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Auction will be for gold, copper and zinc licenses

Saudi mining reserves potential valued at $1.3 trillion

New mining law to help attract foreign investors

Saudi Arabia plans to auction two major mining licenses in 2022 as the world's biggest oil exporter seeks foreign investments into a sector that has $1.3 trillion in untapped potential reserve value, the vice-minister for mining affairs told S&P Global Platts on June 16.

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"We are planning for two major auctions of licenses next year for commodities including gold, copper and zinc," Khalid al-Mudaifer said on the sidelines of the GPCA Leaders Forum in Dubai.

The country also has also major resources of phosphate, tantalum, niobium and nickel, he added.

"Going forward, we expect to see an increase in international investment in mining, particularly because demand for minerals around the world is growing fast. According to geological surveys dating back 80 years, the kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion."

Saudi Arabia's mining industry has already attracted some major foreign investors. Alcoa Corp. has a 25.1% stake in two companies, Ma'aden Bauxite and Alumina Co. and Ma'aden Aluminium Co., as part of $10.8 billion joint venture with Saudi miner Ma'aden located in Ras al-Khair Industrial City in the eastern province. Fertilizer producer The Mosaic Co. has a 25% stake in the $8 billion Ma'aden Wa'ad Al Shamal Fertilizer Production Complex located in Wa'ad Al Shamal Minerals Industrial City in the northern province of Saud Arabia.

Barrick Gold Corp. has a 50% stake with Ma'aden in the Jabal Sayid underground Copper Mine and Plant.

A new mining law, which came into force on Jan. 1, 2021, will help attract foreign investors because it treats them equally with local ones, Mudaifer said.

"We have already received a number of applications for exploration licenses from locals and are also in conversations with a number of international mining businesses," he added.

Some $45 billion in private and public sector investments have gone into the mining sector over the last decade, mainly in phosphate and aluminum production.

"Saudi Arabia has some of the world's largest reserves of phosphate, and so we are investing in major phosphate projects such as Ma'aden's large scale phosphate complex, Phosphate Three," Mudaifer said. "As we continue to invest in this area, we expect to see Saudi Arabia emerge as one of the world's major suppliers of phosphate fertilizers."

The $6.4 billion Phosphate 3 expansion will add 3 million mt/year of phosphate fertilizer production capacity, boosting the total to more than 9 million mt/year. The expansion project will make Ma'aden one of the top three global phosphate fertilizer producers and Saudi Arabia the second largest phosphate fertilizer exporter worldwide, according to Ma'aden.

Saudi Arabia also plans to launch a comprehensive geological survey to help in mapping the country's mining potential.

"The mining sector also recently invested $500,000 to launch our Regional Geological Survey Program, designed to collect the essential data required for mineral exploration in the kingdom," Mudaifer said. "The five-year program will conduct geophysical and geochemical surveys, and create detailed mapping of more than 700,000 sq km of the mineral-rich Arabian Shield area in Saudi Arabia."

Saudi Arabia wants to turn mining into a third pillar of its economic development, after energy and petrochemicals, under the Vision 2030 roadmap launched in 2016, which aims to diversify the country's economy away from oil production and exports.

"The Ministry of Industry and Mineral Resources is investing $3.7 billion to transform and develop the sector and maximize the value of the kingdom's mineral resources," Mudaifer said.

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INTERVIEW: Saudi Arabia to auction mining licenses in 2022 to woo foreign investors - S&P Global