Eight investors prequalify for Saudi Arabian zinc, copper mine site auction

Six international investors and two domestic companies have prequalified to participate in an auction for exploration rights for Saudi Arabia's Khnaiguiyah zinc and copper deposit, deputy minister for mining development Musad Abdulaziz Aldaood said during a June 24 roadshow in London, designed to attract strategic partners to help develop the kingdom's mineral wealth.

The prequalifying companies are Aditya Birla Group, Vedanta (both from India), Norinco (China), Ivanhoe Electric (US), Moxico Resources (UK), Alara Resources (Australia), and AMAK and Ma'aden Group (both from Saudi Arabia).

Khnaiguiyah is the first mineral property to be put up for auction in the kingdom's current drive to seek new mining investors, Aldaood said. The prequalified companies will submit proposals and whoever bids highest will win five years' exploration rights to the deposit, with the potential to expand this to15 years and then gain a 30 years' renewable exploitation, or mining, contract.

Details of the proposals should be announced at the auction at the end of July and the winner of the rights should be announced mid-August.

The winner will be chosen on the basis of criteria including technical and exploitation expertise, financial capability, work program and ESG plan including employment and local content provisions.

Khnaiguiyah, 170 kilometers southwest of Riyadh, has ore reserves of around 25 million mt, grading 4.11% zinc and 0.56% copper. It has the capability to produce 55,000 mt/year of ore concentrates over 12 years, officials from the Saudi Ministry of Industry and Mineral Resources said at the event in London.

The project is considered critical to developing the kingdom's zinc and copper downstream industries. However, any investor is entitled to own up to 100% of the project and export or sell the product locally as they think best. Royalty discounts would nonetheless be offered on projects that use the production to develop downstream industries in the kingdom, officials at the event said. Royalties on sales from mineral sales in Saudi Arabia are typically 2%.

One official pointed out that Khnaiguiyah has been selected as the first property to be auctioned in the kingdom's current mineral licensing and auction drive as it is the biggest -- stretching over a 353 sq km -- and also the most advanced, having already undergone some drilling and with a bankable feasibility study completed in 2015.

The deposit's development cost is put at 2 billion riyals ($532 million).

Two more copper deposits

An exploration licensing round for Saudi Arabia's Muhaddad copper and zinc property was launched at the June 24 roadshow while a pre-qualification round for the Umm Ad Damar copper and gold deposit is expected to be finalized by July 17. Both are located in the Arabian Shield.

"We've already had too many enquiries," an official said at the event, referring to the level of interest shown in Umm Ad Damar.

Umm Ad Damar, 300 km northeast of Jeddah, is an early exploration project in the Sayid Formation of the Arj Group mineral area. It has geological similarities to the Jabal Sayid copper deposit, just 20 km away, a joint venture between Canada-based Barrick Gold and Ma'aden. Jabal Sayid, considered a national success story, started commercial copper concentrates production in 2016 and produced 151 million lb copper in 2021, according to ministry data. Zinc is also produced at Jabal Sayid.

Umm Ad Damar's copper content in the ore is put at a relatively high level of 0.86% copper for 110,000 mt/slag.

Muhaddad, 600 km east-south-east of Jeddah, is an early stage base metal exploration site located within the underexplored Bishah volcanic belt where more than 40 gold and/or base metal mineral occurrences have been discovered including the Al Hajar VMS deposit, explored by partly state-owned minerals corporation Ma'aden.