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Jeddah - Yasmine El Tohamy - Saudi mining industry needs finance ministry’s backing to flourish: Minister tells Future Minerals Forum
RIYADH: Saudi Arabia’s mining industry is becoming an investment destination largely on the back of the Ministry of Finance’s enablement and support, delegates at the Future Minerals Forum heard on Wednesday.
“For a mining industry to flourish, the ministry of finance will need to be in the backseat,” said Saudi Arabia’s Minister of Finance Mohammed Al-Jadaan during a panel discussion.
The minister identified the mining sector as an area of vast potential for the Kingdom’s economic advancement, as well as a critical part of Vision 2030.
Al-Jadaan said: “When you look at the government policy, like the mining law in Saudi Arabia, you could see that the mining industry is not actually a revenue play. The mining industry is an economic play.”
“We are not looking to extract the last penny from the mining companies. It is something we look to develop the economy through, to create jobs through, diversify the economy through, increase exports through, and that will ultimately help the government,” he added.
Al-Jadaan said the ministry has been undergoing rigorous reforms to ensure that the regulatory framework is effective and that the budgeting is predictable and consistent.
“A lot of work has been done between the ministry of finance and the ministry of industry and mining to ensure that we provide them with the platform, the enablement, and the support that the investors need in terms of not only the regulatory side but also the financial and resources side,” stated the minister.
During the FMF event, the industry leaders also discussed alternative methods through which governments are able to facilitate and attract investment.
“Mining is a long-term game, so it's about how do you really attract long-term investment and ensure that that capital is comfortable in your environment,” said Mark Bristow, CEO of Barrick Gold Corp..
He added: “And I must say that the Saudi initiatives in mining are a world-leading initiative because it moved away from the oil and gas legislation and created something very specific for the minerals and mining industry, and that’s fantastic.”
The ineffective use of taxes was identified during the discussion as a possible detrimental component to retrieving global investors.
Bristow added: “What we see all around the world is the temptation that when mining starts to work, you increase the taxes and eventually destroy the attraction of reinvesting in your country.”
“The biggest mistake governments and policy makers make is thinking about windfall tax,” added the Minister of Finance.
The second edition of the Future Minerals Forum began on Jan. 10 with a ministerial roundtable, followed by two days of meetings and addresses involving more than 200 speakers from around the world.
The forum comes as Saudi Arabia is deemed to be on track to become a “global leader” in the mining industry thanks to the Kingdom’s “welcoming investment climate” according to a report from The Payne Institute for Public Policy at the Colorado School for Mines in the US, issued in December.
Currently, the Kingdom is processing 145 exploration license applications sent in by foreign companies, according to the analysis.
According to geological surveys dating back 80 years, the Kingdom is thought to have an estimated reserve of untapped mining potential valued at $1.3 trillion.
However, with the prices of valuable minerals rising, especially gold, copper and zinc, the true value of the Kingdom’s current mineral wealth could be double that figure, CEO of the Saudi Geological Survey Abdullah Al-Shamrani said in September 2022.
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