Saudi Arabia is located on the Arabian Peninsula, with a land area of 2.25 million square kilometers. To the east is the Persian Gulf, to the west is the Red Sea, with an average elevation of 665 meters. It borders Jordan, Iraq, Kuwait, the United Arab Emirates, Oman, Yemen and other countries. The western plateau of Saudi Arabia has a Mediterranean climate, while other regions have a subtropical desert climate. Summer is hot and dry, with the highest temperature reaching over 50 ℃; The climate is mild in winter.
Saudi Arabia is predominantly Arab and Islam is the state religion. Sunni Muslims make up the majority of the population and are distributed throughout the country. The official language is Arabic, and English is commonly used in the business world.
Distribution of mineral resources
Saudi Arabia has abundant phosphate and bauxite deposits, as well as other mineral resources available for commercial mining, including gold, silver, lead, zinc, copper, iron ore, and rare earths. Saudi Arabia also has a large number of major mineral deposits used in the construction industry.
Saudi Arabia's remaining recoverable oil reserves are 36.3 billion tons, accounting for 26% of the world's reserves and ranking first in the world; The remaining recoverable reserves of natural gas are 8.2 trillion cubic meters, accounting for 4.1% of the world's reserves and ranking fourth in the world. Saudi Arabia also has mineral deposits such as gold, copper, iron, tin, aluminum, and zinc. Saudi Arabia is the world's largest producer of desalinated seawater, accounting for about 20% of the world's total desalination capacity.
According to the Saudi Arabian Economic Daily, citing data from the Saudi Statistical Agency, as of the end of 2016, there were a total of 5478 discovered mineral resources in Saudi Arabia, an increase of 69 compared to 2015. Among them, 54% are non-metallic minerals, including sand and gravel, salt, sulfur mines, and coal mines; The remaining 46% are metallic minerals, including gold, silver, copper, etc. Saudi Arabia has discovered over 30 types of metal minerals, with gold reserves being the most abundant, accounting for 33% of all metal minerals. Among non-metallic minerals, limestone has a higher reserve, accounting for 18% of all non-metallic minerals.
At present, the Saudi government has issued more than 1800 mineral development licenses, with a total mining output of 420 million tons, a turnover of 18 billion rials and a net profit of more than 8 billion rials. According to the planning of the Saudi Ministry of Energy, Industry, and Mines, Jizan and its surrounding areas are key areas for future mineral development. This area is rich in mineral resources such as salt mines, potassium fertilizers, silica sand, limestone, gypsum, dolomite, marble, etc.
Mining management and policies
For a long time, due to Saudi Arabia's lack of emphasis on the mining industry, the development of mineral resources has progressed slowly. In 1999, the Saudi government established the Saudi Geological Survey in accordance with Cabinet Order 115. This agency is an independent government agency related to the business of the Ministry of Petroleum and Mineral Resources, responsible for geological surveys and research on mineral resources in Saudi Arabia. It also issues reports on mineral resources and supervises mining development and operation in accordance with the policies and regulations of the Ministry of Petroleum and Mineral Resources.
In 2004, the Saudi government passed a new Mining Law, which stipulated that mineral royalty fees would not be levied and allowed non development and development licenses to be issued to companies and individuals. Non development licenses include exploration and material collection licenses with a validity period of 2 years, as well as exploration licenses with a validity period of 3 years. The development license includes a mining license and a quarrying license, both valid for 30 years. The validity period of the small-scale mining permit is 20 years, and the validity period of the building material quarry permit is 5 years. The license can be transferred with the approval of the Ministry of Energy, Industry and Mineral Resources. Saudi Arabian Mining Company is the largest non-ferrous metal production enterprise in Saudi Arabia.
Investment environment analysis
Favorable factors:
Foreign direct investment in Saudi Arabia can enjoy a series of preferential policies and measures issued by the Saudi government, while foreign investment in the six economic cities planned by the Saudi government (King Abdullah Economic City, Medina Economic City, Jizan Economic City, Khail Economic City, Tabuk Economic City, and Ahessa Economic City), more than 30 completed and under construction industrial cities across the country, as well as in the two exclusive industrial zones of Jubail and Yanbu, can enjoy more favorable regional investment preferential treatment provided by the Saudi government, especially in terms of access to cheap energy supply, cheap project land, preferential labor measures, reduction of corporate income tax, exemption of import tariffs on raw materials and equipment, etc. A series of preferential measures.
At the same time, Saudi Arabia also has corresponding protective policies for investment and cooperation with Chinese enterprises, such as:
On February 29, 1996, the governments of China and Saudi Arabia signed the Agreement on Mutual Encouragement and Protection of Investment between the Chinese and Saudi governments.
On January 23, 2006, the governments of China and Saudi Arabia signed the Agreement on the Avoidance of Double Taxation and Prevention of Tax Evasion on Income and Property.
Adverse factors:
1. Political risk. Although Saudi Arabia's political situation is relatively stable and the royal family has strong control over politics, it also faces the issue of power transfer to the next generation. Although there is a high probability that the sand will smoothly transition to power, in the long run, it will have an impact on the stability of its policies.
2. Security risks. One is the deterioration of the external security environment. Recently, Saudi Arabia's foreign policy has gradually shifted from being moderate and moderate to being tough and proactive, which will pose challenges to the regional security environment. The second is the existence of certain terrorist threats. Although the threat of terrorist attacks in Saudi Arabia has greatly decreased since the vigorous crackdown on the Al Qaeda movement, the security risks posed by terrorism still exist.
3. Social risks. There is potential instability in the domestic social situation in Saudi Arabia, and there is a certain risk of internal strife. Firstly, there is a significant disparity between the rich and the poor; Secondly, the fiscal tightening policies implemented by Saudi Arabia in recent years are prone to causing social instability; Thirdly, the unemployment rate among Saudi Arabian nationals remains high.
4. Business environment risks. One is that there are investment restrictions in specific industries. The second is labor policy restrictions. In order to increase the employment rate in the country, the Saudi Arabian government implements a "Saudi specialization" grading system, which requires all enterprises operating in Saudi Arabia to hire a certain proportion of Saudi Arabian employees according to their industry and enterprise size, and provide a series of incentive policies or punishment measures based on the completion status of each enterprise. The third issue is severe corruption, which poses difficulties for foreign enterprises to engage in investment activities.
5. Legal risks. According to the Saudi Foreign Investment Law, foreign investment can establish wholly-owned subsidiaries or branches within Saudi Arabia and enjoy the same treatment as local legal entities in Saudi Arabia. However, in practical operation, Chinese enterprises are not easily able to enjoy the same treatment in practical terms. In addition, although the investment industry in Saudi Arabia operates in a relatively standardized manner and has strict laws, domestic arbitration institutions in Saudi Arabia often favor local people.
