for automation. So yes in industry and mining we are betting on technology and we invite the technology players to grow their presence in our country. Already Maaden is using drones for stockpile compliance – drone speed and accuracy can you help make better and much faster decisions. But they can also help maintain ESG standards on minesites through surveying. In mining itself, mechanisation and automation will also play a greater role. In Saudi Arabian mining we have no baggage of misconceptions or conservatism when it comes to new technology. We are a clean sheet of paper if you like.
In terms of developed mines, Maaden remains a powerful force in Saudi mining but of course it is still 70% owned by the Kingdom via Saudi Aramco. Are you just as open to completely foreign mining companies operating in Saudi Arabia?
I am glad you have asked this question, because there has sometimes been a perception that Maaden somehow has favourable terms. This is absolutely not the case. Maaden has been through extensive changes and today is like any other global mining company. The competitive landscape is also very clear under the new Mining Investment Law. We encourage any interested parties to approach us directly or through joint ventures. There is no preferred entity or structure. Saudi and non-Saudi companies are being treated in exactly the same way. The only difference would be the tax structure, but this has nothing to do with mining specifically. The tax system in Saudi Arabia is unified for all sectors. And in mining, you get certain tax allowances for producing more downstream products in country. To reiterate, we are very proud of Maaden, a national company that has been able to demonstrate great successes and growth. But today it is also worth pointing out that it is a listed company with much greater transparency and international investment levels. Also where there have been JV’s between Maaden and Barrick for example, these have been very beneficial in enabling knowledge sharing as well as being culturally progressive through shared responsibilities. In Saudi Arabia, JV’s have been a great success in many industries – sometimes you need a local partner to help with local knowledge for marketing and other reasons. I was in business before becoming a Minister and we have several joint ventures that were very fruitful.
Are you offering any specific incentives to mineral exploration and mining companies to participate in the new mining and minerals industry in the Kingdom?
Another good question – we have two levels of incentives – first what we call standard off the shelf incentives that are available for certain strategic industries. That applies to financing such as through SIDF – in some cases it will permit 50% or even up to 75% financing. There are also incentives relating to energy. Then we have another level of incentives – there is a committee headed by the Ministry of Investment with the other Ministries also participating – that will consider any additional incentives be it financial or legal or structural that a project may need to proceed with the involvement of a major investor. Finally on free zones – NEOM is set to become the world’s most competitive free zone and will transform more than 6,500 km2 in the Kingdom’s northwestern Tabuk region. While this of course is quite location specific and many mines will be in remote regions – it is an option for example, for mining technology and service suppliers to be based there.
Lastly, mining requires skilled workers – what are you putting in place to encourage especially younger people but also local people trained up to be able to work in these new mines that will be developed?
Yes this is crucial for us. For example in the north of the country where Maaden’s phosphate operations are located, we already have a state of the art training institute where a lot of local people receive the necessary skills to work in that industry. This has been tried and tested and works well so the same model will be applied elsewhere. In our new Mining Investment Law we also have incentives to train young Saudi people in the mining field. And there are areas where we will share training costs with mining companies and investors. The challenge with training is how can we scale it up to meet the kind of growth levels we are aiming for – yes for mining engineers but the real need is the support roles such operators, maintenance and service staff, electricians and mechanics. But with the help of technology like e-learning, reskilling is much easier than before. And in certain areas we already have a good structure in place – we have two renowned schools for geologists, for example.