In recent years, Saudi Arabia has witnessed substantial growth in the production of primary, midstream, and downstream mineral and metals products catering to both local and export markets. Currently, as a part of the Kingdom's Vision 2030 program, Saudi Arabia is working to increase the mining sector's contribution to the Saudi economy with the objective of making the mining sector the third pillar of Saudi industry, alongside the oil and gas and petrochemical sectors.

To assist in achieving this goal, Saudi Arabia announced on June 9, 2020, the issuance of a new Mining Law, which offers certain changes and incentives not found in the previous Mining Law. In this White Paper, we will examine some of the more substantial amendments introduced by the New Law.

In early June 2020, Saudi Arabia issued a new Mining Law aimed at promoting mining in Saudi Arabia. The new Mining Law establishes a new fund to provide sustainable finance for the development of the mining sector as well as to support geological survey and exploration programs. The initial value and scope of the fund will be clarified when the law's implementing regulations are issued. However, we expect that the fund will provide financial support in the form of medium- and long-term soft loans to businesses operating in the mining sector. Other amendments introduced by the new Mining Law include: (i) an increase in the types of land on which mining activities may be undertaken; (ii) an effective extension of the duration of exploration licenses; (iii) the ability to mortgage mining licenses; and (iv) the creation of a mineral zones register. The new Mining Law is the first of many steps that can be expected to implement Saudi Vision 2030's goals for the Saudi mining industry.

In recent years, Saudi Arabia has witnessed substantial growth in the production of primary, midstream, and downstream mineral and metals products catering to both local and export markets. Currently, as a part of the Kingdom's Vision 2030 program, Saudi Arabia is working to increase the mining sector's contribution to the Saudi economy with the objective of making the mining sector the third pillar of Saudi industry, alongside the oil and gas and petrochemical sectors.

To assist in achieving this goal, Saudi Arabia announced on June 9, 2020, the issuance of a new Mining Law1 ("New Law"), which offers certain changes and incentives not found in the previous Mining Law2 ("Old Law"). In this White Paper, we will examine some of the more substantial amendments introduced by the New Law.

PRELIMINARY COMMENTS

As of September 10, 2020, the New Mining Law has not yet been published in the Saudi Arabian Official Gazette and will not come into force until 180 days after the date of publication. The New Law provides that the Ministry of Industry and Mineral Resources ("Ministry") will have the authority to issue the regulations, forms, procedures, and instructions necessary to implement the New Law.

MINING FUND

The New Law provides for the creation of a new mining fund ("Fund") to provide sustainable finance for the development of the mining sector as well as to support geological survey and exploration programs. The Fund is to be financed by fees for licenses and other services provided by the Ministry, fines imposed under the New Law, surface rents, financial returns from competitive bids, and gifts, donations, and endowments.

Until the publication of the New Law's implementing regulations and any additional regulations governing the Fund, the nature and mechanics of the Fund remain undefined. We can speculate that the Fund will serve the Saudi mining sector much as the Saudi Industrial Development Fund serves Saudi industry: by providing financial support in the form of medium- and long-term soft loans to businesses operating in the targeted sectors.

EXCLUDED LANDS

The Old Law

The Old Law provided that mining licenses could not be issued in respect of:

  • Lands occupied by Holy Places (e.g., Makkah and Medina);
  • Lands officially designated as historical or archaeological sites;
  • Lands specified by a Council of Ministers resolution;
  • Lands on which were located cities, streets, airports, railways, pipelines, public roads, or other infrastructure; and/or
  • Lands designated for water projects, public facilities, military installations, or agricultural projects.

The New Law

The New Law largely tracks the Old Law's prohibition of mining licenses for:

  • Lands occupied by Holy Places or military establishments;
  • Lands specified by a Council of Ministers resolution; and
  • Lands reserved for hydrocarbon3 operations or as hydrocarbon exploration areas.

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