Saudi Arabian Mining Company (Maaden) has appointed the UK’s HSBC to act as financial adviser on the development of its SR21bn ($5.6bn) new phosphates project in the north of the country.

The project will be one of the cornerstone developments of the Waad al-Shamal, or North Promise, Industrial Mineral City, which is being built at Umm Waal, on the northern border with Jordan. In late February the government approved a plan to develop the city, allocated the land, and said that the project will be linked to the North-South Railway, which stretches from one end of the kingdom to the other.

Maaden will develop the Al-Khabra phosphates deposit at Umm Waal that should add 1.5 million tonnes of phosphates to Maaden’s phosphates capacity, which will be used to make phosphoric acid.

The project is expected to start production in late 2016, and banks are expected to approached the finance the scheme in 2013. HSBC is already working with Maaden as adviser on a SR7bn ($1.9bn) five year loan deal, that was priced at just 85 basis points above the Saudi interbank offered rate.

Maaden is owned by the government through the Public Investment Fund, which holds 50 per cent of the company, and the General Organisation for Social Insurance and the Public Pensions Agency. A further 33 per cent is listed on the Saudi Stock Exchange (Tadawul).

The firm said in April that its profits for the first quarter had jumped from SR44m in 2011 to SR246m, driven by higher gold prices, rising sales, and the start of commercial production at its existing phosphates project at Ras al-Khair.