Saudi Arabia is a small country in the Middle East and is slightly larger than Mexico. Saudi Arabia has about $34.4 trillion worth of natural resources—notably oil. The nation has been a leading exporter ever since oil was discovered in 1938. With 22.4% of the world’s reserves, the country’s economy depends heavily on its oil exports. It also has the fourth-largest natural gas reserves. Saudi Arabia’s other natural resources include copper, feldspar, phosphate, silver, sulfur, tungsten, and zinc.
The Middle Eastern Kingdom of Saudi Arabia straddles the Arabian Peninsula, bordered by Jordan, Kuwait and Iraq in the north and Oman and Yemen in the south. It is the 14th largest country in the world, covering around two million square kilometres, making it the second largest OPEC Member Country. Saudi Arabia has a population of over 34 million, more than seven million of whom live in the capital, Riyadh. Arabic is the official language.
Saudi Arabia possesses around 17 per cent of the world’s proven petroleum reserves. The oil and gas sector accounts for about 50 per cent of gross domestic product, and about 70 per cent of export earnings. Apart from petroleum, the Kingdom’s other natural resources include natural gas, iron ore, gold, and copper.
The national currency is the riyal.
The Sovereign is the Custodian of the Two Holy Mosques, HM King Salman Bin Abdulaziz Al-Saud. Saudi Arabia is a Founder Member of OPEC.
Covering 2 million km², Saudi Arabia is the largest country in the Middle East and the 14th largest country in the world. Saudi Arabia’s size and geology make it rich in minerals, oil, gas, key raw materials for manufacturing and industrial development. Saudi Arabia has the largest mineral deposits in the Middle East. In the west of the country, the Arabian Shield is a major source of precious and basic minerals such as gold, silver, copper, zinc, chromium, manganese, tungsten, lead, tin, Aluminum and iron. Mainly in the east, extensive sedimentary formations contain industrial minerals such as gypsum, feldspar, mica, Sulphur and salt.
Saudi Arabia is also a source of highly prized rare earth elements such as tantalum – for which it has a quarter of the world’s reserves – and niobium. Saudi Arabia’s deeper sedimentary formations contain most of its 266.4 billion barrels of proven and recoverable oil. This vast natural resource represents up to 22% of global oil reserves, more than any other country. Saudi Arabia oil production began in 1933 and oil exports in 1939. Some eight decades later, Saudi Arabia has enough oil to last another 80 years at today’s extraction rate of 10.2 million barrels a day. Each day Saudi Arabia extracts over 7.5 billion standard cubic feet of natural gas. More than 8588 billion m³ of natural gas is available.
Abdulrahman Al-Rashed, a member of the Shoura Council’s finance committee, said the Kingdom is rich in natural resources, especially minerals, and the decisions will open up the mining sector to investors. Other mineral sources in the country have not yet been opened up for investment, he noted, and added that mining companies around the world recognize the importance of these opportunities.
He also commended the transparency of the decisions, which delineate clearly the responsibilities of the authorities and local or foreign investors. The Ministry of Industry and Mineral Resources drafted the laws regulating the mining industry after studying international experiences in the sector, said Al-Rashed, a former chairman the Council of Saudi Chambers. They are in line with global mining laws and offer investors many concessions, he noted. In addition, he said it is highly likely the authorities will offer incentives to attract investors, just as they were offered to petrochemicals and gas investors in the 1970s.
He added that he expects international businesses to register an interest in investing in the sector given the quality of the Kingdom’s mineral reserves.
Economic adviser Abdullah Al-Barrak said the infrastructure needed to attract investment in the mining sector has been improved in recent years and the prices of precious minerals have been rising of late, making investment more attractive than ever.
“This is the right time to open up the mining sector for investment,” he said. “In fact, the government started thinking seriously about this sector about eight years ago but decided to go ahead now because the opportunities are more favorable for local and foreign investors, besides which the mining infrastructure is robust and ready for vital investment.”
Fadhel Saad Albuainain, an economic analyst, said Saudi Vision 2030 targets the development of a number of vital sectors, including mining, to diversify the Kingdom’s economy, create new industries and increase GDP. The Saudi mining sector is potentially huge but requires massive investment and input from experts with considerable experience in the field.
“Privatization is instrumental to the mining sector,” he said. “Still, special attention should be given to the nature of contracts and the government’s return on these investments. The future production variables and profit maximization should be taken into consideration so as to allow the government to have a share of the future returns.”
The privatization of the mining sites should be carried out based on a fair assessment of the reserves that meets the needs and interests of both the investor and the government, Albuainain said. However, a degree of hedging in allocation contracts is important to allow for variations in capacity and prices, he added.
