Doing Business in Saudi Arabia - International Franchise Association

Mining Industry Equipment — MIN
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Saudi Arabia contains significant industrial minerals beside the oil and gas fields. The Deputy
Ministry for Mineral Resources (DMMR) has located 1,273 sites of precious metals, and 1,171
sites of non-precious metals. Over 30 minerals have already been identified in the Kingdom,
with at least 15 industrial mineral that could successfully be exploited by investors. Feasibility
studies have shown that many of the industrial minerals indentified in the Kingdom would have a
return on investment close to 30 percent. Despite of mineral wealth, Saudi Arabia is still in the
preliminarily stage, particularly in the metallic minerals. The government established Saudi
Arabian Mining Company (Ma’aden) in 1997, and Saudi Geological Survey Agency in 2000 to
survey, identify and explore mining resources and prepare them to be attractive for local and
foreign investors.
The government aims to diversify the economy and become a leading exporter of minerals
beside oil and gas. There are, however, many challenges and obstacles facing the mining
sector, which in the turn may require a long period of time before the government’s goal is
achieved. At the top of these challenges is the fact that most of mining resource are in remote
areas and lack basic infrastructures. This has made mining very costly to develop, not only for
the government but also for the private sector.
Data on the potential market size are extremely difficult to estimate. The mining industry in
Saudi Arabia is at the beginning of a large expansion, as the country begins to exploit large
mineral resources identified some time ago. The country is simultaneously implementing
several large-scale transportation infrastructure projects, requiring much of the same equipment
as the mining projects.
In recent years, the Saudi government has recognized the potential of the mining and minerals
sector to become the third pillar of the Kingdom’s economy, behind oil and petrochemicals.
Geological surveys carried out over the past 53 years have proven that the Kingdom has large
mineral deposits that are commercially viable for exploitation. The government is committed to
fully realizing the potential of the mining sector, and is seeking to attract investors, partners and
suppliers. A new mining law adopted in 2004 to allow greater access for foreign companies to
the kingdom’s mineral resources is beginning to bring results.
Ma’aden’s aluminum project includes the development and construction of a bauxite mine near
Al-Baitha with a mine life of over 30 years at an annual capacity of 4,000,000 metric tons as well
as facilities for handling raw materials. It also comprises the development, design, construction
and operation of an integrated aluminum operation at Ras Az-Zawr about 90 km north of Jubail
Industrial City. Facilities there will include an alumina refinery with a capacity of 1,800,000
metric tons per year, a 740,000 metric ton per year aluminum smelter and an aluminum rolling
mill with a capacity of 250,000 tons per year.
The Bauxite will be transported from the mine site located between Hail and Qassim provinces,
via the north-south railway to Ras Az-Zawr where it will be refined to produce alumina, which in
turn will be processed in the aluminum smelter to produce aluminum. The mine plan has been