July 2024 | The latest annual assessment of mining investment risks from MineHutte and Mining Journal Intelligence recognizes Saudi Arabia for exceptional mining investment environment.
The recently published World Risk Report 2023, which features MineHutte Risk Ratings, highlights Saudi Arabia as a standout best-performing mining jurisdiction, both regionally and globally. The Kingdom’s scores have risen sharply in terms of de-risking mining investments from 2018 to 2023 (five years) to become one of the top 10 countries with the least legal and financial risks – measuring an investor risk of losing the economic benefit of a mineral discovery, corporate taxation, and GDP growth. This follows its sweeping sector reforms designed to attract mining and mineral investment since Saudi Arabia’s mining and mineral strategy launched in 2018.
Emma Beatty, MineHutte COO and research director behind the team that compiled the Report said,
“Saudi Arabia remains the legislative reform story of the Middle East and a standout jurisdiction, both regionally and globally, in terms of recent successful reform efforts. It is clear from the legislation alone that Saudi Arabia is not only serious about establishing itself as a considerable investment and operational force in the global mining arena, but also committed to growing its domestic mining sector. It is refreshing to see the implementation of legislation that has serious potential to attract foreign investment, and, if effectively implemented, it will undoubtedly prove to be a powerful tool in delivering on the country’s economic vision for the mining sector.”
At a time when the race for new sources of critical minerals to support decarbonization is becoming increasingly urgent, investors are turning to new jurisdictions while having to carefully weigh up the risks they represent. But new jurisdictions do not necessarily mean new risks.
The World Risk Report is a comprehensive evaluation of global mining investment risk. It is informed by 11 Hard Risk metrics based on external data accompanying perceived risk scores based on more than 600 respondents with knowledge of the specific regions, including their assessments of more than 120 jurisdictions globally.
This influential Report equips mining companies and investors with a powerful tool to compare the investment risks in 121 jurisdictions. It is based on ratings that encompass five categories: Legal, Governance, Social, Fiscal, and Infrastructure.
MineHutte is a leading resource for the global mining industry, empowering companies to navigate the complexities of legal and regulatory risks. Their comprehensive database provides access to over a hundred mining codes.
A Blueprint for the Region
On the Investment Risk Index (IRI), Saudi Arabia recorded the second-biggest global improvement, as it is singled out several times in the Report as fast becoming a preferred destination for mining investment thanks to the comprehensive and attractive framework it has created through legislation and accompanying regulations. The largest gain is in the legal section, measuring an investor’s risk of losing the economic benefit of a mineral discovery, with 20-point increase in the past five years.
As a result of these improvements, Saudi Arabia is now ranked as a top-tier mining jurisdiction for investment, with respondents to the survey ranking it (perceived overall risk) among the top 20 jurisdictions globally. Assessing its approach to permitting, the Report ranked Saudi Arabia as the second highest jurisdiction globally, indicating an efficient permitting process compared to many other jurisdictions. Furthermore, the Kingdom’s Fiscal Hard Risk score has improved, placing Saudi among the top 10 countries for fiscal risk mitigation worldwide.
Impressively, when looked at over a five-year timeframe Saudi Arabia has registered the biggest gains of any geography, thanks to its new mining strategy reforms.
In fact, its reforms have been so successful that they are being used as a blueprint for improving the regulatory frameworks and mining industries of neighboring countries.
The country’s determined and ongoing push to expand its mining industry is likely to lead to further improvements and attract more investment into the sector.
Reacting to Saudi Arabia’s outstanding performance in the World Risk Report, His Excellency Khalid Al-Mudaifer, Vice Minister for Mining Affairs, Ministry of Industry and Mineral Resources, said that it represented another great reason for investors to consider projects in the Kingdom:
“In line with Vision 2030, the Ministry of Industry and Mineral Resources has been working to establish the mining sector as the third pillar of its industrial economy and believes that it offers a myriad of opportunities for investors. Saudi Arabia represents a unique value proposition in the mining and mineral sector. What we need is for investors to take a long-term view, partnering with us to create local value and lasting development.”
Rich Mineral Potential of Saudi Arabia
In Saudi Arabia, it is estimated that its untapped mineral resources, including phosphate, gold, copper, bauxite, and rare earths, amount to $2.5 trillion.
With the vast increase in the supply of strategic and critical minerals needed to deliver the energy transition, new mining jurisdictions will need to be established – and quickly.
Saudi’s Favorable Mining Regime
These opportunities have been created through a raft of miner-friendly initiatives overseen by the Ministry.
The mining reforms have streamlined the permitting process, limited the environmental impact of mining operations and maximized benefits to local communities.
Digital Transformation and Geological Surveys
In tandem with the 700,000 Geological Survey Program of the Arabian Shield, the digital transformation of the sector helped in making vast amounts of data available through a transparent geological data management system, the National Geological Database (NGD), bringing together more than 80 years’ worth of geological and geochemical data.
Numerous avenues have also been created to incentivize investors to finance exploration and mineral production.
Innovative Funding Mechanisms
An Industrial Development Fund has been financing exploration and mining projects up to 75% of the cost of eligible projects, while the Exploration Enablement Program was launched in January 2024. This program has been designed to attract mineral exploration companies, with a focus on Greenfield Exploration sites and a cap on projects up to 7.5 million SAR.
A Global Stage for Mineral Sector Collaboration
Lastly, in 2022, the Ministry established the Future Minerals Forum (FMF) – the largest gathering of its kind anywhere in the world, and the only government-led mineral platform, with over 14,000 delegates – to act as what is effectively a marketplace for the sector.
FMF has fast become a global focal point for discussions on mineral supply chains and the energy transition, as well as a conduit for connecting investors to mineral-rich nations and regions.
This multistakeholder, collaborative space hosts discussions on the complex challenges of mineral supply and helps to attract investment in developing mineral value chains across the Super Region, which extends from Africa to West and Central Asia.
Away from the mining sector, Saudi Arabia has been featured high on several other economic indexes that show how the Kingdom has increasingly become an economic and investment powerhouse. Moody’s affirmation of Saudi Arabia’s ‘A1’ credit rating with a positive outlook signals the agency’s confidence in the government’s ability to successfully execute its reform agenda and diversify the economy beyond its reliance on oil and gas, while Fitch affirmed Saudi Arabia’s credit rating at ‘A+’, with Stable Outlook.
