Double boost for mining project

05 July 2002

Plans to develop phosphate reserves at Al-Jalamid in the far north of the kingdom have taken a significant step forward with the launch of a financial advisory mandate and a government decision to include an industrial railway within the scope of the project. A handful of international and regional banks have been invited to submit bids for the mandate for the $2,000 million project, under development by a consortium of Saudi Arabian Mining Company (Maaden) and Saudi Oger, which joined forces on the project in early 2001 (Saudi Arabia, MEED Special Report, 21:6:02).

Banks expected to bid by the mid July deadline include the following: ANZ Investment Bank; Barclays Capitaland Gulf International Bank; HSBC Investment Bankwith Saudi British Bank; Mizuho Financial Group; and Citibankwith Saudi American Bank.

Communications Minister Nasser al-Saloum announced in early July that the government had decided to allow Maaden and Oger to develop the railway element of the project themselves, rather than tendering it as part of a wider expansion of the kingdom's railways. Al-Saloum also said the government would pay half the cost of developing railway projects, but did not specify whether this included the Al-Jalamid railway, project sources say.

The government's decision will allow Oger and Maaden to move forward with their plans. The first step will be to complete the establishment of a joint venture company to carry out the plans. By the end of August, a new feasibility study will be commissioned to examine how the mineral extraction, the railway, processing and shipment facilities can be best fitted together. The sources say that the first ground could be broken at Al-Jalamid by 2006 and the first fertiliser produced by 2007. Maaden also announced in early July that it could start to privatise as early as next year.

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