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A Quick Guide to Mining in the Kingdom of Saudi Arabia


Discover the most exciting opportunities, projects and players in the Saudi Arabian mining industry

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Overview
Saudi Arabia is among the richest and most diverse countries in the Middle East and Africa in terms of metal and mineral potential. In line with the country's push to diversify its economy away from hydrocarbons, Saudi Arabia's mining sector is targeted to become the "third pillar" of the country's economy. To achieve this, the Saudi government has offered many incentives to investors in mining and mineral based manufacturing in the Kingdom over the last decade. The issuance of a new mining investment code has made it easier for international firms to become involved in the nations fast developing mining industry.

What will you learn over the following pages?


1. What opportunities Saudi offers the global mining industry
Discover the scale and types of mineral and metal wealth available and see how the Ministry for Mines (DMMR) and Saudi Geological Survey are opening up opportunities to exploit this wealth.

2. Who is driving these opportunities?


Who are the major contacts to talk to for data, to secure licences, to invest, to consult and to supply? Take a look at who is pulling the strings and who is firmly entrenched in this highly lucrative frontier market.

3. What the most exciting projects are


From Jabal Sayid to Khnaiguiyah, we give a brief overview of the major producing projects in numbers. We also share the hottest exploration projects to look out for. Look out for our next report on production challenges and opportunities associated with these projects.

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Country overview
Total area: Approximately 2.5 million square kilometers in size and 1 third of that (more than 650,000 km2) encompasses the Arabian Shield. According to the Ministry of Petroleum and Mineral Resources there are 1,270 sources of precious stones and 1,170 sources of other minerals in Saudi Arabia. Composed of 4 major geologic divisions: Arabian Shield, Arabian Platform, Harrats, and the Red Sea Coastal Plain. The majority of metallic mineral deposits are completely present within the border of Districts and Belts inside the Arabian Shield, whereas non-metallic, industrial minerals and/or construction materials are located within the Arabian Platform sedimentary cover.
Arabian plate Outcropping Precambrian African plate Eurasian plate Turkish plate Plate boundary Transform faults Sutsurface Cambrian salt basins

Map displaying the geologic divisions that form Saudi Arabia

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Key organisations
Deputy Ministry for Mineral Resources
DMMR is the sole agency responsible for implementing the provisions of the Mining Code and Regulations. All enquiries and applications should be addressed to DMMR. A major objective of the DMMR is to stimulate the development of a sound mineral industry. The intention is to provide reliable geologic and economic data to prospective investors. DMMR has compiled a comprehensive database on the geology and mineral resources of the Kingdom, which is readily available for examination or purchase by investors and other interested parties. This includes maps, databases, archives and reports. The Mining Investment Law in use today is the version introduced in 2004.It is the basic framework for controlling exploration and mining activities in the Kingdom. A Reconnaissance license allows its holder to examine the area covered by the license for all minerals not excluded by the Law. It is issued for a period of two years and may be renewed or extended for a single two-year period. An Exploration license conveys two important rights -- the exclusive right to explore within the license area, and the exclusive right to obtain a mining lease. It is issued for a period of five years which may be renewed or extended for a period or periods not exceeding five years in total. A Mining license confers the exclusive right to produce and exploit specified minerals in the license area. The area is restricted to a maximum of 50 sq.km. and is issued initially for a period of up to 30 years. A maximum surface rental of SR10,000 (approximately US$2,667) per square kilometer per year is payable.

Incentives
The Mining Law permits all document holders to use water resources within their concession area, subject to any existing arrangements that may have been made for the supply of towns or villages. All equipment required for the implementation of a concession is exempt from import and export duties. Attractive terms are available for financing mining projects, from government institutions such as the Saudi Industrial Development Fund (SIDF), and the Public Investment Fund (PIF). Details of these funds' requirements are available from the respective institution. Profits and capital may be repatriatedwithout any restriction. There are large tracts of geologically favorable land available. Many prospects are available for further exploration and evaluation. Comprehensive reviews of both metallic and non-metallic mineral resources have been published.

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Saudi Geological Survey


Established as an independent entity attached to the Ministry of Petroleum and Mineral Resources following a Council of Ministers Decision in 1999. Currently producing the first Metallogenic Map for the Kingdom of Saudi Arabia. Stated mission to use trained professionals, consult the government and the community on earth sciences, utilize advanced technology to produce geoscience information, and develop sustainable mineral and water resources. They also aim to protect the environment and monitor geohazards to secure a better life for our people. Headquarters are in Jeddah, which is located on the Red Sea and is the second largest city in the country. Jeddah is also adjacent to the western margin of the Neoproterozoic Arabian Shield, and studies of that geologic region form one of the primary foci of the Saudi Geologic Survey. A branch office is maintained in Riyadh , the capital of the country and houses facilities for making and printing topographic maps.

Maaden
Maaden is Saudi Arabias biggest mining company. It was fully state owned until 2008 when they floated 50% of their shares on the Saudi Stock Exchange (Tadawul). Maadens activities are heavily concentrated on gold; they currently operate 5 gold mines and own over 11 million ounces of JORC compliant gold resources at exploration and development stage. Phosphate production started in 2011 and they have several aluminum projects underway. They have a strong focus on exploration to expand the company further and increase their mineral portfolio.

In 2011, Maaden had close to 50,000 sq km in concessions, which represents approximately 10% of the whole Arabian shield. In 2011, resources totaled 11 Moz. Basic target for precious metals is to add 1.5 Moz of gold resources per year, with emphasis on higher grades and near mine extensions. In addition to gold, Ma'aden aim to grow their resource base in phosphate and bauxite (in 2011, phosphate totaled 1.5 billion tones, whilst bauxite totaled 300 million tons as, aresource). Ma'aden is diversifying further to include new minerals. These include base metals, namely copper and zinc, as well as new minerals including uranium and rare earth elements. To do this, the company has embarked on electromagnetic, airbourne surveys, as quicker alternative to ground surveys. 4 main business areas: Gold and base metal. Phosphate project - including a joint venture between Ma'aden Phosphate and SABIC. Aluminum project - consists of a joint venture with Alcoa; is currently in the construction phase. Industrial minerals - including magnesium carbonate, kaolin and bauxite.

Alara Resources
Alara Resources Limited (ASX Code: AUQ) have zinc and copper properties in the Kingdom of Saudi Arabia as well as several copper and gold interests in the Sultanate of Oman and the El Quillay coppergold properties in Chile, South America. Alara Resources is a committed explorer and miner, with its Head Quarters in Perth, Australia focused in the Gulf Region of the Middle East and South America with substantial existing infrastructure. The company has been successful at integrating services from around the region. It faced challenges locating certain services and equipment, including drilling machines eventually obtained from Turkey. Alara Resources cites the following attributes as being what attracted them to KSA: Low tax rates, permitted ownership of 100%, royalties nil, profits are repatriable, excellent tenure certainty, good infrastructure and low fuel prices.

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MGBM (Ma'aden Gold and Base Metals Company)


Maaden wholly owned subsidiary. Operates 5 gold mines: Sukhaybarat, Bulgah, Al Amar, Al Hajar, Mahd Ad Dahab. Gold and base metal portfolio comprised approximately 11 million Oz of resources in 2011. Average annual production (2011): 150,000 Oz. 2 new mines under execution: Ad'Duaihi and As-Suq mine. 3 mines under consideration for development Mansoura, Massara and Ar-Rjum.
A new 500km treated water pipeline is being constructed between aif all the way to central KSA to feed water to these planned gold mines.

Barrick
TSX listed, Barrick is one of the worlds leading gold producers and has been present in Saudi since 2011. In 2013 full year gold production guidance is 7.0 - 7.4 million ounces from a portfolio that includes some of the worlds premier gold assets. Barrick has operating mines and advanced exploration and development projects located across the world, and large land positions on some of the most prolific and prospective mineral trends.

Key challenge: the mines remote locations and the resulting scarcit of water.

Key contacts
Deputy Ministry for Mineral Resources P.O. Box 345, Jeddah 21191, Kingdom of Saudi Arabia Tel: (966-2) 667- 4800, Web: www.dmmr.gov.sa, Email: deputyminister@dmmr.gov.sa

Engr. Mohamad Abdalah Al Hatlani,


CEO, Manajem Tel: +966(1)2251201/40, Fax: +966(1)2254218

Ma'aden Phosphate Company


Ma'aden's Phosphate business currently consists of a joint venture with SABIC in which Ma'aden owns 70% and SABIC 30%, and the Al Khabra Project which is wholly owned by Ma'aden.

Darko Kulas
Corporate Relation Corp. Communication, Maaden Tel: +966 (11) 874 8397, Fax: +966 (11) 874 8057

Andy Lloyd
Vice President Communications Tel: +1 416 307-7414 Email: alloyd@barrick.com

United Arabian Mining Company (MANAJEM)


Privately owned Saudi mining company. 50% ownership of the Khnaiguiyah Mining Company LLC (KMC) which runs the Khnaiguiyah
Zinc-Copper Project.

Zohair Nawab
CEO, Saudi Geological Survey Abdullah Al Attas, Assistant President for Technical Affairs, Saudi Geological Survey Tel: 966-2-619-5000, Fax: 966-2-619-600

ore reserve with 1.5% copper grade.

Umm Add Dammar. Copper/zinc/gold. Drilling and surface samples indicate 7mt strategic Umm Ash Shalaheeb. 2.5 mt with 16g/ton grade gold and 2.5% zinc.

5 exploration projects covering precious (gold, silver, platinum) and base (copper, zinc) metals and industrial (quartz, silica, dolomite).

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Key projects
Khnaiguiyah Zinc-Copper Project
(Manajem/Alara Resources) Location: Approx 200km west of Riyadh Stage: Near production
Alara has a 50% interest in the advanced Khnaiguiyah Zinc-Copper Project via a 50% shareholding interestin a newly formed joint venture company, Khnaiguiyah for Mining Company (KMC).

The Khnaiguiyah Project is advanced - near production - and the Definitive Feasibility Study shows it to be financially and technically robust. Now the focus is on project financing and mine construction. LOM of 13 years at 2Mtpa. Total LOM production will be 1.4Mt zinc concentrate and 0.21Mt copper concentrate. The project comprises a core mining license, of about 6sq km. Around this there is about 380sqm of exploration licenses and applications.

Map displaying the location of the Khnaiguiyah Zinc-Copper Project in Saudi Arabia

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Jabal Sayid copper project


(Bariq) Location: Approx 350 km north-east of Jeddah. Stage: Near production
The Jabal Sayid copper project is owned by Barrick Gold as a result of the acquisition of Equinox Minerals Limited. The mining license for the project was granted in May 2010. The plan is to open an underground mining operation that would have an 11 year mine life. Construction of the processing infrastructure was completed in Q3 2012, but commissioning was delayed when Barrick received notification that the mine site was not in compliance with the recently introduced safety and security standards. Following receipt of the notification, a dedicated EPCM team has been working towards achieving full compliance with these standards in a process that is expected to take until 2014 and cost approximately $100 million. Average annual production from Jabal Sayid is expected to be 100-130 million pounds of copper over the first full five years of operation at C1 cash costs of $1.50-$1.70 per pound.

Map displaying the location of the Jabal Sayid copper project

As of December 31, 2012, Jabal Sayids copper reserves were 1.34 billion pounds.

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Al-Jalamid Project
(Maaden)
Production started in Q2 of 2011 after 4 years of development. Represents an investment of 5.6 billion. Produces 3 million tonnes of DAP and 1.4 m tonnes pa of phosphoric acid. Maaden also expecting to produce 1.5m tonnes pa of phosphoric acid from the Al Khabra deposit.

Al-Zabira Bauxite Mine


(Maaden/Alcoa)
Low Grade Bauxite and Kaolin: The Az-Zabirah mine consists of an open pit mine, in the central zone of the Az-Zabirah bauxite deposit, and a processing facility. The mine started operation in 2008.

Ma'aden's $10.8 billion joint venture with Alcoa will be the largest and most efficient vertically integrated aluminium complex in the world.

The new project can be divided into 4 sectors:


The Bauxite Mine: In Ba'itha, in the North of the Kingdom, that will produce 4 million tons annually. This mine will be operational in 2014. The refinery: Located in Ras Al Khair in the Jubair area, it will be the first alumina refinery in the GCC, with an estimated production of 1.8 million tons of alumina annually. Due to be operational in 2014.

Yanbu Magnesite
(Maaden)
Maadens magnesite project comprises the operational magnesite mine at Zargat and the processing plant at Madinah Industrial City. Sahara & Ma'aden Petrochemical Company are also producing caustic soda and dichloride ethylene.

The smelter: Due to become operational in 2013 and estimated to produce 74,000 tonnes pa, but designed for expansion. The rolling mill: Will become operational in 2013, with an estimated production of 380,000 tonnes pa, designed for expansion.

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Interview with: Abdullah Al Attas, Assistant President for Technical Affairs, Saudi Geological Survey
What is the Ministry doing to attract international mining companies to set up business in Saudi Arabia?
The Saudi government has offered many incentives to investors in mining, mineral and mineral based manufacturing in the Kingdom of Saudi Arabia in its 8th five year development plan. The issuance of the Mining Investment Code, at the start of the 8th five year development plan was the most important incentivizing factor for investments. The Saudi government has been working on its diversification plan for the last decade and the mining and mineral sector has proved to be the best economic base for diversification. The creation of five economic (industrial) cities in Saudi Arabia which offer; water, electric power, fuel and financing through the Saudi Arabian General Investment Authority (SAGIA) and all other facilities at reasonably cheaper cost. In addition the repatriation of (any amount) money, with or without a Saudi business partner setting options, transparency in mining and exploration licenses are included in the incentives given by the Saudi government. The Saudi government encourages and promotes the integration of mining with other economic activities, ensuring the value-add to the Saudi mineral resources and manufacturing of high-tech industrial raw materials, semi finished and finished products. To attract domestic and international investors in minerals and mining sectors, the Saudi government in the last few years has put efforts into identifying and developing potential mineral resources and potential mining areas in the Kingdom of Saudi Arabia. In addition to providing necessary infrastructure, the Saudi government has taken care of sustainable and environmentally friendly mining activities through mining and environmental laws and regulations. The 9th five year plan of Saudi Arabia is targeted to achieve an annual growth rate of 7.2% in this sector. In the domestic production of building material the targeted growth rate is between 8-9% that requires international investment in modern techniques not only in mining but also in mineral processing and manufacturing.

"The 9th five year plan of Saudi Arabia is targeted to achieve an awnnual growth rate of 7.2% in the mining sector"

What do international mining companies need to know about operating in Saudi Arabia?
The Saudi governments priority is to produce added value products and not exporting bulk unprocessed raw materials in any commodity. The Saudi government offers significant help if you are planning to convert low priced non-metallic mineral commodities to high quality and high value mineral specialty. Integrated industries and mineral value chains are the priorities of the Saudi government. If you have technology for mineral processing and adding value to mineral commodities, Saudi Arabia is the best place to invest.

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Which metals/minerals hold the best opportunities in Saudi Arabia?


In metallic minerals: Gold, Rare Earth, Copper Zinc In non-metallics: 1. Silica Sand for colorless glass, specialty glass, solar glass, optical glass 2. Quartz (lump quartz) for silicon metal, silicones (manufactured from silicon metal), high purity quartz (for fused quartz production) and its downstream 3. The most important opportunities are in processing quartz to produce high purity quartz and fused quartz (glass) 4. Limestone: manufacturing of ground calcium carbonate ( less than 5 micron), precipitated calcium carbonate (fillers for plastics and paints), high quality quicklime and construction materials 5. Basalt continuous fiber and composite manufacturing 6. High quality feldspar raw material for ceramics

How many international projects are already underway in the region?


Active projects are in the following fields:
From Saudi Bauxite to aluminum metal production with a Canadian company and Saudi Maaden Production of fused magnesia from Saudimagnesite Several gold mining projects Base metal project Three projects in polysilicon manufacturing, two in Jubail and one in Yanbu One silicon carbide production project Silicon metal production (not yet started) Ground calcium carbonate project Two float glass projects