Saudi Arabia’s Hidden Wealth for Post-Oil Era

KSA Seeks to Diversify Resources in Economic Transformation Drive

A miner at work in Al Amar gold mine, southwest of Riyadh, Saudi Arabia. Credit: Reuters.
A miner at work in Al Amar gold mine, southwest of Riyadh, Saudi Arabia. Credit: Reuters.

Saudi Arabia’s Hidden Wealth for Post-Oil Era

For a long period of time, Saudi Arabia’s wealth has come mainly from oil production in the eastern part of the Kingdom. With proven reserves of oil estimated at 267 billion barrels, Saudi Arabia can produce oil at the current levels for another 80 years. However, the world is turning to renewable energy to fight global warming. The world will not give up the oil overnight; it might take decades to run the world on sunlight and wind. Despite that, Saudi decision-makers believe that the time is ripe for an economic transformation in which oil’s contribution to the gross domestic product (GDP) shrinks to minimum levels. This means exploring more ways to find new revenues to cover the expenses of running the country.

The Kingdom has hidden wealth in the Arabian Shield in the western part of the Arabian Peninsula, bordering the Red Sea with extensions in Yemen and southern Jordan. Other sources of Saudi hidden non-oil wealth exist everywhere in the country in varying quantities. The underground wealth includes more than 80 types of minerals. Let us have a quick look at the promising mineral wealth of the biggest Arab economy.


Saudi Arabia is home to some of the oldest mines in history, namely, the Al Amar Mine, which is 160 km west of Riyadh and was discovered 800 BC. It was exploited by the Umayyad and Abbasid empires as an abundant source of gold. The mine is still operational today.

Mahd Ad Dhahab mine (meaning cradle of gold) is the biggest in the Middle East. It is 170 km away from Al Madian Al Munawarah. There is evidence that gold and other minerals used to be extracted 3,000 years ago. The mine was operational in the 7th and 8th centuries. The mine was re-opened after the foundation of the Kingdom in the early 1930s, however, operations were stopped in the 1950s. Production has been resumed without interruption since 1988.

Saudi Arabia’s pre-oil economy used to rely partially on mining. After the exportation of oil began in 1938, the role of mining declined due to shifting the focus to oil and the deteriorating prices of minerals accompanied by rising extraction costs.

With the oil price fall in the 1980s, the Kingdom started to look for other sources of revenue to reduce the rising budget deficit. This accounts for the rehabilitation and resumption of gold extraction in Mahd Ad Dhahab mine in the 1980s.

Mining works flourish whenever oil prices slump or there is a plan to limit oil dependence. This explains the story of the foundation of the Saudi Arabian Mining Company in the late 1990s.

Saudi man walking past the logo of Vision 2030 after a news conference in Jeddah, Saudi Arabia June 7, 2016. REUTERS/Faisal Al Nasser


During the 1990s, the international oil market’s performance was at its worst due to the collapse of most of the Asian economies, especially those in Southeast Asia. The Saudi budget deficit increased, and the government had to diversify the economy, look for new sources of revenues, and impose some fees/taxes.

In this complicated economic context, the government founded Saudi Arabian Mining Company (Ma’aden), which was born in 1997 to benefit from unexploited mineral resources. More than two-thirds of the company is now owned by the Saudi Public Investment Fund (PIF). The rest of the shares are traded in the Saudi Stock Market.

Ma’aden has a portfolio of six mines in different parts of the Kingdom with gold amounting to 20% of the company’s revenues. Last June, the company awarded a new 880 million development contract to boost gold production for its Mansourah and Massarah gold mines located west of Saudi Arabia in Makkah Region. It is interesting to note that Ma’aden has a goal to produce one million ounces of gold per year by 2025.

Gold is not the only focal commodity for Ma’aden. The company invests over USD 15 bn to extract phosphate from its mining sites north of Saudi Arabia in Hazm Al Jalameed village.  The Saudi phosphate reserves in the northern areas form 7% of the global reserves, which pave the way for the advanced mining industry.


According to stats from Saudi Arabia’s Ministry of Industry and Mineral Resources, the current mining investments are estimated at USD 45-48 bn. They are expected to increase by 150% in the next decade according to recent press interviews with Eng. Khalid Al- Mudaifer, Vice Minister of Mining Affairs. Up to a quarter-million jobs will be provided by the mining sector. The main mineral resources include phosphate, gold, copper, aluminum, zinc, and nickel. Rare earth minerals such as uranium, plutonium, and lithium are highly likely to exist in commercial quantities according to various studies.

More than 1,500 licensing requests from local and international investors have been received by the Ministry of Industry and Mineral Resources after approving the new mining law. Around 250 licenses have been issued by the end of last August.

The Saudi government estimates the value of its untapped mineral wealth at USD 1.3 tr. The estimates are not final as the government has initiated a six-year plan to conduct an aerial geophysical survey of the Arab Shield in western Saudi Arabia. Other parts of the country are expected to contain greater amounts of minerals. Only 7%-8% of minerals have been extracted so far.


“With the demise of the oil era, the minerals will be of increasing importance for the energy transformation to renewable sources. Windmills, solar domes, electric vehicles, and their batteries need billions of tons of minerals. Even peaceful nuclear reactors that are used to generate electricity will need more uranium to power them,” said Fahad Al Sheikh, a Saudi economic expert.

Under the Kingdom Vision 2030, Saudi Arabia will focus on growing the industry sector with more credit facilities and tax/fee exemptions for investors. The local demand is set to increase dramatically and mineral production needs to grow accordingly.

“The mineral wealth will be one of the pillars of the national post-oil economy. The rising demand for minerals will be the name of the game in the future. Countries with huge mineral wealth will have more say in the international economic scene,” Al Sheikh concluded.


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