The Kingdom of Saudi Arabia is keen to expand and develop a minerals sector to diversify the country’s economy. The general tempo of exploration activity in Saudi Arabia has increased over the past few years, driven by the recognition that the new Saudi Mining Investment Code, which came into effect in January 2005, ensures an attractive investment environment for the development of a viable exploration and mining industry. Exploration companies from the United Kingdom, Australia, Canada and Oman, plus local Saudi companies, have recently applied for exploration licences for precious and base metals. Some of the key aspects of the new Mining Investment Code, which are attracting investment in the exploration and mining industry in Saudi Arabia, are:
- Flat 20% corporate tax;
- No royalty on minerals;
- All commodities are available to all groups, including 100% foreign owned companies;
- Security of tenure through all stages of exploration and development;
- No restrictions on foreign exchange; and
- No restrictions on repatriation of capital and profits.
- Accelerated depreciation; and
- Exemption from import duties on capital items imported for mining projects.
One of the main reasons for the modernisation for the Mining Investment Code was to attract foreign investment and mining technology to develop a viable mining industry so as to create job opportunities for the increasing number of young, unemployed Saudi nationals.
The Kingdom of Saudi Arabia has been a historic producer of gold with gold mining extending back over 5,000 years. The Mahd Adh Dhahab (Cradle of Gold) mine has been estimated to have produced over six million ounces of gold since antiquity. It is reputed to be the fabled King Solomon’s Mine and is still in production today with remaining resources of more than 1 million ounces of gold.
The Saudi Arabian Directorate General of Mineral Resources (DGMR) commenced gold exploration in the 1970s, following a rise in value of the metal. The United States Geological Survey (USGS) and French equivalent, Bureau de Recherches Géologiques et Miniéres (BRGM), were commissioned to document and evaluate the mineral occurrences over a 25 year period from the 1970s to mid-1990s. Over 5,000 historic mines and occurrences were discovered. Some larger international companies, such as Noranda, Boliden, Utah, Rio Tinto and Petromin (now called Ma’aden) explored Saudi Arabia for gold and base metals in the late 1970s to early 1990s. Since 2000, Ma’aden has discovered JORC-compliant resources totalling approximately eight million ounces of gold in the Central Arabian Gold Region. Relatively little modern exploration has been undertaken in the large Precambrian Shield of Saudi Arabia, which measures approximately 1,500km north-south and 800km east-west, and there remains substantial potential for further discoveries of significant gold and copper deposits.
Further Information on Saudi Arabia