In recent years, Saudi Arabia has embarked on an impressive expansion of its mining sector. With large bauxite, copper, gold, phosphate, and uranium reserves, the Kingdom is developing its mining strategy in line with the Saudi Vision 2030. This has led to significant improvements in the mining investment framework, which includes a new mining law, a transparent licensing processes, a web platform for license applications, and more data related to mineral wealth.
This insight gives a snapshot of Saudi’s mining law and investment framework.
Framework – The mining law, in force since December 2021, introduces an investor-friendly framework that encourages participation in all stages of the mining process. While boosting survey and exploration activities, it also offers financial incentives (including attractive loans).
Mining Rights – The mining law provides for various mining licenses, including an Exploration License (valid for up to 5 years, renewable up to 15 years) and a Mining License (valid for 30 years, renewable up to 60 years) relating to minerals from land or marine areas.
Fiscal – Holders of a mining license can expect to pay (i) annual surface rental fees; (ii) income tax; and (iii) a ‘severance fee’ determined by a formula in the Regulation. This fee will depend on the ‘class’ of minerals mined: Class A (e.g. nickel and manganese) ranges from 1 – 4.5% of the net value at extraction; Class B (e.g. potash and some bauxite) ranges from 2.5 – 38 Riyals per ton or (e.g. graphite) 5% of net sales revenue; and Class C ranges from 0.53 – 38 Riyals per ton.
Loans and Auctions – The law establishes a fund that provides finance for mining projects, including attractive loans. Auctions of new mining opportunities will be organized by the government, which this year will include deposits of copper, zinc, lead, and iron.
Why Saudi? – Saudi has excellent infrastructure that includes an extensive road and power network. Investors can benefit from its geographic position, making global markets easily accessible, and a strong regional market for downstream products. There are no foreign ownership restrictions, but applicants must set up a corporate entity registered within Saudi Arabia. We advise on your options and the process for setting up in Saudi.
Experience – At Serus, our bilingual team has extensive experience working in Saudi, where we’ve advised investors and governments on the new framework. We assist with company structuring and set-up, project acquisitions, and due diligence, and prepare all related mining agreements such as royalty, JV, construction, earn-in, and other mining contracts.
Serus is an international law firm that uses technology and lower overheads to provide legal services at a significantly better value. Please contact our team or email felix@seruslegal.com.
The contents of this insight do not constitute legal advice and is subject to input from a lawyer.