SITTING ON A GOLDMINE

Saudi Arabia 2016 | ENERGY | INTERVIEW

TBY talks to HE Sultan J. Shawli, Deputy Minister for Mineral Resources, on the country's business friendly environment, its attractive mining potential, and how the sector will further contribute to the economy.

HE Sultan J. Shawli
BIOGRAPHY
HE Sultan J. Shawli is the Deputy Minister for Mineral Resources. He was earlier the general manager of the concessions department at the DMMR, Assistant Deputy Minister for Mining Investment, and President of the Saudi Geological Survey Designate, among others. Shawli sits on a number of boards, including the Board of Directors of Saudi Arabian Mining Company, the Board of Directors of Saudi Geological Survey (SGS), and the board responsible for mineral resources of the GCC. Shawli holds a MSc degree in geology.

How is the Ministry of Petroleum and Mineral Resources creating a more investor-friendly environment in the mining sector?

Investors will find a business-friendly and transparent regulatory environment in Saudi Arabia. The Kingdom offers hundreds of locations with great prospects. One of the main pillars of an investor-friendly environment is the Kingdom's Mining Investment Law, which is one of the most advanced mining laws in the world. The law provides transparency to investors and puts all investors on an equal footing, whether local or foreign. It employs the first-come-first-served principle in processing applications, and in order to minimize downtime to investors it stipulates specific time periods for issuing licenses. Unlike other mining jurisdictions, the Kingdom does not require advance payment from investors, nor does it have any profit-sharing requirement. The only financial obligation that an investor has to the government is paying income tax, severance fees, and surface rental, which are among the most competitive in the world. In addition, the ministry encourages investment in the sector by providing incentives for exploration due to the presence of positive indicators and encouraging geologic studies. These incentives are expected to contribute to an increase in mining development, transfer of technology and expertise to local citizens, provide job opportunities to the Saudi cadre, develop remote areas, and promote technical support services.

Why is mining an attractive investment prospect in Saudi Arabia?

The most important factor is that the Kingdom offers a free market economy and an attractive mineral potential. Many occurrences and deposits with positive indicators have been found. Geologic studies undertaken by the Ministry of Petroleum and Mineral Resources have identified occurrences and deposits rich in gold, silver, copper, zinc, and associated minerals. Additionally Saudi Arabia is under-explored by world standards and therefore the likelihood of finding viable deposits is high. The Kingdom offers economic security as well as security of tenure once an exploration license has been issued. Other economic factors that make the Kingdom an attractive mining country is its competitive labor cost and the availability of energy. Previous investigations have shown huge resources of precious and base metals such as gold, silver, copper, zinc, and lead that exist in over 900 locations deemed promising prospects. All of these resources require detailed exploration work to determine their economic viability. As for industrial minerals, there are over 1,000 prospects that contain silica sand, limestone, ornamental stone, and gypsum. Most of these locations have been set aside by the ministry for the benefit of potential investors.

The mining sector is set to become the third pillar of the local economy. What main contribution will this sector offer the country?

As the mineral sector undergoes further development its contribution to the Kingdom's GDP will increase. We expect the sector to increase its contribution from 2% of GDP at present to 5% in the next 20 years. Additionally, further development will lead to technology transfer and will create additional employment opportunities for Saudi citizens. In Saudi Arabia, there are many students that graduate annually. The young people in the country are our most important resource, and the mining sector can contribute to their employment. Additionally, as a result of mining development, we expect foreign direct and indirect investment to increase proportionally, and, consequently, imports of mineral commodities should decline and value-added mineral exports should increase. Finally, due to the diverse geology of Saudi Arabia and the location of its potential mineral resources, we anticipate an increase in the development of remote regions in the Kingdom.

What are the ministry's most important objectives in developing the mining sector?

Some of our most important objectives include the optimum exploitation of minerals and the protection of the environment, the transfer of technology to substitute imports with locally produced minerals, and Saudization and creating job opportunities for Saudi citizens, especially in remote areas. We also focus on exports of value-added commodities and not unprocessed minerals and developing remote areas of the kingdom.