By Arab News
By Basil M.K. Al-Ghalayini*
As part of its Vision 2030 reform plan, the Saudi government has already begun to jump-start the Kingdom’s mining sector as part of an overall industrial strategy aimed at diversifying the economy and attracting private sector investments.
Last week, the Cabinet issued a new law, including 63 articles, which is expected to make a quantum leap in the Saudi mineral industry in general and the mining sector in particular.
The law expects to create over 200,000 direct and indirect jobs. It will increase the sector’s contribution to the gross domestic product by more than SR240 billion ($64 billion), and will create an attractive investment environment in the sector.
The law will facilitate the establishment of a mining fund to provide sustainable finance for the sector as well as support geological survey and exploration programs. The law is in line with the objectives of the National Industrial Development and Logistics Program, which seeks to transform the Kingdom into an industrial power and logistics hub.
The Kingdom has abundant natural resources across its massive area. The new law aims to make the most of the mining sector in a way that is in line with global practices and standards, and to achieve a high degree of transparency that allows investors to make their decisions with the least risk.
It also aims for sustainability in the sector, not only in terms of natural resources, but also to convert them into industrial components and semi-manufactured products. The mining sector by nature needs significant investment, so the law will be a focal point to set up guidelines for financing and sustainable savings in order to make the sector more attractive in terms of long-term investment opportunities.
The Saudi mining sector was characterized in the past by a shortage of publicly available geoscientific data, longer processing times on licenses and lack of transparency. Later, with billions invested in enhancing its infrastructure, the sector has improved its data quality and reduced the risks associated with investing in new opportunities.
The new law is expected to further facilitate investors’ access to financing, and will support exploration and geological survey activities. In my opinion, it will be another important and promising destination for long-term foreign direct investors.
*Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.