The Opportunities of the Mining Sector in the Kingdom

The main paper was presented by the keynote speaker of Asbar Forum, consultant Dr. Ibrahim Nazer, commented on by Mr. Mohammed Al-Dandani and Mr. Hussam Al-Beheiri, and the debate was moderated by Mr. Jamal Malaika. The paper addressed the challenges which this sector is suffering from, and what it can contribute to development in terms of providing employment opportunities, and contributing to the gross domestic product as a source of national income. It addressed the reasons for its meager contribution to the national economy, the most important of these reasons is that the current mining system does not keep pace with local and global economic developments.

 Regarding the present and future of mining industry, the comments stated that mining now receives special care of the Ministry of Energy, Mining and Industry. This goes in line with the vision and directions of country’s leadership. Work is under way to change the administrative composition of the Survey Authority, with a CEO has been appointed.

The comments emphasized that although there are very many mineral resources, the sector still suffers from disorganization and significant bureaucratic restrictions. A number of mining experts agree that more organizational changes must be made in order for the Kingdom to take full advantage of its mineral reserves that have not been utilized as required. It has to be kept in mind that this sector is the third source of the Kingdom’s economy after the oil and petrochemical sectors according to Vision 2030.

 The contributions made on this paper indicated that this sector is still not being used in an optimal and correct manner. Based on the latest figures of the agency of the Ministry of Mineral Resources, the contribution of the mining sector to GDP is S.R. 64 billion per annum. This share is expected to jump to S.R. 97 billion riyals in 2020, and the number of jobs is currently 65 thousand jobs, and expected to reach 90 thousand jobs in 2020, while the amount of investments is estimated at S.R. 250 billion.

The contributors argued that an obstacle that prevents investing in the mining sector is that there are currently no attempts to eliminate the existing obstacles and facilitate access to the sector. There is also no adequate funding or large funds being injected into this sector to succeed, as well as the very expensive exploration process.

 The contributors added that the mining industry is primarily an extractive industry according to the fourth version of the International Standard Industrial Classification of economic activities (ISIC4), as well as the Saudi Directory of Economic Activities and the Ministry of Commerce and Investment, which requires large capitals, especially precious metals, such as gold, silver, platinum, and metallic minerals in general, as well as advanced technologies.

Among the most important recommendations were the following:

• The government has to stop competing with the private sector, especially in the stages of transformational industries, while encouraging the private sector to enter the metallic and non-metallic minerals industry.
• Increasing exports of mineral products and replacing imported mineral ores with local ores.
• Encouraging the University of Petroleum and Minerals to establish specialized departments and institutes geared to all phases of the mining industry.
• Establishing a specialized bank to finance mining projects in the Kingdom with capital appropriate to the needs of the sector.
• Integrating the various legislative and organizational departments under an independent body, with full powers to manage mining activity.
• Prohibiting land ownerships on a tribal basis, so that land will be owned by the State.
• Focusing on training and education to prepare the required national cadres in the mining sector.