As part of Saudi Vision 2030, a strategic framework aimed at reducing Saudi Arabia’s dependence on oil and diversifying its economy, the Ministry of Industry and Mineral Resources developed the New Mining Investment Law (the New Law). One of the main goals of the New Law is to attract more local and international investors to the mining sector, and it lays the foundation for a number of interesting initiatives, including (i) the establishment of a national geological database, (ii) the establishment of a “Mining Fund” to support the mining sector, (iii) potentially streamlining the procedure for obtaining mining licenses, and (iv) introducing certain financial incentives for investors. In this article, we discuss the New Law, the notable differences between the New Law and the previous Mining Investment Law, and the potential opportunities for investors presented by the New Law and the wider sector reforms already underway.
Licenses and Licensing procedure
Detailed procedures for the issuing of licenses will be included in the regulations; it is expected there will be aggressive new timelines for the Ministry and other stakeholders to adhere to when processing and approving applications. Crucially, the New Law continues to grant the holder of an Exploration License the exclusive right to obtain a Utilization/Exploitation License for the relevant License Site.
Holders of Exploitation/Utilization Licenses for Class A Minerals will be exempt from paying either (i) the financial consideration or (ii) a percentage of their net revenues, for the first five years after a license is issued, which will provide valuable relief during the early stages of a project when capital costs and risks are at their highest. The New Law also continues to provide for customs duties exemptions for imported equipment and spare parts required for carrying out any licensed Mining Activity.
Financing & mortgaging
Under the New Law, licensees are permitted to mortgage/ pledge their rights under both Exploitation/Utilization Licenses and Exploration Licenses without obtaining the prior written approval of the Ministry, and the New Law specifically provides for mortgagees/pledgees to transfer licenses to eligible persons.