Study identifies obstacles to growth of Saudi mining industry
JEDDAH: Saudi Arabia’s mining sector is faced with six key obstacles to improving efficiency, according to a recent study.
The study revealed that the biggest obstacles include the industry’s focus on the export of minerals as raw materials, instead of processing or manufacturing them. Other issues include the high cost and risk of investment in the sector, as well as the limited spending on exploration operations.
The study, which was introduced during a panel discussion on increasing added value to the mineral sector, revealed other obstacles, which included a lack of manpower in the Kingdom for exploration, production, and manufacturing operations.
Meanwhile, the industry is still reliant on traditional energy sources. And investors are not easily supported, due to a lack of funding, not least because of complicated borrowing terms imposed by the banks.
The study still needs to be finalized before the recommendations are introduced. But it showed that the industry was gaining importance with the backing of the Saudi government, as the Kingdom looked to diversify its income sources.
The study also explains that the Vision 2030 and the National Transformation Program (NTP) 2020, have attached special importance to the mining sector.
One of the study’s highlights regarding the NTP 2020 was the development and support of the Saudi mining industry, as it raises its contribution to the gross domestic product (GDP) from SR64 billion ($17.06 billion) in 2015 to about SR97 billion in 2020.
The study also found that the dependence of the Saudi economy on oil resources and the exportation of crude oil presented high risks that were clearly demonstrated when crude oil prices dropped to less than $50 a barrel, having reached highs of $147 in 2008.
It also noted that the Kingdom possessed untapped mineral wealth, as well as large reserves, which if exploited, would represent a third source of income after oil products and petrochemical industries.
The recommendations follow a number of seminars held ahead of the initiatives being submitted to the royal court, following their endorsement at next November’s Riyadh Economic Forum. The study aims to develop the mining industry, optimize the exploitation of the mineral sector and activate the role of the mining sector to contribute to the balanced development and diversification of the economy.
The study predicts that the mining sector should contribute to the creation of large numbers of jobs by 2030, while it also meets targets for the increase in contribution to the GDP.
The Riyadh Economic Forum holds workshops that bring together around 300 prominent figures from the public and private sectors, as well as other sections of society, to debate and create practical proposals for discussion.