Privatization & PPP of theSaudi Mining Sector

Prepared by: Sumayya JadBusiness ConsultantGlobal Gold & Silver

10th Oct, 2017

Privatization & PPP : What’s the Difference?

Dimensions Privatization PPP

Ownership Permanent transfer of to the Private Sector (Partially / Completely)

Retained with the Public Sector

Accountability of providing services to citizens

Transferred to the Private sector Retained with the Public Sector

Risk Management Private sector is 100% responsible The best party in risk management takes care of it – by agreement

Example UK: British Airports Authority, British Gas, British Steel, Jaguar, Rolls Royce, British Telecom

UK: “PPPs have delivered £56 billion of private sector capital investment in over 700 UK infrastructure projects. These include new schools, hospitals, roads, housing, prisons, and military equipment and accommodation.”- The private sector has built 8 new prisons , fully financed by them, and ret it back to the government

How can PPP help the Saudi Mining Sector Develop?

• Better infrastructure solutions than an initiative that is wholly public or wholly

private.

•Faster project completions

•A public-private partnership's return-on-investment (ROI) may be greater than

traditional,

•Risks are fully appraised early on to determine project feasibility

•The operational and project execution risk is transferred from government to the

private participant,

How can PPP help the Saudi Mining Sector Develop?

•P3s' greater efficiency reduces government budgets and budget deficits

•Public-private partnerships may include early completion bonuses that further

increase efficiency.

•By increasing the efficiency of the government's investment, it allows government

funds to be re-directed to other important socio-economic areas.

•High-quality standards are better obtained and maintained through the life-cycle of

the project

•Public-Private partnerships that reduce costs also allow lower taxes.

International Mining Experience with Privatization & PPP

Peru

“through privatization and through transnationalization, the mining sector has

become a key element for future development opportunities”

Ghana

‘'the impacts of mining-sector reform - privatization -in Ghana at both the

macroeconomic and microeconomic levels’. Through opening international

investment opportunities, “The country's mining industry has since expanded rapidly,

experiencing by 2004 a fivefold increase in annual gold output and big rises in

bauxite, diamond, and manganese production”

International Mining Experience with Privatization & PPP

Turkey

Turkey refers its 10 years sharp economic development to its successful

implementation of PPP

The Saudi Mining Sector

''We will seek to shift the government’s role from providing services to one that

focuses on regulating and monitoring them and we will build the capability to monitor

this transition. We will seek to increase private sector contribution by encouraging

investments, both local and international, in healthcare, municipal services, housing,

finance, energy and so forth.”

Vision 2030

The Saudi Mining Sector - General Information

• The Saudi Mining Sector is expected to rank the third economically after Oil and

petrochemicals

• The largest Phosphate reserve in the world is in Saudi

• Largest country in size in MENA, 14th worldwide, highly fertilised in with natural

minerals

The Saudi Mining Sector - Developmental Actions

• Ma’aden (1997) : publicly owned corporation, 50% Gov. , 50% IPO

• The major (and almost only) company in the country specialized in Mining activities

through strategic partnership with national (E.G SABIC) and international (e.g.

ALCOA) companies

The Saudi Mining Sector - Does the current situation have any Privatization or PPP?

NO!• However, a new mining, investment and tax incentives regulations have been

issued, which is expected to reflect positively on the Saudi Mining activities and

investment opportunities

• The Saudi Ministry of Energy, Industry and Minerals' new strategy focuses on 4

points, one of which is R&D in the development of the Saudi Mining sector through

engaging the private sector locally and internationally

The Saudi Mining Sector – Fact 1: GDP

As of October 2017:

GDP = $646.440 bn

GDP from Mining = $67,101.3 mn

which constitutes 10.4% of Total

GDP

The Saudi Mining Sector – Fact 2: Investment

Investment Capital: SR 250 bn

Investment Revenue: SR 30 bn ,

of which SR 9 bn Profit

The Saudi Mining Sector – Set Goal by Saudi Government

To increase revenue from SR 64 bn to SR 240 bn (increase by TRIPLE)

How?

• Revision of governmental bureaucratic procedures

• Increase local and international investment opportunities

How can we help ?

“We identify investment opportunities in mining companies listed on the London stock

exchange and transfer their experience to the Middle East and Gulf area. Likewise we

can offer consultancy services to mining companies from this region”

How can we help? Privatization

We can help the Saudi Mining sector Privatise by driving the right local and

international private sector investments through our consultants' expertise in global

financial markets

How can we help? PPP

Transfer of internationally distinguished mining experience to Saudi through the

company's strategic partnerships mature firms in the sector

Thank You

References

• https://ppp.gov.ph/?press_releases=ppp-is-not-privatization• https://www.gov.uk/government/collections/public-private-partnerships• http://news.bbc.co.uk/2/hi/uk_news/1518523.stm• http://new.dmmr.gov.sa/mop/pages/home.aspx• http://new.dmmr.gov.sa/MOP/Pages/AnnualReports.aspx• https://tradingeconomics.com/saudi-arabia/gdp-from-mining• https://www.argaam.com/ar/article/articledetail/id/367778• http://www.alarab.co.uk/?id=16725• https://www.thebalance.com/public-private-partnership-pros-and-cons-844713• https://muse.jhu.edu/article/177008/summary• http://journals.sagepub.com/doi/abs/10.1068/a371• http://www.pppcoe.com/Home/Article/3