Saudi Arabia Is Looking To Natural Resources

By November 28, 2016News

Saudi Arabia is looking to build its future on natural resources.

Saudi Arabia has taken a multitude of steps to diversify its economy in the run up to Vision 2030. Included in its focus is making mining a key element in the diversified Saudi economy.

Out in the desert, about 80km north of Jubail, the Ras Al-Khair Industrial City has grown extensively over the last 8 years. 

Phosphate minerals, used to produce fertilizer and bauxite, the chief ore in making aluminum, are at the centre of the mining efforts.

After an investment of nearly $35 billion (SR131 billion), in the project, it will be officially inaugurated on Tuesday by King Salman.

“This place we are in did not exist in 2007, there was nobody at all, other than a good number of camels” said Khalid Al-Mudaifer, the CEO of Saudi mining company Maaden, during a visit by foreign journalists to the site.

In April, Saudi Arabia announced  Vision 2030, a reform plan, that seeks to diversify the economy away from oil. Since then, a number of updates have been announced such as the Balanced Nitaqat, trade licence updates and technology agreements

Saudi Arabia has rich mineral reserves including phosphate, bauxite, copper and uranium, however, the Vision 2030 plan noted that the mining sector ”has yet to meet expectations”.

The third pillar of economy

The government sees mining eventually becoming the third pillar of its economy after petroleum and petrochemicals. It wants the sector to contribute $26 billion (SR97 billion) to the GDP by 2020, roughly double the current contribution.

The vast scale of Vision 2030 has raised doubts over whether it can all be achieved but government officials say Ras Al-Khair is helping the diversification.

“This project is the first project to use phosphate in Saudi Arabia. The phosphate has been there for 35 million years but it required infrastructure, and now the infrastructure is there,” Mudaifer said.

Maaden Phosphate, a joint venture with Saudi petrochemicals giant SABIC, is one of the components of the Ras Al-Khair development.

Phosphate rock mined west of Arar city, in the far northern border near Iraq is transported by rail. It travels 1,450KM across the desert to Ras Al-Khair, where it is turned into fertilizer. The product is then loaded onto ships for export to farmers in India and several other countries from the project’s own port. It accounts for 10 percent of global phosphate fertilizer exports.

A joint venture

The train line also transports another major raw material, pinkish bauxite rock that is mined in central Saudi Arabia, to the industrial city. A joint venture between Maaden Aluminum and Alcoa from the US, operates a Ras Al-Khair refinery that converts the bauxite into alumina.

The fine white powder produced in the refinery goes into a four-year-old smelter that produces shiny ingots and other aluminum products.

The site’s rolling mill, sees mattress-sized slabs of aluminum gradually heated down, until they become thin sheets. These sheets are sold to make drink cans or construction material. In a new venture, Maaden also has a contract to supply sheets to Jaguar Land Rover in the UK.

Mudaifer said Ras Al-Khair is “taking a good share” of the regional aluminum market however it remains small in terms of global output, with around 750,000 tons a year. For milled products, China and other producers provide strong competition, but market share will increase ”because there is a good growth in demand” he said.

The site is vast, stretching over 90 square kilometers. Its factories stand alongside housing and other facilities for around 12,000 workers, including its own water desalination and power plant making up Ras Al-Khair Industrial City.

The Saline Water Corporation’s (SWCC) water desalination and power plant, has now made it into the Guinness Book of Records. It is the world’s largest dual-function plant, said Ali bin Abdulrahman Al Hazmi, governor of SWCC. The plant will supply Maaden with its required energy needs. The remaining power supply will distributed by Saudi Electricity Company. The Ras Al Khair facility has an annual production capacity of 1.025 million cubic meters of desalinated water and 2,400MW of electricity.

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