Yours And Mine: A Briefing On Mining Exploration Opportunities In Saudi Arabia – Mining

On 30 October 2022, the Saudi Arabian Minister of Industry and
Mineral Resources announced that Saudi Arabia is planning to
auction five new mining exploration opportunities for local and
international investors in 2023. These five new sites contain
deposits of copper, zinc, lead and iron and are being auctioned in
line with the new Mining Investment Law.

The Ministry of Industrial and Mineral Resources is Saudi
Arabia’s principal government entity responsible for ensuring
adherence to the new Mining Law. The main features of this area of
law include licensing provisions, sustainability provisions,
financing, monitoring and inspection.

The Mining Law specifies the following types of licenses that
are open to foreign investors:

1. Reconnaissance license: an initial geological
   survey license to identify and scan the geological environment for
   the presence of minerals. The period of the reconnaissance license
   will not exceed two years for the area designated by the applicant,
   and it may be extended or renewed for a single additional period
   not exceeding two years.




2. Exploration license: a detailed activity that
   leads to the exploration of sediment by geological, geophysical, or
   geochemical methods. It is also used in relation to drilling of all
   kinds, or any other appropriate method, in any location, in order
   to determine the presence of these sediments, their extensions,
   quantities, types, and the feasibility of mining them.

   The period of this license is up to 15 years in total with a
   maximum five-year initial term, plus one or more renewal periods of
   not more than five years each. It is worth mentioning that the
   Mining Law grants the holder of the exploration license the
   exclusive right to obtain a utilisation/exploitation license for
   the relevant license site.




3. Exploitation license: to extract ores and
   minerals (mining or quarrying), including any direct or indirect
   activity necessary to achieve this. The maximum licensed area is 50
   kilometres for utilisation and exploitation, with a duration
   limitation of 60 years (inclusive of renewals and/or extensions)
   and an initial term of up to 30 years.

   The exploitation license also includes the following:
   

   1. Mining license: for the purpose of extracting
      useful minerals or formations from land or marine areas, including
      direct or indirect mining activity;

   
   

   2. Small mine license: for areas that do not
      exceed one kilometre;

   
   

   3. Building materials quarry license: this is
      limited to locations from which rocks or minerals are extracted;
      and its initial period does not exceed 10 years; and

   
   

   4. General purpose license: which is a license
      that allows the holder of an exploitation license to establish
      facilities or use lands outside the exploitation-licensed
      site.

Other features of the new Mining Law

Moreover, the Mining Law requires that all mining activities
take place on land owned by the government, private parties, or
marine areas, with the exception of: 1) land occupied by holy
places; 2) land occupied by military installations or areas
reserved for hydrocarbon operations; or 3) land and marine areas
that are excluded on the basis of a decision by the Saudi Council
of Ministers.

The Mining Law also outlines the mechanism for applying for
licenses, their expiry, renewal and termination. In addition, the
implementing regulations of the Mining Law details the procedures
for applying for the licenses, the violations and penalties.

The Kingdom of Saudi Arabia is seeking to diversify its economy
away from oil by investing hundreds of billions of dollars into
Vision 2030, initiated by Saudi Arabia’s Crown Prince Mohammed
bin Salman. Mining is one of the sectors that has been identified
for expansion.

This sentiment is best summarised by His Excellency Mr. Bandar
bin Ibrahim AlKhorayef, who stated the following:

“Following the launch of Vision 2030, the Ministry of
Industry and Mineral Resources has been working to establish a
world-class mining jurisdiction in support of transforming the
mining sector into the third pillar of Saudi national industry.
Critical to these efforts has been to ensure an investor-friendly
environment that is underscored by transparency, ease of doing
business, and ESG compliance.”

Mining clearly represents an important sector in this region,
and the introduction of the new Mining Law signifies a positive
step in establishing a reliable framework with which non-Saudi
Arabian entities can take comfort.

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