The recent discovery of substantial gold reserves by the Saudi Arabian Mining Company (Ma’aden) could position Saudi Arabia as an influential player in the precious metals market. The announcement, which is the result of an exploration initiative begun in 2022, revealed significant gold deposits along a 100km stretch in proximity to the Mansourah-Massarah gold mine in the Makkah region.
Experts, such as Nasser Saidi, the former Lebanese economy minister, have noted the potential impact of this discovery given the high gold content found. Random samples from two drilling sites revealed high-grade gold deposits of 10.4 grams per tonne (g/t) and 20.6 g/t, respectively, surpassing the usual high-grade mine densities of eight to 10 g/t.
The higher ore grade not only increases the value of the deposits but also simplifies the extraction process. To illustrate, the Mansourah-Massarah mine had gold resources nearing seven million ounces and an annual production capacity of 250,000 ounces at the end of the previous year.
As the leading oil exporter globally, Saudi Arabia is actively seeking to diversify its economy, with mining being a crucial element in this strategy, as outlined in the nation’s Vision 2030 plan. This blueprint envisions a significant enhancement of the mining sector’s contribution to the national GDP.
While the overall economic expansion of Saudi Arabia has been robust, with an 8.7 percent growth in 2022, the output from gold exports remains modest in comparison to the nation’s total exports. Nonetheless, the Ma’aden’s discovery may help reduce the kingdom’s reliance on imported gold, which amounted to $3.68 billion in 2021.
Despite the potential, the actual increase in Saudi Arabia’s gold production may take time, as it can take decades from discovery to refined bullion production. Nonetheless, gold output is anticipated to grow annually by 12 percent from 2022 to 2026, based on projections from GlobalData.
The mining sector’s future is also influenced by global economic conditions, with gold prices reaching record levels in 2023. With predictions of continued growth for the commodity, Saudi Arabia’s new gold deposits could play a significant role in the kingdom’s economic landscape.
The nation is also looking to capitalize on the demand for metals essential for technological advancements and green energy solutions. This includes rare earth elements and metals for battery production, vital for the burgeoning electric vehicle market.
Ultimately, the kingdom’s efforts to attract foreign direct investment and expand its private sector through diversification, including the mining industry, are still in the early stages. Time will tell how these initiatives will reshape Saudi Arabia’s economy beyond its traditional reliance on oil.