Saudi Arabia’s industrial and mining sectors are linchpins of the country’s diversification and privatisation initiatives. Local content requirements, upgrades in logistics infrastructure and ambitious government growth targets have engendered significant transformation in Saudi Arabia’s industrial and mining sectors, making them increasingly dynamic and diversified contributors to the economy. Thanks to major public investment, legal and regulatory updates, and growing foreign direct investment (FDI), Saudi Arabia’s non-oil economy has seen encouraging growth despite a challenging geopolitical environment and a destabilised regional context. Additionally, new regulatory bodies and more streamlined bureaucracy has laid strong foundations for success as the Kingdom seeks to diversify away from hydrocarbons revenue.
Structure
The Ministry of Industry and Mineral Resources (MIMR), established in August 2019, is the main regulatory entity for the industry, metals and mining sectors. The MIMR is guided by a set of executive regulations dating from May 2022, defining its leadership, the process of issuing mining and industrial licences, mineral classes and their associated regulations, and sustainability requirements for the mining and industrial sectors. The ministry is responsible for the execution and enforcement of the 2020 Mining Investment Law (MIL), the overarching law for Saudi Arabia’s mineral sector. The MIL stipulates that all surface and subsurface deposits, both on land and in the sea, within Saudi Arabia’s borders are sovereign property. It lays out the powers of the MIMR, designates extractive areas and their associated rules, and establishes a mining fund to help develop companies in the sector. The law also established the National Geological Database, a repository for geological data collected by the Saudi Geological Survey (SGS). Bandar Alkhorayef has led the MIMR as minister since its founding, and there are nine deputy ministers with specialised portfolios including mining affairs, industry affairs, and mining development. The minister is also the board chairman of the SGS, whose deputy chairman is the deputy minister of mining affairs. Furthermore, among various entities the minister chairs the Saudi Authority for Industrial Cities and Technology Zones (MODON) and the National Industrial Development and Logistics Programme (NIDLP), a Vision 2030 realisation programme focused on the development of industry, mining, logistics and energy.
Oversight
The MIMR plays a central role in the Kingdom’s Vision 2030 diversification initiatives, with the stated target of achieving 84% growth in non-oil industries and 55% growth in local content manufacturing by 2030. NIDLP provides the roadmap to achieve that goal through improving regulations to drive up domestic and foreign investment, upgrading logistics networks, localising industrial value chains and upskilling the domestic workforce.
NIDLP’s mining plan is divided into three phases. Phase one involves surveys, the exploration of mineral quantities and feasibility studies. Phase two aims to expand refining capacity and the manufacture of raw materials, while phase three targets semi-finished and final products. The MIMR oversees the National Industrial Strategy, launched in October 2022, which aims to grow the manufacturing sector’s contribution to GDP from SR331bn ($88.3bn) in 2020 to SR895bn ($239bn) in 2030, increase the number of people employed in the sector from 900,000 to 2.1m in the same period, and expand non-oil exports from SR169bn ($45.1bn) to SR557bn ($149bn).
The entity targets 12 industrial subsectors: automotive, aviation, chemicals and specialty chemicals, construction materials, food and agriculture, machinery and equipment, maritime manufacturing, medical devices and supplies, military manufacturing, mining and minerals, pharmaceuticals, and renewable energy. It aims to drive investment and business to those sectors through local procurement rules, in addition to improving their efficiency through workforce training, boosted private sector engagement, and structural increases in capital expenditure. With one of the highest global rates of military expenditure as a percentage of GDP, Saudi Arabia intends to localise 50% of defence spending by 2030. Second-order effects of these policies should help to achieve additional NIS targets, such as strengthening supply chains, easing the investment environment and encouraging domestic innovation.
Key Government Entities
There are a number of other government entities that are involved in the industry and mining sectors. On the planning side, the National Industrial Development Centre helps set policy and attract investment, collects business intelligence, and serves as a government liaison for industrial companies and a trade body for industry. Meanwhile, the National Centre for Industrial and Mining Information collects industrial and mining information for the two entities, and the Royal Commission for Jubail and Yanbu oversees the Kingdom’s energy-intensive industrial cities. Elsewhere, the Saudi Export Development Authority works to increase exports by reviewing and improving existing export regulations, drafting new ones and facilitating export certifications for Saudi companies. It also runs the Made in Saudi programme, which encourages local consumers to purchase Saudi products and promotes Saudi products abroad.
In addition to running the National Geological Database, the Saudi Geographical Survey makes geological maps, carries out technical surveys, and inventories mineral deposits and water resources. It oversees Nuthree, an incubator targeting entrepreneurship in geology and mining, with a specific focus on mineral exploration. The Saudi Standards, Metrology and Quality Organisation is responsible for developing and regulating Saudi standards for goods and services, in addition to consulting various companies on achieving those standards.
On the financing side, the Saudi Industrial Development Fund (SIDF), which has been revitalised in recent years to become a vital funding source for industrial modernisation in the Kingdom. According to the fund’s 2022 annual – the most recently published as of November 2024, it approved SR14.2bn ($3.8bn) in loans that year, up from SR11.1bn ($3bn) in 2021. A total of 102 loans out of 111, valued at SR13bn ($3.5bn), went to the industrial sector. Meanwhile, the Saudi EXIM bank was established in February 2020 to help fund exports, and has seen its loan disbursement rise from SR320m ($85.3m) in 2020 to SR 16.5bn ($4.4bn) in 2023.
Lastly, a key public entity on the implementation side is MODON, which is responsible for all industrial infrastructure in the country’s 36 industrial areas and six so-called industrial oases, including the King Abdullah Economic City and NEOM Industrial City. Its remit includes logistics infrastructure such as container yards and warehouses; services, including hospitals and housing for employees; and ready-built factories for small and medium-sized enterprises (SMEs). MODON is involved with the Future Factories Programme, launched in July 2022, which plans to transform 4000 factories into advanced and automated industrial facilities and reduce the manufacturing sector’s dependence on low-skilled workers.
Major Player
Despite its diversification and privatisation initiatives, the government remains a major player in Saudi Arabia’s industry and mining sectors. SABIC, the dominant petrochemicals manufacturer in the Kingdom and among the largest in the world, is 70% owned by the national energy firm Aramco, which in turn is 81.5% owned by the government. SABIC Agri-Nutrients Company is 50.1% owned by SABIC, with the remainder listed on Saudi Arabia’s stock exchange, known as the Tadawul. Yanbu National Petrochemical Company (Yansab), another key sector player, is also 51%-owned by SABIC.
Elsewhere, the metals sector is highly concentrated. Hadeed, a SABIC steel subsidiary, was bought by the Public Investment Fund (PIF) – the Kingdom’s sovereign wealth fund – in September 2023 for $3.3bn, with the purchase approved in May 2024. Rajhi Steel, a privately held firm, was also acquired by the PIF in September 2023 and will be merged with Hadeed, creating a steel giant that Yazeed Al Humied, deputy governor and the head of MENA investment at the PIF, said would become a national champion.
Government-owned mining company Ma’aden is the Kingdom’s largest mining firm, with operations in gold, phosphate, copper, silver, zinc and aluminium mining. It is also active in the mineral processing industry and has an aluminium production joint venture with US firm Alcoa in Ras Al Khair Industrial City, where it runs two fertiliser production joint ventures with SABIC. Ma’aden also operates a joint venture in Jubail Industrial City with Sahara International Petrochemical Company (Sipchem), producing potash. Manara Minerals Investment Company is a Ma’aden-PIF joint venture targeting international mining investment opportunities.
Among privately owned industry and mining companies, Sipchem and Advanced Petrochemical Company – the second- and fourth-largest petrochemicals companies in Saudi Arabia by market capitalisation – stand out due to their size and lack of major government shareholding. In the metals sector, Al Ittefaq Steel is the largest privately owned steel manufacturer in the Kingdom, valued at SR8bn ($2.1bn) in 2022. Another major player, Zamil Steel, is not listed on the Tadawul unlike its parent company, Zamil Industrial Investment. Among the largest listed steel companies with little or no government shareholding is Al Yamamah Steel Industries, a firm specialising in steel bar construction. Additionally, Riyadh Steel, Bena Steel Industries and Molan Steel are steel manufacturers specialising in specific products. In the mining sector, Al Masane Al Kobra (AMAK) is the largest Saudi mining company with no government shareholding, and is active in the copper, zinc and gold mining segments.
Size & Performance
According to NIDLP’s 2023 annual report, non-oil activities accounted for 50% of GDP for the first time that year, and non-oil exports grew to reach SR454bn ($121bn) in 2023 from SR328bn ($87.4bn) in 2020. Employment in NIDLP’s four key sectors grew from 1.3m individuals to 1.9m in the same period. Of the total 269,000 new workers in 2023, 113,000 were Saudi nationals – with 51,000 females and 62,000 males. According to the Saudi Central Bank (SAMA), the Kingdom’s economy grew by 8.7% in 2022, with manufacturing expanding by 7.9% and GDP of non-oil activities recording an increase of 11.8%. Non-oil commodity exports rose by 14% from 2021 to 2022.
Petrochemicals
According to SAMA, petrochemicals production increased to 61.4m tonnes in 2022, up from 58.2m tonnes in 2021. SABIC accounted for the majority of this volume, contributing 47.9m tonnes in 2022, up from 45.9m tonnes in 2021. According to its annual report, SABIC’s revenue declined from just over SR183bn ($48.8bn) in 2022 to SR142bn ($37.9bn) in 2023. Over the same period its net income contracted from SR16.5bn ($4.4bn) in 2022 to a net loss of SR2.8bn ($738m) in 2023, caused primarily by a reduction in average selling prices due to slowing global growth, impairment of assets and the sale of Hadeed to the PIF.
Yansab’s revenue declined from SR7bn ($1.9bn) in 2022 to SR4.5bn ($1.2bn) in 2023, with the company’s profit contracting from SR414m ($110m) in 2022 to a loss of SR485m ($129m) in 2023. Revenue for Advanced Petrochemical Company saw a drop from SR2.9bn ($773m) in 2022 to SR2.4bn ($640m) in 2023, with overall profit shrinking from SR292m ($77.8m) to SR167m ($44.5m) over the same period.
Meanwhile, SAMA data showed that petrochemicals exports had increased by 14.3% in 2022 to reach nearly SR199bn ($53.1bn), making up 12.9% of total exports by earnings. According to SABIC, Asian markets accounted for 41% of its customer base in 2023 – with China making up 19% of this figure. This was followed by Europe, at 21%, Saudi Arabia at 14%, the Americas at 10%, Africa at 5% and others at 9%.
Mining
According to NIDLP, mining and quarrying activities’ contribution to GDP rose by 6% between 2022 and 2023, from SR12.2bn ($3.3bn) to SR13bn ($3.5bn). In 2022 the mining sector produced 12.3 tonnes of gold, 9.5 tonnes of silver, 98,040 tonnes of copper and 51,013 tonnes of zinc. Other major mining products that year included sand, with 37,947 tonnes; limestone, with 70,104 tonnes; diammonium phosphate, used for fertiliser, with 10,844 tonnes; and bauxite, with 5330 tonnes. At the end of 2022 the number of mining licences issued by the MIMR stood at 2300. Of these, 1452 were for construction materials, 628 for exploration, 104 for mineral mining, 74 for small mines and 42 for reconnaissance. Saudi Arabia exported raw aluminium worth $1.3bn and copper ore worth $618m in 2022, while Saudi EXIM Bank financed and guaranteed SR75m ($20m) worth of mining exports in both 2021 and 2022.
Ma’aden saw SR29.2bn ($7.8bn) in revenue in 2023, down from SR40.3bn ($10.7bn) in 2022, primarily due to a global decline in mineral prices, reducing the company’s profit from SR12.1bn ($3.2bn) in 2022 to SR1.7bn ($453m) in 2023. The majority of Ma’aden’s profit came from international sales, totalling SR25.3bn ($6.7bn) compared to SR4bn ($1bn) for domestic sales, with India, Europe and Africa the company’s primary export destinations. Phosphate revenue totalled SR17.4bn ($4.6bn) in 2023, making up more than half of the total, while aluminium accounted for SR8.8bn ($2.3bn). AMAK, meanwhile, generated SR488m ($130m) in revenue in 2023 – down from 583m ($155m) in 2022 – with its net profit contracting from SR126m ($33.6m) in 2022 to SR54.6m ($14.6m) in 2023.
Metals
Saudi Arabia produced a total of 5.2m tonnes in of metals 2022, up 12% from 2021. While revenue in the metals industry rose, profit declined between 2022 and 2023, primarily due to the higher cost of raw materials. Al Yamamah Steel Industries saw its revenue rise from SR1.5bn ($389m) in 2022 to SR1.6bn ($416m) in the first nine months of 2023. Its profit, however, went from SR78.2m ($20.8m) to SR28.3m ($7.5m) in losses over the same period. Similarly, Molan Steel saw revenue rise from SR84.6m ($22.6m) in 2022 to SR89.7m ($23.9m) in 2023, while profit dropped from SR5.3m ($1.4m) to SR4.1m ($1.1m). Bena Steel Industries’ revenue increased from SR374m ($99.7m) to SR409m ($109m) between 2022 and 2023, with a growth in profit from SR26.5m ($7.1m) in 2022 to SR30.2m ($8.1m) in 2023. Riyadh Steel, potentially due to its specialised role in the market, saw revenue decline from SR156m ($41.6m) in 2022 to SR134m ($35.7m) in 2023, and profit expand from SR16.3m ($4.3m) to SR22.1m ($5.9m) over the same period. Total metals exports stood at $7bn in 2022, with raw aluminium accounting for 18.9% of the total, scrap copper 18% and aluminium plating 11.1%.
Industry
According to SAMA, the MIMR issued 974 new factory licences in 2022, representing a capital investment of SR32.2bn ($8.6bn). This brought the total number of industrial units in the Kingdom to 10,518, which were estimated to employ about 1m people. Industry contributed 12.4% to GDP in 2022, down from 12.5% in 2021, and sectoral growth slowed from 11.4% in 2021 to 7.9% in 2022. Investment in the industrial sector increased by 23% between the first quarter of 2022 and the corresponding period of 2023, and warehouse occupancy levels reached a record high of 96% in 2023 due to growing demand.
Expanding domestic car manufacturing is a core target of NIDLP, with an annual production goal of 300,000 cars by 2030. US-based electric vehicle (EV) manufacturer Lucid Motors opened its first factory in Saudi Arabia in September 2023, with initial production of 5000 cars per year and a longterm goal of 155,000 EVs annually. Saudi EV brand Ceer received an industry licence in August 2023 to establish an EV manufacturing facility in the King Abdullah Economic City, and South Korean automaker Hyundai signed a joint venture agreement with the PIF valued at more than SR1bn ($267m) to produce 50,000 cars per year in the Kingdom starting in 2026.
Ammonia is another industrial subsector seeing significant investment. The NEOM Green Hydrogen Company plans to build the largest green hydrogen-based ammonia plant in the world by 2026. Upon completion, it is expected to produce up to 600 tonnes of hydrogen per day and 1.2m tonnes of ammonia per year. SABIC Agri-Nutrients Company and Aramco are also planning to build ammonia production plants, in part to absorb the significant amount of excess renewable energy the country will produce during peak solar hours. Ammonia exports have also grown rapidly, with $2.3bn exported in 2022, primarily to India, at 38.3%; South Korea, at 20.1%; and Morocco, at 14.7%. Ammonia exports totalled $1.8bn in 2020 and $1.4bn in 2021.
Investment & Incentives
Saudi Arabia aims to achieve a significant increase in FDI under Vision 2030, from 1.5% of GDP in 2021 to 5.7% of GDP by 2030, equivalent to SR388bn ($103bn). According to the Ministry of Investment, net FDI in 2022 reached SR123bn ($32.8bn), more than double that year’s target of SR61bn ($16.3bn) and already ahead of the 2024 target of 109bn ($29.1bn). The main FDI recipient sectors were transport and storage, with SR51.2bn ($13.6bn); manufacturing, with SR41.2bn ($11bn); and wholesale and retail trade, including the repair of motor vehicles, with SR8.8bn ($2.3bn). The largest source markets in 2022 were the US, with SR9.1bn ($2.4bn); Japan, with SR5.7bn ($1.5bn); France, with SR4.9bn ($1.3bn); the UK, with SR4.3bn ($1.1bn); and South Korea, with SR2.6bn ($693m).
Private investment in NIDLP has risen in recent years, from SR382bn ($102bn) in 2021 to SR456bn ($122bn) in 2022 and SR524bn ($140bn) in 2023. In an effort to elevate its international profile, Saudi Arabia organises the Future Minerals Forum, an event for international mining companies and investors to discuss the sector, with a focus on the Kingdom. Representatives from over 60 countries attended the inaugural event in January 2022, with the fourth iteration of the forum taking place in January 2025. “With increasing investment in manufacturing and heavy industries, Saudi Arabia is positioned to become a regional leader in industrial production,” Sharjeel Azhar, CEO of Al Ittefaq Steel, told OBG. “To maintain this momentum, it is essential to develop skilled labour and enhance local supply chain capabilities.”
While private investment has grown, the government remains the largest actor in industry and mining. The SIDF approved SR14.2bn ($3.8bn) in loans in 2022, up from SR11.1bn ($3bn) in 2021, though disbursed loans dropped from SR10.1bn ($2.7bn) in 2021 to SR6.3bn ($1.7bn) in 2022. Some 78% of the loans went to industrial SMEs – a value of SR1.1bn ($293m). Entities in the engineering and chemical segments made up the majority of the loans, receiving 54% and 38% of the value, respectively. Of the 111 loans approved by the SIDF in 2022, 102 went to industry, five to logistics, two to energy and two to mining. The high proportion of SME and industrial loan recipients is in part due to the SIDF’s Afaq programme, which targets SMEs in the industrial sector.
In March 2023 the MIMR announced the first batch of projects supported under the Shareek initiative, which hopes to unlock SR5trn ($1.3trn) in investment by fostering collaboration between the public and private sectors. The investment included SR192bn ($51.2bn) across 12 projects, with a goal of creating more than 64,000 local jobs. Through growth in these projects and private sector contributions, the government aims to increase the value of this investment SR466bn ($124bn) by 2040. Additionally, in January 2024 Aramco Ventures, the venture capital arm of Aramco, more than doubled its overall capital from $3bn to $7bn to fund domestic initiatives.
The largest and most important investor in industry and mining is the PIF, with $925bn in total assets under management. The PIF plans to invest at least $40bn a year domestically through 2030, accompanied by concurrent investment from PIF portfolio companies such as Ma’aden, Saudi Arabian Military Industries and utilities firm Water and Electricity Holding. Due to its large reserves of capital, the PIF exerts significant influence in the market.
International Investment
In terms of global investment, the Saudi government has stipulated that only multinational companies that situate their regional headquarters in the Kingdom can win government contracts (see Economy chapter). As a result, multinationals including Pepsi, Boeing and PwC have moved their main regional offices to Riyadh. These organisations receive exemptions from Saudiisation requirements and certain taxes, and receive government tendering priority.
This aligns with a raft of local procurement regulations. Government entities, including the PIF, must source 30% of products in a contract from local bidders as of December 2023, based on an approved list from the Local Content and Government Procurement Authority (LCGPA), the entity that sets localisation targets and measures their impact. According to the LCGPA, local content can include assets, goods, services, labour and technology. LCGPA spending on local content rose by 20% in February 2024 and Saudi member companies of the LCGPA-led Local Content Coordination Council sourced 47% of their products domestically in 2022. The SIDF’s Tawteen programme, meanwhile, disburses funding for local content and supply chain localisation products and funded 10 projects valued at SR152.5m ($40.7m) in 2022.
Outlook
Saudi Arabia has achieved success in boosting investment in its industrial and mining sectors in recent years. Localisation projects are expanding and the country’s adoption of green energy will situate it to capitalise on the growing global hydrogen and ammonia markets. Meanwhile, the merger of Hadeed and Rajhi Steel should create a company that can benefit from economies of scale and a mutually beneficial relationship with the PIF.
Once the groundwork is laid, Saudi Arabia’s mining sector is set to see more room for growth, with Ma’aden as the main beneficiary. However, a global economic slowdown and the overproduction of steel in China could prove challenging in the near term. Additionally, relatively low oil prices could result in a pause or rationalisation in public spending on major projects. Strong international demand for petrochemicals, blue and green hydrogen and ammonia products, and rare earth minerals, however, should ensure that investment in the Kingdom’s domestic industrial sector is well positioned to reap rewards.
Read More from OBG
