Eoin Treacy's view

It was a pleasure to visit Saudi Arabia for the first, of what I believe will be many occasions, this week. I’d like to express my thanks to the government for their hospitality.

I feel like I am a well-travelled individual. I’ve lived in a half a dozen countries, visited many more and travelled to the far reaches of the world in search of the best diving destinations. It’s not often I have my preconceptions confounded. That’s what happened in Riyadh this week.

I had not expected to see so many young people given responsibility in organizing a globally significant event. I also had not expected to see so many young women in positions of responsibility. I had not expected to see women working in shopping malls either. On Friday night, the highway was jammed at 1am on the way to airport.

Many of the young people I spoke with were articulate, and enthusiastic about the future. They had been educated at universities both at home and abroad. Saudi Arabia is a conservative country, but the young generation are bursting with the enthusiasm and ambition of a population who sees the potential to achieve a better life. I was left with a feeling of optimism about the country and its prospects.

David often spoke of his first trips to Singapore where the young women were given responsibility, were forthright in their opinions and were power dressers. History does not repeat itself. Saudi Arabia is already a wealthy country but the reformation of civil society is not a fantasy. It was absolutely refreshing.

Many countries have large young populations. That creates both opportunities and challenges. The great benefit of the demographic dividend is you get the creative vigour of youth that creates value and growth. The challenge is doing whatever is necessary to capture the productive capacity of each individual to maximise the long-term benefits to the economy. To enact the reforms necessary to achieve those goals takes a great deal of courage. That’s what the 2030 vision of development is about. It's a leap of faith.  

This conference put a lot of decision makers in the same room. I was surprised to have such ready access to mining CEOs, senior government and corporate officials, mining investors, lawyers, and investors.

The message from the mining sector is clear. They are salivating at the prospect of commodity prices rising because of supply inelasticity meeting a secular trend of rising demand from the energy transition. They have seen the verbal spending commitments made at COP26 and other international events. If even a fraction of that capital is in fact spent, it will represent a significant mining boom.

Right now, Saudi Arabia seems like the only place where cheques are in fact being written. There was a series of mini celebrations throughout the two days to mark the signing of memoranda of understanding.  

The two things mining companies want is a streamlined permitting process so they are not waiting years to secure locations and an independent arbitration system so grievances can be aired. The new mining legislation includes elements of both these demands. I had the pleasure of speaking with some of the framers of the legislation and they related to me that it is not quite as transparent as some of the miners might wish but it is a big improvement on what existed before now.  

I don’t think that is surprising. Most mining locations have prospective areas but no capital. They then have to offer very attractive terms to miners, so they will bring capital and expertise. That uneven relationship contributes to the cyclicality of the mining sector. The terms are so attractive that when resources are found, governments change their minds and rewrite laws. Investment dries up and they end up back where they started. Driving deals to secure licenses in Saudi Arabia will require harder bargaining and the national champion Ma’aden will play a significant role in major discoveries. However, miners can also have the security that deals struck will be held to.

From many conversations It was clear senior government officials earnestly wish to reform the reputation of the country as both an investment destination and partner in meeting the globe’s needs for energy and minerals. That’s why Saudi Arabia is setting itself up as a regional hub to support development and mining activity within its broad sphere of influence.

The reality is there are very few places in the world today that are unexplored. The CEO of Barrick Gold, Dennis Mark Bristow, made the point in no uncertain terms that he believes the geological belt that borders the Red Sea and carries on across Asia is at least as prolific in terms of resources as the Andean trend that runs along the west coast of the Americas. It is estimated Saudi Arabia alone has $1.3 trillion in resources based on 2019 prices. Ore grades have been declining for decades. Wholly unexplored territory is one of the only places where high grades could potentially be found. Ma-Aden has grown from nothing to become a top-10 miner in less than 25 years.  

The companies most likely to be successful in Saudi Arabia are those with something new to offer in terms of technology or intelligence. That is why Ivanhoe and its new geophysics applications were highlighted so prominently. Reducing uncertainty, gaining greater intelligence on the size of the resource base and speeding up the prospecting process makes mining ventures immediately more attractive to investors. It’s the kind of innovation that has the capacity to unleash the capital necessary to build new mines.

Saudi Arabia fully intends to build both upstream mining and downstream processing for everything it finds domestically. It also intends to build out the tertiary industries like processing and shipping. To do that it will need knowhow, technology, and capital. There are significant opportunities for investors to partner with domestic firms in further these aims. I was asked by senior officials in the ministry of mining to put the call out far and wide, that they are open for business and ready to deal.

At a minimum delegates expressed the opinion that the region deserved its own big mining conference like Indaba or PDAC. The difference is the state sponsorship of this event means the chances of securing the investment required to build is a higher probability.

Of course, it also goes without saying that Saudi Arabia’s lowest cost energy position remains unquestioned and that will be leveraged to ensure the competitiveness of refining, smelting, and processing facilities. That’s most particularly true when it comes to achieving these development goals in a carbon friendly manner.


Saudi Arabian Mining Co. (Ma’aden) rebounded impressively from the region of the trend mean in December and is back testing the region of the peaks. It clearly outperforming the wider market.

One thing I had not previously been aware of is Saudi corporates are levied a 2.5% tax per annum on funds that are not invested (zakat); in lieu of corporate tax. That represents a significant tailwind for the domestic stock market and especially for dividend paying stocks or growth opportunties.  

Saudi Arabian officials believe they are getting out in front of an emerging secular theme. They want to take a dominant position in supplying the world with the resources it will need to build the carbon free economy of the future. If the world is serious about pursuing a carbon free economy, the investments made over the next couple of years have the potential to be secular winners.