Industry sources say RFPs for the feasibility study for the estimated $1,500 million railway project are expected to be out ‘soon’ and will run parallel to another study determining the feasibility of the Al-Jalamid phosphate project, which will be jointly developed by Maaden and Saudi Oger as originally planned. The developers have yet to award the contract to carry out the study. Both studies are expected to be completed within 9-12 months.
Maaden and Saudi Oger, together with the state’s Public Investment Fund (PIF), are expected to provide financing for the railway project. Initial reports suggest that PIF will provide 60 per cent of the financing, with Maaden and Saudi Oger providing the remainder. However, industry sources say a final decision will only be made once the feasibility of the projects have been confirmed.
Several other issues will also need to be resolved. The government has to decide whether the new railway line’s operations will be handled by Saudi Railway Organisationor by a foreign operator under a long-term concession.
Another moot question is whether the financial advisory mandate, which was awarded to ANZ Investment Bankand Riyad Bankby Saudi Oger and Maaden last year on the basis of an integrated project, will now evolve into two separate mandates.
The minerals railway will run from Al-Jalamid in the far north to Riyadh, where it will connect to an existing rail link to Dammam. In total, it will stretch more than 1,200 kilometres and pass close to the Al-Zabirah bauxite mine, which is situated near Hail, north of Riyadh. The contract to prepare a full feasibility study for the $3,200 million Al-Zabirah bauxite mining project was awarded in April to the US’ Bechtel.
Mining is a key element of the government’s plans to diversify the economy under its seventh five-year plan.