For the Kingdom of Saudi Arabia, ensuring that its mining sector could compete with other major industry giants has meant an upgrade to its systems across the board. Between an ambitious new exploratory program, a recent virtual roadshow of appearances by members of the Ministry of Industry and Mineral Resources to a complete overhaul of its mining legislation, the Kingdom’s strategy of showing the sector’s investment potential is readily apparent.

However, it is the legislation in particular that speaks to the Kingdom’s growing ambitions, and is the framework providing insights into the plans highlighting the sector’s newfound growth and stability. 

Following a period of extensive international consultation with entities such as the World Bank, the New Mining Investment Law was developed through a benchmarking process against similar mining legislation across the globe. The Saudi Mining Investment Law was approved by the Kingdom’s Cabinet on 9 June 2020 and came fully into effect as of January 2021.

In October 2020, the ministry announced that certain articles within the law had been fast-tracked, effectively providing a glimpse into the new processes that would be required for mining licensing within the nation. However, the legislation in its entirety shows that the Kingdom is now committed to a fully regulated mining industry, though it appears that this has not come at the cost of ease of accessibility.

“The legal infrastructure has become an integral part of the mining ecosystem, supporting a clear and transparent set of processes for reconnaissance, exploration and mining license applications,” said His Excellency, the Vice Minister for Mining Affairs, Khalid Al-Mudaifer.

He referred to the law’s establishment of a series of recently launched mining registers, where data on applications has been made publicly available for potential investors – and the general public. The registers are already available through the Kingdom’s digital platform, TAADIN, where the public can see locations of mining blocks and mining reserve areas, and any applications for the area that are pending or have already been granted. This newfound digitisation has already resulted in a series of applications for mining and exploratory licenses, he explained.

The initial regulations detail the size of mining areas depending on mineral allocations, and the application processes for licenses across the board.

“From an administrative perspective, the law has provided a thorough breakdown of these new processes, which are admittedly more stringent – but needed to be made to ensure a de-risked investment environment and a fair, sustainable industry,” said Al-Mudaifer.

But these processes  speak to the Kingdom’s renewed focus on sustainability and local community development.

Particularly important from an environmental and sustainability perspective is the new requirement for mining and exploratory licensees to prove their technical capability and financial capacity to ensure feasibility of operations. One of the fast-tracked articles, Article 35 of the law, is of particular interest on a local level.

This article states that license applicants have to not only provide business feasibility studies for their projects, but also explain how they will contribute to the development of communities “around or adjacent to the license site”. This, alongside a rehabilitation plan for the area to follow the mine’s eventual closure, to ensure that operations remain sustainable.

Equally important is the submission of an Environmental and Social Impact Study, where the licensee will assure it will take all necessary measures “to preserve and protect water resources, the environment and wildlife from any hazardous waste or any other environmental damage as prescribed by the regulations”.

Included in the upcoming legislation is also the establishment of a new mining fund to support geological exploration programs, further financial mechanisms, sustainable financing options, a focus on sector sustainability, more environmental protections and stricter compliance with health and safety regulations.

“We understand that the new regulations may be a great change for our already established mining operators, but we believe that they will ultimately benefit us all in the future, bringing us in line with other mineral production hubs. This remains part of the Saudi Vision 2030 goal of transforming the mining sector into the Kingdom’s third pillar of industry,” said Al-Mudaifer.

Saudi Arabia’s national strategic framework ‘Vision 2030’ identified mining as a potentially significant contributor to the diversification of the Saudi economy. In the last decade, over $40 billion has already been invested in this growing sector, propelling the Kingdom to become a substantial supplier of mining sector products to regional and global markets.

But recent government studies indicate the untapped potential of the Kingdom’s mineral wealth could be as high as $1.3 trillion dollars.

In January, Minister of Industry and Mineral Resources, His Excellency Bandar bin Ibrahim Al-Khorayef said that to establish a mining law that would unlock this potential and enable new investment for the next phase of mining sector growth, the government undertook a comprehensive process of consultation with global experts in mining legislation and carefully studied some of the world’s most successful mining jurisdictions.

“We wanted to ensure the Mining Investment Law would not only enhance governance of the sector, improve transparency, and increase investor confidence, but it was a priority for us to achieve growth sustainability through preserving the environment, promote health and occupational safety, and encourage local communities to participate in the growth of the mining sector,” said Al-Khorayef.

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