The Saudi Mining Company Ma’aden made a surprising announcement lately regarding the discovery of a substantial amount of gold located 125 km south of the Mansourah and Massarah gold mine in the Makkah region. This revelation came as a great surprise to the Saudi economy, capping off a year of economic success for the Kingdom.
First success within Ma’aden’s extensive exploration program
This discovery marks the first success within Ma’aden’s extensive exploration program, which was initiated in 2022 with the goal of establishing a metal production line. The company is optimistic that the region will become a prominent gold belt on a global scale in Saudi Arabia. The available resources within the region, both at depth and along the area, indicate the potential for abundant wealth in the mine. There is also the possibility of extending the mine’s lifespan through underground development.
Robert Wilt, CEO of Ma’aden, highlights that these discoveries provide significant evidence of the untapped mineral wealth in Saudi Arabia. Moreover, they align with the goals of Vision 2030, which aims to diversify income sources and solidify mining as a key pillar of the Saudi economy.
Great economic significance
The Kingdom’s goals for the mining sector are being pursued as planned. According to Bandar Alkhorayef, Saudi minister of Industry and Mineral Resources, the target for the mining sector’s contribution to the country’s GDP has been increased to a range of $70 billion to $80 billion by 2030. This adjustment reflects an upward revision from previous estimates, which had projected the mining sector’s contribution to reach $64 billion by 2030. The Kingdom is committed to harnessing the potential of the mining industry to drive economic growth and diversification.
During a session held on the sidelines of the Saudi-Arab-African Economic Conference, it was announced that Saudi plans to provide an updated forecast on the size of its current $1.3 trillion mineral reserves in January of the following year. The announcement also mentioned ongoing efforts to conduct extensive geological surveys across the Kingdom. According to official Saudi data, the mining sector achieved remarkable revenues in 2023, surpassing SAR1.5 billion.
In line with its commitment to developing the mining sector and fostering international collaboration, the Kingdom is actively pursuing opportunities for cooperation with foreign nations. Adolfo Urso, Italy’s minister of Industry, has revealed ongoing discussions between Italy and Saudi Arabia regarding joint investments in various sectors, including automotive, mining, oil, gas, defense, hydrogen, and aerospace.
Similarly, the Saudi Ministry of Industry and Mineral Resources has announced a memorandum of cooperation in the field of mining and mineral resources between Japan’s Minister of Industry Ken Saitō, and Alkhorayef.
Boosting spending
The recent gold discovery in Saudi Arabia has the potential to generate increased profits and revenues for the Kingdom’s state treasury. This, in turn, will enable the Kingdom to allocate more funds towards investment and development projects, thus offsetting the losses incurred from the reduction in oil production. As part of its efforts to bolster the non-oil sector, Saudi Arabia aims to intensify its spending on large-scale projects. Notably, the country experienced robust economic growth last year, surpassing many other G20 nations and achieving its first budget surplus in nearly ten years. However, the decline in oil production and prices has adversely affected the economy. Despite this, the non-oil GDP growth rate reached a remarkable 5.9 percent in 2023, surpassing the overall economic performance.
Regarding the recent discovery by Ma’aden, the company’s statement confirms the presence of substantial resources in the Mansourah-Massarah mine, indicating significant wealth. According to their exploration results, the mine is estimated to hold approximately 7 million ounces of gold resources as of the end of 2023, with an annual production capacity of 250 thousand ounces.
According to Wilt, the recent discovery of the new gold region serves as a catalyst for gold exploration worldwide. He further highlighted that this discovery plays a crucial role in the growth strategy of the company. Also, Wilt expressed optimism that this is merely the first of numerous discoveries that Maaden anticipates in the years ahead. In line with this vision, the company initiated one of the most extensive exploration programs globally last year.
Significance of gold reserves
Significantly, precious metals, with gold being a prominent example, form the foundation of tangible wealth. As such, a nation’s accumulation of this yellow metal serves as a true reflection of its prosperity. While gold no longer plays a direct role in the international monetary system, central banks and governments worldwide strive to maintain substantial reserves of it as a safeguard against economic instability. Consequently, gold exhibits lower volatility compared to individual commodities, commercial stocks, and currencies. Moreover, gold holds great significance for countries during periods of war and conflict, as it helps mitigate the economic impacts of such tumultuous times.
Final thought
In summary, Saudi Arabia’s surveys and explorations for precious metals have the potential to yield substantial economic benefits. The country can choose to mine these resources, generating state revenues, or store them to ensure economic stability. If the surveys and gold discoveries continue to progress, Saudi Arabia has the opportunity to maintain a leading position among Arab nations in terms of its gold reserves. It may also ascend in the global rankings of the top 20 countries with the largest gold reserves, surpassing its current 16th place and potentially achieving even higher positions.
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