Saudi Arabia's Ma'aden to ramp up exploration after major gold find in Makkah region

Find, first announced in December, could put company 'at centre of the world's next gold rush', CEO says

A worker holds a rock at the Al Amar gold mine, 200km southwest of Riyadh. Reuters
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Saudi Arabian Mining Company (Ma'aden), the biggest mining company in the Arab world, expects to aggressively expand its exploration activity following the discovery of vast gold deposits in the Makkah region in December.

The discoveries, which are along a 100km strip in the south of Ma'aden's Mansourah-Massarah gold mine, could put the company “at the centre of the world’s next gold rush”, chief executive Bob Wilt said in a statement on Monday.

Ma’aden said it began commercial production at the Mansourah-Massarah mine in the first quarter and expects to reach the maximum production capacity during this year. It held nearly seven million ounces in gold resources at the end of 2023, with a production capacity of 250,000 ounces a year.

Saudi Arabia, the world’s largest oil exporter, has been looking to diversify away from crude exports by developing sectors including tourism, hospitality and finance.

Mining is a key component of the kingdom’s drive to attract foreign direct investment as laid out in the Vision 2030 plan. It aims to more than triple the mining sector’s contribution to the nation’s economic output by the end of the decade.

Meanwhile, Ma'aden swung to a net profit of 890 million Saudi riyals ($237.30 million) in the fourth quarter of 2023, from a loss of 83 million riyals in the third quarter, the company said in a filing to the Tadawul stock exchange, where its shares are traded.

Revenue during the same period jumped 29 per cent to 8.04 billion riyals, supported by higher overall sales prices and volumes.

Ma’aden, one of the largest exporters of phosphate fertilisers globally, said fourth-quarter sales from its phosphate business stood at 4.72 billion riyals, up from 3.25 billion riyals in the third quarter.

The company’s aluminium sales grew 12 per cent quarter-over-quarter to 2.4 billion riyals in the final three months of 2023.

Ma’aden’s sales of base metals and minerals, which includes gold, rose to 897 million riyals in the fourth quarter from 812 million riyals in the third quarter.

For the full-year 2023, the company’s net profit dropped 83 per cent year-on-year to 1.58 billion riyals, while revenue fell 27 per cent to 29.27 billion riyals.

Russia's invasion of Ukraine in 2022 exacerbated already tight global fertiliser supplies, boosting prices to all-time highs.

Ma’aden expects the global phosphate market to remain stable this year, with higher demand in key markets offsetting a return in supply.

Following a period of reduced manufacturing activity worldwide, the aluminium market is projected to become more stable in 2024 amid increasing demand for the metal in North America and Europe, coupled with a recovery of manufacturing activity in China, the company said.

Ma’aden warned that the prices of natural gas and diesel used in its operations will rise slightly from the first quarter, which will increase the company’s total annual cost of sales by about 3.2 per cent.

“We continue to monitor disruptions in the Red Sea and work with our customers to minimise impact,” the company said.

Updated: February 26, 2024, 12:00 PM