The Middle East is well placed to take advantage of a anticipated surge in global copper prices. Saudi Arabia is leading the way in mining its copper deposits, with two new mines in the kingdom scheduled to start commercial production by the end of 2011, the largest of which, the Jabal Sayid project, will produce 57,000 tonnes a year of copper in concentrate.
The economics of the Jabal Sayid mine are such that even with copper prices at $3,555 a tonne, the project will break even. With copper prices estimated to average $8,476 a tonne in 2011, the huge investments being made in the kingdom’s copper mines look solid. Foreign mining groups are showing interest in Saudi Arabia’s copper mines in particular, because of the kingdom’s investor-friendly mining code that was introduced in October 2004. In neighbouring Oman, copper is also emerging as a significant source of export revenue, following a 2003 overhaul of the Sultanate’s mining legislation. The country earned $65m from copper exports in 2008, a rise of 6 per cent on 2007.
However, the Gulf’s copper riches are dwarfed by those in Iran, which has an estimated 1.9 billion tonnes of ore – 3 per cent of global reserves. But with Iran’s share of global production at just 1 per cent, the Islamic Republic needs to invest significantly in its production capacity to realise its potential.