Energy & Mining

Eye On The Ball

Mining

While Saudi Arabia is world famous for its oil and gas reserves, its mining sector is beginning to come into its own. With large deposits of gold, silver, copper, and […]

While Saudi Arabia is world famous for its oil and gas reserves, its mining sector is beginning to come into its own. With large deposits of gold, silver, copper, and phosphates, as well as fresh investment, the sector is beginning to show signs it could be a real money maker. The Kingdom has a number of metallic and non-metallic minerals, with the bulk of the metallic minerals, such as gold, zinc, copper, and tin, lying in the Precambrian rocks of the Arabian Shield, located in the Western part of the country. When it comes to non-metallic minerals, they often lie in the northern and central part of the Kingdom in Precambrian and Phanerozoic formations. Non-metallic minerals, such as phosphate, are attracting more attention as the authorities look to encourage foreign investment to help exploit a number of untapped resources.

PHOSPHATES

One of the main upcoming sectors for the Saudi mining sector is phosphate. The flagship of this new endeavor will be Waad Al Shammal project. The plan is to build an industrial city surrounding a phosphate mine. In February 2014, a SAR36 billion ($9.6 billion) deal was signed to develop Waad Al Shammal Industrial City. The project is hoping to follow in the footsteps of Jabail and Yanbu, two petrochemical industrial cities that were developed in the 1980s around oil deposits on the Gulf and the Red Sea, respectively. One of the main investors in the city is Ma’aden, the partly state-owned mining company of Saudi Arabia. “We announced a $7 billion investment for the Waad Al Shammal project, which is a phosphate mining operation,” Khalid Al Mudaifer, CEO of Ma’aden, explained to TBY in an interview. “We plan on investing up to $35 billion over the next 20 years.” Ma’aden’s phosphate operations are dealt with using Ma’aden Phosphate Company, which is a joint venture with SABIC in which Ma’aden owns 70% and SABIC 30%. To help boost the mines’ revenues, Ma’aden has signed a number of deals with foreign companies to set up plants in the city. As part of the project, Ma’aden signed an agreement with Canadian company SNC-Lavalin and Chinese company Sinopec to establish a sulfuric acid plant in the city, while it also signed with China Huanqiu Contracting & Engineering Corp. to develop an ore beneficiation plant. In addition to these two deals, Ma’aden also signed with South Korea’s Hanwha Engineering & Construction Co. to build a phosphoric acid plant to the tune of SAR3.5 billion ($930 million). Once complete, the plant will have a production capacity of 1.5 million tons. There are seven large, world-class plants planned for the industrial city that will boost the capacity to 16 million tons per year, including phosphate concrete, dicalcium, and monocalcium, which is used in animal feed. There are many more companies involved in the project, and once it starts to take shape, many more still are likely to jump on board.

GOLD

Gold has been mined in Saudi Arabia for over 5,000 years, and there are 782 recorded instances of gold finds; however, only 51 have ever been tested and evaluated. Currently, the only company to mine gold in the Kingdom is Ma’aden, which operates five mines. Since 1988, the company has produced over 4 million ounces of gold. The company’s gold operations are run by Ma’aden Gold and Base Metals Company (MGBM), which is a subsidiary of Ma’aden. Gold mining faces a number of challenges in Saudi Arabia, specifically the remote location and lack of water to process the ore. However, the development of a 500-kilometer pipeline will help alleviate some of the problems facing the company as it will bring treated wastewater from the Taif municipality to a newly planned mine 365 kilometers northeast of Jeddah in As Suq. Ausenco won the contract to build the open-pit mine as well as heap leach (HL) and absorption desorption recovery (ADR) processing facilities. Another mine currently under construction is the Ad Duwayhi Gold Project, located approximately 450 kilometers southwest of Riyadh. It will also be an open-pit mine and involve milling operations to produce a product onsite, which will then be transported to Jeddah, which is 125 kilometers away.

BAUXITE

Ma’aden is the major player in the Saudi mining sector and operates in a number of fields. It recently announced a $10.8 billion joint venture with Alcoa to create the largest vertically integrated aluminum complex in the world. It will use Saudi Arabia’s vast bauxite resources to produce aluminum for domestic and international markets. The project will involve the development of two sites: Al Ba’itha and Ras Al Khair. Al Ba’itha is expected to meet the demand from the complex for bauxite and produce 4 million tons per year, while Ras Al Khair will receive the bauxite by rail and produce 1.8 million tons per year of aluminum.