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28/05/2024
Mining News

The Kingdom of Saudi Arabia is sitting on a US$2.5 trillion-worth of precious metals and minerals

Saudi’s mining magnet, state-owned Ma’aden, has recently uncovered significant gold alongside its Mansourah Massarah gold mine. This is the first of its kind from the company’s exploration programme, suggesting its potential to become a major gold belt for Arabia and strengthen its existing precious metal production pipeline. 

Ma’aden is one of the world’s fastest-growing mining operations and is in charge of developing Saudi Arabia into an industrial and mining hub. The company recently announced it is expanding its exploration at Jabal Ghadarah and Bir Tawilah, on the outskirts of Mansourah Massarah, after discovering “significant” gold resource potential late last year.

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“These discoveries have the potential to be the centre of the world’s next gold rush and are a strong part of our growth strategy,” said Ma’aden CEO Robert Wilt. “The Arabian Shield has enormous potential for more world-class discoveries, and this is the first of many we expect to make in the coming years.”

The discovery is at par with Saudi Arabia’s efforts to diversify away and reduce its dependence on hydrocarbon revenue. The country’s mining sector is expected to become the third pillar of its economy by tripling its economic contribution by 2030.

Under Saudi Vision 2030 – a roadmap “for economic diversification, global engagement, and enhanced quality of life” launched in 2016 – the country hopes its mining-powered green transition will generate 50% of its electricity from renewables and the other half from gas. This energy transition requires precious metals and minerals to lay the groundwork for the rapid upscaling of efficient and large-scale renewable energy projects around the world.

Precious Gold, Minerals and Green Energy

Saudi Arabia is opening up its mining industry for international collaboration and foreign investments. With investors now focused on decarbonization, gold mining is bringing about a new climate narrative.

Known for its monetary value, in recent years gold has become an asset for its use in the green energy sector. Indeed, gold has been found to improve efficiency and conductivity in solar cells and electric vehicle batteries and, as the world shifts towards renewable energy for a sustainable and clean energy-driven world, its importance and demand along with other precious metals is expected to rise.

According to the International Energy Agency (IEA), the market for minerals and metals, which are key to clean energy transition, has doubled in the last five years.

“All new technologies – wind, solar, electric vehicles, whatever – need specific minerals including lithium, cobalt and rare earth minerals. The Kingdom is rich in these and in many others,” said Peter Leon, a key advisor for Saudi Arabia’s Ministry of Industry and Mineral Resources. “The World Bank recently reported that over 3 million tons of minerals and metals will be needed in the coming transition. That represents a 500 per cent increase in demand for minerals. But it also means a huge supply gap.”

Hence, Saudi Arabia holds the potential to play a pivotal role as a global supplier of precious metals and minerals to drive global energy towards a green energy transition to achieve net-zero carbon emissions.

In June 2022, gold executives said that although gold is unlikely to top the list of important net-zero metals, it is still essential to the energy transition and climate change. This means that gold mining will be important for Saudi Arabia’s push to become a global player in the mineral and metal supply chain. 

At last month’s Future Mineral Forum 2024, held in Saudi Arabia’s capital city Riyadh, the country’s Ministry of Industry and Mineral Resources formalized collaborations in the mining sector by signing memorandums of understanding with Egypt, Russia, Morocco, and the Democratic Republic of Congo, effectively solidifying its position in the global mining landscape.

Sustainable Gold Mining and Transparency

“[T]he gold mining industry’s recognition of its need to operate in a transparent and trusted manner, and to demonstrate high standards of responsible and sustainable business practices has underpinned its ability to take ambitious steps to ensure it can contribute to social and environmental progress including decarbonisation and local resilience,” said World Gold Council CFO Terry Heymann.

At last month’s World Economic Forum in Davos, members of the International Council of Metals and Minerals (ICMM) pledged that meeting the demand for critical materials in advancing global sustainable development goals should not be at the expense of nature. This nature-positive commitment is aimed at promoting health, diversity and resilience of species, ecosystems and natural processes. However, the persistent use of coal-fired electricity is an obstacle to accelerating progress towards climate target alignment.

“There is no escaping that the act of mining directly affects nature, which is why the cornerstone of our commitments is to ensure at least no net loss of biodiversity at all mine sites by closure against a 2020 baseline,” said CEO of the ICMM Rohitesh Dhawan while speaking at the Nature Positive Initiative event in Davos.

With the pledge, mining companies commit to take steps across their value chains and operations to contribute towards a nature-positive future, Dhawan explained.

This commitment was guided by the Kunming-Montreal Global Biodiversity Framework and ICMM’s existing commitments in relation to protected areas, Indigenous Peoples, water and respecting human rights as per the United Nations Guiding Principles on Business and Human Rights, Dhawan reassured.

A 2021 research paper suggested an absence of significant adverse environmental effects of mining in Saudi Arabia. However, the current mining situation is difficult to assess, as no data on the environmental damages and  details on the country’s mining activity has been made available since the exploration program’s inception in 2022. Transparency is further hindered by strict regulations that researchers and employees of the mining corporations have to adhere to.

Saudi Arabia is attempting to bridge away from its past by bringing responsible mining practices and implementing high standards of environmental, sustainable, and corporate governance (ESG) in its mining industry, in an attempt to enhance transparency and accountability to draw in foreign investments. These efforts include publishing the results of nature-related impact and dependency assessments and setting targets to address them. 

Indeed, in line with the commitment towards nature made in Davos 2024, all ICMM members, including Saudi Arabia, are required to provide transparent disclosures on performance outcomes, including publishing the results of nature-related impact and dependency assessments, and setting targets to address their pledge.

The commitment paves for a much needed higher degree of transparency and credibility from Saudi Arabia to prove its efforts towards green energy transition from its gold and mineral mining, in the international stage. But will it be enough?

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