The history of mining in the Kingdom of Saudi Arabia stretches back thousands of years. The first record of it has been dated to 2100 BC, while carbon dating has shown that operations at Madh Ad Dahab mine were underway at around 1000 BC. Archaelogists have claimed that a copper mine was generating revenue for King Solomon in the 10th century BC. But despite its early rising in the development of mineral extraction, resources in Saudi Arabia have remained relatively untapped.
Controlling around a quarter of the world’s reported petroleum reserves, Saudi Arabia has been under little pressure to exploit other resources it may have access to, with the ever growing global demand for oil enabling the country to get richer and richer.
However, over the past decade the globalisation of oil exploration, an increase in climate change pressure and an influx of US shale gas and oil to the market have served to slightly ease the monopoly of Saudi Arabia and its fellow OPEC members. In response to recent reports that US exports would reduce demand for Saudi oil, the kingdom announced that it would be cutting production to 400,000 barrels per day, the lowest since 2011, in order to preserve the current price of $100 per barrel.
As pressure on its oil future, which will undeniably remain lucrative even if reduced, has increased, the country has started to once again turn its focus to the range of other resources that are in plentiful supply both underground and under the sea.
The revitalisation of mining started in 1997 when the government established the Saudi Arabian Mining Company (Ma’aden) to lead private investment in the sector and was followed in 2004 with the liberalisation of mining and mineral laws to make private exploitation more attractive.
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Affirmation of these acts occurred earlier this year, when Ma’aden became the first mining company from the Middle East to enter the top 40 global firms. In a brochure to investors, half of the company is now listed on the Tadawul stock exchange while the government retains the other half.
"Diversifying the national economy is a strategic goal of the country. One way to expand those non-oil activities that offer considerable potential is to invest more into the mining and mineral processing opportunities that have already been identified," the company states.
While economic pressure to reduce its reliance on its oil reserves has provided the motivation to increase mining activity, geology, the deposition of sediments and the evaporation of seawater have revealed fresh resources for exploitation.
"The geological history of the most recent 500 million years has been marked by the gradual erosion of the continental area, and the deposition of carbonate and clastic sediments in a slowly declining trough extending towards the Arabian Gulf," said the statement from Ma’aden.
Gold mines fit for a Kingdom
The most mature and lucrative sector of the Saudi mining industry is gold. The Mahd Ad Dahab mine produces the lion’s share. First mined over 3,000 years ago, the site, located near the centre of the Arabian Shield, is estimated to have already produced over one million ounces of gold and is currently producing 100,000oz a year. In addition to gold, Ma’aden extracts around 900 tons of copper 4,000 tons of zinc and 280,000oz of silver from the mine each year.
While operations at the mine were carried out in the middle of the last century, it was thought to have been exhausted after reaching depths of 200m. However, as the company explained, technology has enabled greater exploitation: "Today, these reserves are exploited by trackless methods. Recently an additional 1.4 million ton of reserves have been indicated."
The company expects the mine to continue operating for at least another seven years on current known resources, longer if further resources are identified.
The Sukhaybarat mine is located about 250km north-west of Mahd Ad Dahab and produces around 50,000oz of gold a year. It is mined to a depth of 130m through the conventional drill and blast technique. The company expects to get another four years of production at current levels by re-profiling the current open pit. While the current site has a limited lifetime, Ma’aden has identified a number of nearby locations. Bulgah, 65km to the south-west, has been identified as having 30 million tons and is delivering at a rate of one gram of gold per ton.
Industrial materials and joint ventures
In addition to gold, the kingdom is also extracting large amounts of industrial materials, with annual output of around 3,600 tons of zinc and 1,000 tons of copper. While the majority of the resources are extracted from the site at Mahd Ad Dahab, Ma’aden is also developing operations at its Al Amar mine where zinc and copper concentrate are extracted and sold to third parties for smelting.
To further develop copper mining in Saudi Arabia, Ma’aden recently formed a joint venture with Barrick Gold to operate the Jabal Sayid copper mine. Expected to become operational in early 2015, the mine is forecast to deliver 100-130 million ton of copper in each of its first five years of operation and continue for a further ten years with an overall expected output of 1.4 billion pounds.
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Through a $10.8bn joint venture with Alcoa, the company has developed the world’s largest vertically integrated aluminium complex. At Al Baitha in north-eastern Saudi Arabia the JV is extracting bauxite at an expected rate of 4 million tons per year. The refinery, smelter and rolling mill to process the material are located in Ras Al Khair and are expected to produce 1.8 million tons per year. Production at the plant started on 1 September this year.
A global force in the phosphate market
The most promising prospect for the future of Saud Arabia and Ma’aden is phosphate. Highlighting its potential, the Saudi Geological Survey said: "Our phosphate deposits have the potential to make Saudi Arabia one of the top five global producers of phosphate." Through its subsidiary Ma’aden Phosphate Company, it is extracting 11.6 million tons per year at the 50km Al Jalamid site, which is also producing an estimated 5 million tons a year of flotation concentrate.
To support the site, the company has invested significant amounts in infrastructure, including a power plant, water treatment facilities. The company has also invested in road and rail to enable transportation to the processing plant in Ras Al Khair that consist of a phosphoric acid, sulphuric acid and ammonia plant. At full capacity, the operation will produce around 3 million tons per year of granular Diammonium Phosphate and around 400,000 tons of excess ammonia.
To further develop its phosphate operations Ma’aden is in the process of developing seven large plants in Wa’ad Al Shammal. Once completed, the ambitious project is expected to produce around 16 million tons a year of product including phosphate concentrate, sulphuric acid, phosphoric acid and sodium tripolyphosphate.
Saudi Arabia’s history of mining may have started to bolster the coffers of King Solomon, but it has lain almost dormant for the thousands of years that have passed since. Granted a new lease of life from fears over the country’s dominance of the oil market eroding and blessed by geological changes, Ma’aden, its investors and the established industry players it has partnered with look set to play a major role in the global mineral market.