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Saudi minerals: an untapped gold mine for privatization

: Thursday, June 02 - 2005 @ 09:06

The Saudi Arabian General Investment Authority hopes that the Kingdom’s mining sector will become a ‘third pillar’ of the economy after oil and petrochemicals.

Tens of thousands of square kilometres of hard rock and mountainous regions containing minerals ranging from gold silver lead and zinc, uranium to iron ore, copper, phosphates, bauxite, coal, tungsten, are available for exploration.

Saudi Arabia has some of world’s largest phosphate reserves, for example, while estimated bauxite deposits could feed a planned 620,000 tonnes-a-year capacity aluminum smelter for more than 30 years.

Minister of Petroleum & Mineral Resources Ali Al-Naimi says ‘lots of resources are yet to be discovered. Cement, limestone, and other mining sectors locally will help to substitute foreign products with our own domestic ones.’

A Mining Investment Service Centre has been set up to provide information and assistance to those interested in obtaining mineral concessions. This is aimed to provide a one-stop shop and help accelerate exploration licence applications by both foreign and local companies. A bonus for applicants will be access detailed mineral maps as well as some 2,800 technical reports that have been funded by the government over the last 25 years.

The main focus at present however, is on the Kingdom’s Al Jalamid deposit near the northern border which will supply raw materials for a $2 billion fertiliser production complex to be built at Ras al-Zour.

The development will include plants to produce ammonia, sulphuric acid and phosphoric acid. These in turn will provide the feedstock d for a 3 million-tonnes-a year di-ammonium phosphate plant also at Ras al-Zour. Bids from companies to carry out project management consultancy for the various plants have been called for early June.

The chief executive of Saudi Arabian Mining Company (Maaden) Abdullah al-Dabbagh has said the Kingdom’s plans for an integrated mining programme to utilise phosphate and bauxite deposits to produce fertilisers and aluminium will involve investments of more than $10 billion.

Sultan Ibn Jamal Shawli, assistant deputy minister for mining investment says that Maaden’s major phosphate and bauxite projects will place the Kingdom on the world stage as a producer of downstream, value-added fertiliser and aluminium products.’

As interest intensifies in the Kingdom’s minerals potential plans are going ahead for the sale of the state-sponsored Maaden’s interests to the private sector. The process will see the privatisation of the company’s gold, silver, copper and zinc mines starting next year through an initial public offering.

Maaden is also exploring for phosphates in the northern areas of Wadi Sirhan and Turaif and is developing magnesite deposits in the central area of the Kingdom. All of the company’s activities are eventually due to be formed into self supporting business units for divestiture to the private sector.

Petroleum & Mineral Resources Minister Ali Naimi expects that liberalising the solid minerals area will create boom conditions for the Saudi mining sector which he expects to grow up to 10% a year. The Kingdom’s seventh five year economic plan called for 9% growth in the non-oil mining sector making it the fastest growing area of the economy.

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Thursday, June 2- 2005 @ 9:06 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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