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While Saudi Arabia remains the world’s largest petroleum producer, the prospect of US shale gas eating into its dominance of the energy export market has highlighted a need for it to diversify its economy. Having already established itself in the gold market, the kingdom is now setting its sights on ruling the copper, zinc and phosphate markets.
The history of mining in the Kingdom of Saudi Arabia stretches back thousands of years. The first record of it has been dated to 2100 BC, while carbon dating has shown that operations at Madh Ad Dahab mine were underway at around 1000 BC. Archaelogists have claimed that a copper mine was generating revenue for King Solomon in the 10th century BC. But despite its early rising in the development of mineral extraction, resources in Saudi Arabia have remained relatively untapped.
Controlling around a quarter of the world’s reported petroleum reserves, Saudi Arabia has been under little pressure to exploit other resources it may have access to, with the ever growing global demand for oil enabling the country to get richer and richer.
However, over the past decade the globalisation of oil exploration, an increase in climate change pressure and an influx of US shale gas and oil to the market have served to slightly ease the monopoly of Saudi Arabia and its fellow OPEC members. In response to recent reports that US exports would reduce demand for Saudi oil, the kingdom announced that it would be cutting production to 400,000 barrels per day, the lowest since 2011, in order to preserve the current price of $100 per barrel.
As pressure on its oil future, which will undeniably remain lucrative even if reduced, has increased, the country has started to once again turn its focus to the range of other resources that are in plentiful supply both underground and under the sea.
The revitalisation of mining started in 1997 when the government established the Saudi Arabian Mining Company (Ma’aden) to lead private investment in the sector and was followed in 2004 with the liberalisation of mining and mineral laws to make private exploitation more attractive.
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Affirmation of these acts occurred earlier this year, when Ma’aden became the first mining company from the Middle East to enter the top 40 global firms. In a brochure to investors, half of the company is now listed on the Tadawul stock exchange while the government retains the other half.
“Diversifying the national economy is a strategic goal of the country. One way to expand those non-oil activities that offer considerable potential is to invest more into the mining and mineral processing opportunities that have already been identified,” the company states.
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