Canada’s Barrick seeks to tap $2trn of Saudi minerals

• 100 mining-related startups last year
• $20bn investment for sector
• Developing downstream industries

A year ago Saudi Arabia almost doubled the estimated value of its mineral resources, from $1.3 trillion to $2.5 trillion, primarily on higher prices for strategic minerals. 

Now the country has the fastest-growing mining sector in the world, mining minister Bandar Alkhorayef said, speaking at an investment conference in Riyadh last month.

Production rates are still relatively low but steps are being taken. For example, Barrick Gold, the Canadian industry titan and the only foreign company currently mining commercially in Saudi Arabia, is working with its Saudi partner, the state-owned Ma’aden, to extend the life of the Jabal Sayid mine in the mountainous west of the country beyond 10 years, and explore gold mining opportunities.

“Access to ground is slowly opening up,” said Barrick’s CEO, Mark Bristow. “The more ground we can get our hands on – and we know what we want – the more money we will invest in exploration to build our portfolio there.”

New events, such as the Future Minerals Forum, an annual conference held in Riyadh that has become a go-to for mining investors, have intensified the buzz around Saudi Arabia’s potential. 

Yet companies say they want to see more tenders being offered, greater investment in downstream industries such as smelting, and additional evidence of Saudi Arabia’s mineral wealth.

“It’s all very well highlighting the endowment, but there are challenges between the endowment and the delivery,” Bristow said.

“The debate that’s still going on in Saudi Arabia is, how does it unlock its mineral endowment?”.

Contribution to GDP

Global demand for metals crucial to green technologies, such as copper, lithium and gold, has surged over the past decade, with the Saudi government seeking to ride this wave and increase mining’s contribution to GDP to $75 billion by 2035.

Despite much discussion around the kingdom’s mineral resources, however, almost all of it remains in the ground. The Saudi central bank’s most recent report showed non-oil mining and quarrying’s contribution to GDP in 2022 was just SAR12 billion ($3.2 billion), less than 10 percent of the sum Chile’s mining sector produced, and just over 1 percent of the amount Australia’s industry brought in. 

“What limits our expenditure is access to new ground,” Bristow said. 

However, in the past six months, the Saudi government has released new exploration tenders, mostly to local companies, but also to the Canadian company Power Nickel and the Indian company Skylark.

The mining ministry has said it will issue more exploration tenders covering a further 50,000 square kilometres.

The CEO of Ma’aden, Khalid Al-Mudaifer, told reporters at the Future Minerals Forum last month that 100 mining related companies were started in Saudi Arabia last year, and about SAR75 billion ($20 billion) of investment is earmarked for the sector.

“They’re pretty serious about making this a key part of the economy,” said Peter Leon, a partner at the global law firm Herbert Smith Freehills.

“The government really has put out a welcome mat for mining in the kingdom and put money behind that. Few countries have done what Saudi Arabia has done recently.”

The government introduced the New Mining Investment Law in 2020, which is meant to replicate international best practices and encourage investment in Saudi Arabia.

“There are two strengths to this,” said Leon, who helped draft the law. “One is to attract investment into Saudi Arabia as a mining destination, and the second is outbound, to acquire critical minerals for processing in the kingdom.”

Saudi Arabia created Manara, a joint venture between Ma’aden and the Saudi Public Investment Fund, to invest in raw minerals abroad for processing in the kingdom. Last year, Manara acquired 10 percent of the Brazilian mining company Vale for $2.5 billion. It is now in talks with the government of Pakistan to acquire a minority stake in the Barrick-led Reko Diq gold mine.

The Saudi energy minister, Abdulaziz bin Salman, speaking at the Future Minerals Forum, said that while the kingdom was heavily promoting domestic mining projects, it would also invest in importing raw materials from abroad to help develop downstream industries. 

“We don’t claim to have all the resources or abilities, so we’ve created Manara to make sure we can reach out for the resources that we need,” bin Salman said.

“We have to be doing it as fast and furious as possible.”