RIYADH: The Saudi oil industry still dominates the country’s economy, but can be used as a springboard for diversification and transformation, the Minister of Industry and Mines told Arab News.
Bandar Alkhorayef, who oversees the expansion of the Kingdom’s industrial base and vast mineral resources, said: “Certainly (the expansion) will help the industrial sector to develop its capabilities, to ensure that the sector is built in a way that will help our oil and gas (sector), supporting the base to make it resilient and giving local industry time (to develop its) oil and gas capabilities.
“It is important to look at how we can use this oil and gas resource for downstream industries. This is a very important part of our strategy — how to increase and maximize the use of our natural oil and gas resources. (The same applies) now to mining, because mining development is going to be more and more (important). he said.
Alkhorayef’s comments came as part of a high profile interview on “Frankly Speaking”, the series of video interviews with leading policy makers in business and government.
He also spoke of the Kingdom’s ambitious plans to become the Middle East’s leading economic and industrial hub, the huge potential of its natural mineral resources and the need to promote local manufacturing under the “Made in Saudi” brand.
Earlier this year, Alkhorayef hosted one of the biggest business gatherings Riyadh has seen with the first Future Minerals Forum, which is set to become an annual event. He is excited about the prospects for the Kingdom’s mining industry.
“The mining sector is really very untapped so far in Saudi Arabia, but what we know today is that our natural resources, according to conservative estimates of minerals, amount to approximately 1.3 trillion dollars, with huge reserves in the Arabian Shield,” he said, referring to the geological formations that flow along the Kingdom’s Red Sea coast. “We have a huge program to increasingly discover, provide data and analyze the country’s resources.
“Certainly, we have large quantities of very important elements, such as gold, copper, zinc and phosphate. I’m talking about commercially viable and economically viable quantities, so those quantities are already defined.
Alkhorayef revealed that the Kingdom is planning a series of global auctions of mining assets to attract international investment in this booming sector.
“We are planning an auction to take place next month, very close to Riyadh. This is a resource which we believe contains almost 26 million tonnes of copper and zinc – these quantities are very interesting for the global players are coming to participate in these auctions. We have two more to come, hopefully by the end of this year,” he said.
Last year, Alkhorayef launched the “Made in Saudi” initiative to encourage local manufacturing and encourage consumers to buy local products. The response was “overwhelming,” he said.
“It’s really close to my heart: the Made in Saudi program is something that I’m proud of as a Saudi (not because I’m an official). Since we launched the program, it has been a great success. “Engagement we’ve seen from the public is simply overwhelming, also from companies wanting to join the program. The numbers are very encouraging.”
The National Industrial and Logistics Development Program, launched in 2019 with a view to making the Kingdom an industrial and logistics powerhouse, is progressing according to schedule.
“The program simply tries to connect four sectors that are naturally linked to each other: industry, mining, energy and logistics. These sectors need to work in sync to ensure that we maximize their impact on the economy and also on their (individual) competitiveness,” he said.
“So far we have made progress as you can imagine – these sectors are all infrastructure heavy, so there are a lot of infrastructure projects going on as we speak in industrial cities, in gas supply, in renewable projects and in logistics, solutions in various fields.
Part of the NIDLP’s strategy is the creation of special economic and industrial zones in the Kingdom. Other Persian Gulf countries have also successfully used free zones as part of their development strategy, but Alkhorayef said Saudi Arabia has natural advantages in this regard.
“When it comes to economic development, I believe every country is different. (This is especially true for) Saudi Arabia, with its size, with its population and its local consumption; it has different characteristics when it comes to different tools to move the economy forward. So our goal was to build a strong industrial base, which we did, and we can see today that it really gives us the right return on investment.
“If we look at cities like Yanbu and Jubail, which 50 years ago were just deserts, today they are industrial cities, exporting all over the world – petrochemicals, etc. – so it is very important for us in Saudi Arabia. It has been in the past, and it will continue to be, to expand our local capabilities,” he said.
Four new special economic zones will be unveiled “very soon”, he said.
His ministry is collaborating on mega-projects such as NEOM and Qiddiya, which are flagship initiatives of the Vision 2030 strategy to transform the Saudi economy, he said.
“If we look at NEOM or Qiddiya, there’s a very close relationship in terms of what they need to achieve, in (in terms of) local content and (our ability to) ensure they’re able to achieve these goals (based on) different projects and (project results),” Alkhorayef said.
Vision 2030 also aims to encourage Saudi nationals to join private sector employment and use local industry in the supply chain. “I’m really, really bullish about manufacturing today, especially as advancements in technology make retraining, learning, and machine learning much easier than before. These tools have never existed before and we intend to invest in them to ensure that our workforce is reskilled in the right way much faster than ever before,” the Minister said.
Last year, the Kingdom pledged to reach ambitious targets to reach net zero carbon emissions by 2060 and phase out oil in its domestic energy production by 2030 under the Initiative Saudi green. Alkhorayef is convinced that these objectives will be achieved.
“I think the targets are very realistic and – to quote Prince Abdul Aziz bin Salman, the energy minister – if technology also helps us in terms of speed, we could achieve these targets much sooner than expected,” he added.
Alkhorayef rejected the suggestion that for Saudi Arabia’s industrial strategy to succeed, it would mean depriving other regional centers of commercial activity.
“Quite the contrary, really. Today’s winners always make more winners. Our point of view is therefore very simple. Today we have a great opportunity to work with the region to have a greater impact as a whole.