Saudi Arabia: United Cement signs deal for mining license

Saudi Arabia: United Cement signs deal for mining license
Published: 21 November 2011

Petroleum and Mineral Resources Minister Ali Al-Naimi on Sunday signed the first of seven licenses for the exploitation of limestone for cement production. United Cement Co won the first license for mineral exploitation and its director general, Fahd bin Abdullah Al-Harbi, signed the deal on behalf of his company.

“This license is issued as part of the first phase during which two more licenses would be issued to exploit limestone used for Portland and white cement,” said Sultan bin Jamal Shawly, undersecretary at the ministry for mineral resources.

The licensed area is Hurrat Hadhen in Taif, he said.

Shawly also said: “We’ll announce the winners of the second and third licenses next Saturday at the beginning of the new Hijrah year 1433H,” he added.

The licenses are being issued with certain conditions that should be strictly followed by the winning company.

“One condition is that they should employ and train Saudi workers and the percentage of Saudi workers should be not less than 40% by the end of first year after starting production,” he said. “We have also insisted that the number of Saudi workers in the company should reach 80% after the completion of four years,” the official said.

Total capacity should not exceed 2Mta. The company that wins the license should also apply modern and efficient technology in cement industry, leading to better use of energy.

“The company should also abide by safety and security regulations to qualify for the license,” Shawly said. The company should conduct a study on environmental impact before starting operation.

Speaking about the remaining four licenses, he said the ministry had conducted studies on a number of potential limestone regions. “We’ll call for tenders after receiving approval from authorities,” the official said. “We have to make sure that these areas do not come under places that are exempted from mineral investment.”

United Cement Co is licensed to exploit limestone in the Saadiya mountains in Allaith, about 200km south of Jeddah. The licensed area covers about 22km2.

Among the 20 pre-qualified companies, five made their offers with United making the highest bid of SAR11m. Other companies vying for the license were Al-Ahsa Development, Abdul Aziz Al-Amran, Yamamah Trade, and Gulf Cement.

The ministry selected the place for exploitation as it contained high-quality limestone suitable for cement production.

“We expect that the licensing of exploitation of limestone in Allaith would contribute to the development of the region, creating more job opportunities for its people,” Shawl said.

In 2008, the ministry reserved six mining locations for the exploitation of limestone, pozzolan, aggregates, crusher materials and sand in Riyadh, Makkah, Eastern Province, Baha and Jazan.

In addition, seven mining complexes were surveyed with a total area of 8290km2, including locations for silica sand, phosphate, barite and aggregates in Makkah, Tabuk and the Northern Border region.