The Saudi Mining Investment Law, enacted under Royal Decree No. (M/140) dated 19/10/1441H (11 June 2020), was introduced to ease investment in and develop the Saudi mining sector as part of Saudi Arabia's broader strategy to diversify its economy under Vision 2030. The law aims to create a more attractive investment environment by providing a transparent and predictable regulatory framework that aligns with international best practices.
The law establishes a structured licensing system, ensuring that mining activities are carried out responsibly while promoting private sector participation, including foreign investors. It streamlines permit acquisition processes, strengthens environmental and social governance, and introduces financial guarantees to enhance compliance. The legislation also provides investment incentives, such as tax exemptions and reduced royalties for eligible projects, to encourage long-term investment. The licensing and oversight authority is the Ministry of Industry and Mineral Resources. Aside from licensing additional approval will be required for mining minerals classified as of particular strategic importance by the law.
Review process and licensing requirements
Saudi law is generally welcoming to foreign investment in the mining sector. However, certain restrictions apply. Investors looking to engage in the mining sector in the Kingdom must make an applications to the Ministry. The licensing process seeks to ensure that mining operations are conducted in a responsible and sustainable manner and investment is limited to companies that can demonstrate technical competence, financial good standing, and environmental compliance. The Ministry primarily reviews investors applying for licenses on their professional and technical expertise in the mining sector. Secondary priority will be given to the investor's ability to comply with environmental and safety regulations.
License types
The Saudi Mining Investment Law defines several types of licenses depending on the nature and scale of operations.
- Reconnaissance licenses — permit investors to conduct preliminary surveys to identify potential mineral deposits. It is issued for a non-renewable period of two years. While this license is relatively easy to obtain, foreign investors may face additional obligations to share data with the Ministry and other authorities, to allow the government to retain access to geological findings. Local investors, on the other hand, often benefit from expedited approvals, especially if they have prior experience in the sector.
- Exploration licenses — are required for conducting detailed geological studies, including drilling and sampling. It is typically issued for a five year term and may be renewed based on progress reports. Foreign investors applying for exploration licenses are subject to higher scrutiny than local investors. In particular, foreign investors must provide comprehensive proof of financial capacity and technical expertise. The renewal process is also more stringent for foreign entities, requiring extensive justifications and evidence of continued investment viability and environmental compliance.
- Exploitation licenses — grant investors the right to extract minerals for commercial purposes. There are three types of exploitation licenses: (1) general mining licenses apply to large-scale, high-value mineral extraction projects; (2) small mine licenses are designated for lower-scale operations guarantee requirements; and (3) building materials quarry licenses are issued for extracting materials used in construction such as like sand, limestone, and gravel.
Foreign investment
Saudi law permits 100 percent foreign ownership in mining operations. Some restrictions, however, do apply:
- Strategic mineral — pursuant to the Mining Investment Law, the government reserves the right to classify certain minerals as 'strategic'. Extraction of and trade with such strategic minerals is subject to additional restrictions. These restrictions may include additional governmental approval or requirements to partner with local, Saudi investors.
- Saudization and local content requirements — as in other sectors investors must comply with the Saudization policies, ensuring a percentage of their workforce consists of Saudi nationals. Furthermore, mining companies must also meet local content obligations by prioritizing the use of Saudi goods and services in their operations. This mirrors Egypt's policy, which mandates the employment of Egyptian nationals in mining projects, while the UAE takes a more flexible approach to workforce requirements in free zones.
- Environmental and sustainability obligations — all investors must adhere to strict environmental regulations, including sustainable water usage, mine closure plans, and land rehabilitation.
Key Takeaway
Saudi Arabia's mining sector presents lucrative opportunities. Furthermore, the Saudi Mining Investment Law does—other than mining laws of other MENA Region countries—allow for 100 percent foreign investment in the mining sector generally. However, the law still imposes some significant restrictions on foreign investors that may disadvantage foreign investors when competing with Saudi mining companies. Local companies, while subject to the same regulations, often benefit from a smoother approval process and fewer constraints. Still, advanced technological knowhow and more extensive experience may provide foreign investors with an edge over the nascent Saudi mining industry. In any case engaging with the Ministry and conducting comprehensive due diligence will be crucial for successfully navigating the Saudi mining landscape.
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