Why mining?

I have always believed that mineral resources are a great blessing from God for any country. Mining is a significant revenue driver for many economies worldwide. The Saudi mining sector’s revenue is estimated to account for the lion’s share of the country’s non-oil income.

Under the supervision of the Ministry of Industry and Mineral Resources, the government has successfully unlocked numerous investment prospects by granting licenses and concessions to local and international investors.

The ministry’s efforts are attracting the who’s who in global mining circles to explore the promising investment opportunities the Kingdom offers.

Statistics indicate that Saudi Arabia has a significant mineral potential that is relatively underexplored compared to other mature mining markets, with $1.3 trillion worth of untapped mineral assets across the country. With the right pool of investments and resources, the government can unlock the true potential of Saudi Arabia’s mining sector.

Through its Public Investment Fund, Saudi Arabia has been on a global investment spree in recent years, looking for trophy assets in different sectors, including mining.

The Ministry of Industry and Mineral Resources’s efforts are attracting the who’s who in global mining circles to explore the promising investment opportunities the Kingdom offers.

Recently, the PIF and Ma’aden — the publicly listed company created to lead the development of the mining industry in the country — have bid to purchase a 10 percent stake in Vale’s base metals unit, a subsidiary of a leading Brazilian mining company ranked as the world’s No. 2 iron ore supplier. Separately, investment firm Engine No. 1 will buy another 3 percent stake. The total amount to be paid by the trio consortium is circa $3.4 billion. Vale’s deal is the first significant investment in mining since it set up a joint venture with Ma’aden called Manara last January.

The acquisition proceeds will help finance future investments over the next decade to fulfil the growing demand for nickel and copper in the switch to electric vehicles. Establishing a separate base metals unit with Saudi partners may also allow Vale to participate in a wave of consolidation in the industry.

Saudi Aramco last month met major Turkish contractors to discuss $50 billion worth of potential projects in the Kingdom.

This acquisition transaction is expected to close by the first quarter of 2024 with a price tag of Vale’s base metals unit circa $26 billion. Vale’s market capitalization in the Brazilian stock exchange was $67.4 billion at last Thursday’s closing price.

In my opinion, this strategic long-term acquisition will maximize the diversification of our country’s mineral resources while developing Ma’aden’s international portfolio to become a global mining giant.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.