Latest news with #SR29
Arab News
24-04-2025
- Business
- Arab News
Saudi Arabia ramps up mining investment as sector outpaces global peers
RIYADH: Saudi Arabia's mining sector is emerging as a global standout, supported by regulatory reforms, major investment, and a strong pipeline of domestic projects, a new analysis said. In a report titled 'Saudi Arabia Doubles Down on Mining,' S&P Global Ratings said the sector is poised for rapid expansion, with its contribution to gross domestic product expected to surge from $17 billion in 2024 to $75 billion by 2030, under the government's Vision 2030 strategy. Saudi Arabia's mining ambitions are anchored in its substantial natural endowments and reinforced by robust government support. The country holds an estimated SR9.37 trillion ($2.5 trillion) in mineral reserves — a 90 percent increase on a 2016 forecast — thanks to new discoveries of rare earth elements, base metals, and expanded phosphate and gold deposits. Hina Shoeb, credit analyst at S&P Global Ratings, said: 'Saudi Arabia's proactive measures and substantial resources may help offset continued cost pressures and support the resilience of metals and mining companies' credit profiles.' The agency noted that unlike many global peers, Saudi Arabia's metals and mining companies benefit from strong government support, a modern regulatory framework — including the Mining Investment Law — and substantial state-led investment in mega projects and infrastructure. The number of exploitation licenses has increased by 138 percent since 2021, and exploration permits rose from 58 to 259, driven by the law's transparency and investor-friendly policies. Flagship state-owned enterprise Ma'aden reported SR32 billion in 2024 revenues, with a diversified portfolio spanning gold, phosphate, aluminum, and base metals. Its gold output alone reached 450,000 ounces, while phosphate production surpassed 6.5 million tonnes. The number of exploration firms has grown from just six in 2020 to 133 in 2023. 'As budgets continue to increase, the likelihood of discovering additional resources and expanding existing operations supports our view of sustainable, long-term growth of Saudi Arabia's metals and mining industry,' the report said. The Vision 2030 framework has driven a shift away from oil dependency, focusing instead on sectors like mining, tourism, and manufacturing. The mining sector alone contributed about $400 million in revenues as of 2023 and is now backed by a $100 billion investment plan targeting critical minerals by 2035. Government funding also includes a SR29 billion commitment to the Wa'ad Al-Shamal phosphate project. Saudi Arabia's geography offers logistical advantages with access to European, Asian, and African markets, while mega projects such as NEOM and Qiddiya are expected to drive up local demand for construction materials and high-value metals. These projects, the report stated, 'which benefit from funding and infrastructure investments, aim to reduce the country's import costs for metals, including iron, steel, precious and semi-stones, by creating a solid domestic market for metals and minerals.' However, the report also notes infrastructure and labor as potential bottlenecks. Many deposits are in remote desert regions lacking adequate transportation and water infrastructure. Additionally, the sector's expansion will require substantial investments in workforce training to avoid high labor costs from foreign recruitment. S&P states that Saudi Arabia's commitment to financial discipline, low debt levels in the sector, and targeted policy support position the Kingdom's mining industry to grow sustainably — even amid volatile commodity markets. 'We expect these initiatives will spur domestic demand for metals, reduce import dependency, and over time improve the sector's operational efficiency,' S&P added.
Arab News
17-04-2025
- Business
- Arab News
Mortgage securitization can offer Saudi banks funding boost: Fitch
RIYADH: Saudi banks could unlock additional funding and expand the Kingdom's debt market by converting home loans into investment products, according to a recent report by Fitch Ratings. The rising securitization of residential mortgage loans would represent a major shift in financing strategies, with Saudi banks' combined mortgage portfolio now totaling around SR0.7 trillion ($186.7 billion) — approximately 23 percent of gross loans. Securitization involves pooling loans — such as mortgages or unpaid debts — and converting them into tradable securities that investors can purchase. This process enables banks to raise capital, reduce risk exposure, and support the development of deeper capital markets. 'Saudi Arabian banks' liquidity profiles and capital ratios may benefit if potential bad debt securitisations go ahead, but probably not enough to trigger Viability Rating upgrades,' Fitch Ratings said. 'Securitisations, which some banks are reportedly considering, could also help to develop the Kingdom's debt capital markets,' it added. Some financial institutions have already begun to take steps in this direction, including the issuance of mortgage-backed securities by the Saudi Real Estate Refinance Co. However, Fitch noted that 'the use of mortgage securitizations is still low,' with SRC's loan book amounting to only SR29 billion. The report noted that impaired loans in the banking sector have declined, reaching SR41 billion, or 1.4 percent of gross loans, by the end of 2024 — down from SR49 billion in 2022 — driven by write-offs and a healthier operating environment. Newly impaired loans also fell to SR10 billion in 2024, from SR16 billion in 2022. Should banks proceed with securitizing impaired loans, the agency added that the resulting bonds would likely be issued at the loans' net balance sheet value, which stood at SR17 billion at the end of 2024. However, Fitch cautioned that 'the uplift to core capital ratios from impaired loans securitizations would be limited,' as these loans represent just 0.5 percent of risk-weighted assets. While securitization is unlikely to significantly narrow the Kingdom's SR0.3 trillion deposit gap or alter Fitch's 12–14 percent credit growth forecast for 2025, it could offer banks an alternative source of funding. This is especially relevant as lending continues to outpace deposit growth, and Saudi banks play a pivotal role in financing the Kingdom's giga-projects. Ultimately, the shift toward greater securitization — whether of impaired loans or mortgages — could prove instrumental in diversifying bank funding and strengthening Saudi Arabia's capital markets. The push also aligns with the Kingdom's Vision 2030 goals to transform the financial sector into a key engine of economic growth. Developing deep, liquid capital markets through instruments like mortgage-backed securities supports the broader strategy to diversify funding sources beyond traditional banking and position Riyadh as a regional financial hub.
Arab News
19-02-2025
- Business
- Arab News
Saudi Arabia shortlists 30 firms for 22 quarry licenses in Eastern Province, Tabuk
JEDDAH: Saudi Arabia has shortlisted 30 companies for 22 mining licenses to extract sand and gravel in the Eastern Province and Tabuk, advancing its mining sector expansion and economic diversification. The Ministry of Industry and Mineral Resources said the permits cover Northwest Salwa Western Complex, Al-Masna Crushers Complex, and South Wadi Amq Complex. The process, which received 49 applications, marks another step in Saudi Arabia's push to develop mining as a third pillar of its industrial base, alongside oil and petrochemicals, with efforts ongoing to tap into the Kingdom's estimated $2.5 trillion of mineral wealth. In the Eastern Province, three companies — Saleh Abdul Aziz Al Rashid and Sons Co., Sana Al Sharqiya Contracting Co., and Asas Al Muasim Contracting Co. — have been prequalified for sand extraction at Northwest Salwa Western Complex. For gravel mining at Al-Masna Crushers Complex, northeast of Hafar Al-Batin, the contenders include Saleh Abdul Aziz Al Rashid and Sons Co., Sana Al Sharqiya Contracting Co., and Al-Yamamah Co. for Commercial Works and Contracting. Meanwhile, 24 companies will compete for gravel extraction rights at South Wadi Amq Complex in Tabuk, including Tabuk Modern Contracting Co., Mega Co., and Suleiman bin Saleh Al Muhailib Mining Co. In December, the Taadeen platform introduced a competitive bidding process to secure a stable domestic supply of essential construction materials. A month earlier, the ministry awarded 11 mining exploration permits covering 850 sq. km across Riyadh, Makkah, and Asir, with one national company and five alliances of 10 local and international firms securing rights. The ministry stressed that these efforts are crucial to maximizing the value of Saudi Arabia's mineral resources and establishing mining as a key pillar of the Kingdom's economic future. The news of the shortlist came in the same week as it was announced nearly SR29 billion ($7.7 billion) in investments is being directed toward the city of Wa'ad Al-Shamal as it aims to become a major hub for the Kingdom's mining industry. The vast majority of the funding — SR28 billion — is for the launch of Ma'aden's Phosphate 3 project, backed by the Shareek program. This initiative is set to increase Saudi Arabia's phosphate production capacity to 9 million tonnes annually, building upon the existing Phosphate 1 and Phosphate 2 projects, which each produce 3 million tonnes.
Arab News
17-02-2025
- Business
- Arab News
Saudi Arabia unveils $7.7bn mining investments in Wa'ad Al-Shamal
RIYADH: Saudi Arabia's mining sector is poised for a major boost with nearly SR29 billion ($7.7 billion) in investments being directed toward the city of Wa'ad Al-Shamal. Prince Faisal bin Abdulaziz, governor of the Northern Borders region, inaugurated a series of industrial, developmental, and hospitality projects aimed at solidifying the city's role as a major hub for the Kingdom's mining industry. A major highlight of the announcement was the launch of Ma'aden's Phosphate 3 project, backed by the Shareek program and an investment of SR28 billion. This initiative is set to increase Saudi Arabia's phosphate production capacity to 9 million tonnes annually, building upon the existing Phosphate 1 and Phosphate 2 projects, each producing 3 million tonnes. This expansion is expected to bolster the country's industrial supply chain, generate new investment opportunities, and create employment within the sector. The governor emphasized that these projects align with Saudi Vision 2030, which aims to expand the mining sector's contribution to the national economy. He highlighted that Wa'ad Al-Shamal has transformed into a model for integrated industrial cities, combining major industries, logistics services, and modern residential communities, which enhance its appeal to both local and international investors. The event was attended by Minister of Industry and Mineral Resources Bandar Alkhorayef, Deputy Minister for Mining Affairs Khalid Al-Mudaifer, and other key officials from both the public and private sectors. Additionally, the Saudi Authority for Industrial Cities and Technology Zones launched several new industrial, logistical, and service projects, with investments exceeding SR550 million. These projects include infrastructure development in the industrial zone, which spans 4.3 million sq. meters. As part of this initiative, 32 ready-built units have been established, consisting of 20 pre-built factories and 12 support units covering a combined area of 45,000 sq. meters. Further key developments include a 132 kilovolt, 200 megavolt-amperes power substation, overhead transmission lines, and a 7-km bridge connecting the industrial zone to the international highway. These projects aim to improve logistics and energy reliability, creating an attractive environment for investments, particularly in the phosphate industry. In addition, the governor inaugurated the expansion of Ma'aden's residential city in Wa'ad Al-Shamal, adding 96 new residential units. This brings the total number of housing units to 579, supporting industrial and mining sector employees and their families. To complement the region's infrastructure improvements, the Movenpick Wa'ad Al-Shamal Hotel, developed with an investment exceeding SR500 million, was officially opened. The five-star hotel is designed to cater to the growing accommodation demand from workers, investors, and visitors to the industrial city and Northern Borders region, further enhancing Wa'ad Al-Shamal's position as an integrated industrial and investment hub. As part of broader efforts to advance the mining sector, Alkhorayef, along with the deputy minister for mining affairs and other officials, visited several industrial and developmental projects in Wa'ad Al-Shamal and the Northern Borders region. The tour included a visit to the Scientific Excellence School in Arar, where the minister reviewed modern training laboratories and met with students and faculty. Established through a partnership between Ma'aden and the Ministry of Education with an investment of approximately SR180 million, the initiative seeks to promote scientific education and develop expertise in STEM fields. The minister also toured the Saudi Technical Institute for Mining in Arar, which has trained over 1,081 students, including 52 female graduates, in a range of specializations such as underground and surface mining, mining operations, and mechanical and electrical maintenance. Equipped with advanced mining simulation and training facilities, the institute plays a pivotal role in workforce localization and preparing Saudi talent for the mining industry. The tour also included a visit to the Hazm Al-Jalamid mine, one of the Kingdom's key phosphate mining sites, producing more than 11 million tonnes of phosphate ore annually. The Northern Borders region is home to extensive mineral resources valued at approximately SR4.669 trillion. It is a major source of phosphate, a critical element in global food security due to its role in agricultural fertilizer production. The region also contains high-quality deposits of coal, dolomite, limestone, and silica sand. It currently holds five phosphate ore reserve sites and 29 active mining licenses, including 15 for building materials and 14 for mineral extraction.
