Saudi stock market could play key role in securing mining investment, private equity guru tells Future Minerals Forum

RIYADH: Saudi Arabia’s mining sector needs to create small and flexible upstream and downstream firms to boost innovation in the metals industry, according to the CEO of the mining exchange business within Ajlan Bros.

In an interview during the second day of the Future Minerals Forum in Riyadh, Lamon Rutten said in order to meet the sector’s rising demand, the Kingdom should consider letting some of their staff go to create their own services companies since smaller, more nimble companies are more cost effective.

“Small companies are often way better suited for jobs that require a more nimble approach, lower overheads, and different types of risk appetite,” the CEO of KSA Mining & Metals Exchange explained.

These smaller companies are usually set up by people who worked for the big international companies, so they developed the skills and often have decades of experience. They are also aware of the appropriate level of quality that they are expected to provide, Rutten elaborated.

“Over the past ten years junior miners accounted for 25 percent of exploration expenditure in Australia and they accounted for 75 percent of discoveries,” he disclosed.

What these smaller companies lack, however, is proper capital. This is why making room for raising public funds for these smaller companies is crucial, the CEO stressed.

Currently, the Saudi Stock Exchange, also known as Tadawul, has two platforms: the main market for big companies – referred to as TASI – and another parallel market for smaller companies – referred to as Nomu.

“So what you need is an exchange that allows these smaller companies to list the same way as smaller mining companies can now list in the main market in South Africa, Canada, and Australia but impossible to list on TASI,” Rutten highlighted.

Nevertheless, in order for this to happen, companies, investors, and financial intermediaries need to undergo a educational process that better equips them for listing on the main market.

“For investors, it requires, if you want, a more long-term view on investments, portfolio thinking – it’s again a big educational process. For the regulators who are supposed to determine what instruments can be offered to investors, it requires also a completely different way of thinking,” Rutten concluded.

The second edition of the Future Minerals Forum began on Jan. 10 with a ministerial roundtable, followed by two days of meetings and addresses involving more than 200 speakers from around the world.

Topics under discussion include sustainability, the future of mining, and energy transition, as well as the contribution of minerals to the development of societies, digital transformation, and integrated value chains.

The forum comes as Saudi Arabia is deemed to be on track to become a “global leader” in the mining industry thanks to the Kingdom’s “welcoming investment climate” according to a report from The Payne Institute for Public Policy at the Colorado School for Mines in the US, issued in December.

Currently, the Kingdom is processing 145 exploration license applications sent in by foreign companies, according to the analysis.

According to geological surveys dating back 80 years, the Kingdom is thought to have an estimated reserve of untapped mining potential valued at $1.3 trillion.

However, with the prices of valuable minerals rising, especially gold, copper and zinc, the true value of the Kingdom’s current mineral wealth could be double that figure, CEO of the Saudi Geological Survey Abdullah Al-Shamrani said in September 2022.