Approved in 2020, the Saudi mining law will enable foreign investors easier access to the under-developed market in the Kingdom.
The law was formed to facilitate the process of obtaining licenses and attract investors to the sector by reducing administrative discretion, bureaucracy, and other possible hurdles.
The Ministry of Industry and Mineral Resources had advisory sessions with the World Bank and was inspired by the best practices of leading markets of the sector before finalizing the mining law. Peter Leon of Herbert Smith Freehills Law firm said.
“There’s an online licensing application system, so investors know where the applications are, who’s applied for which rights, and that’s all transparent, everybody can see who’s applied for what,”
“We looked at the best practice examples from Canada, Australia, Botswana, and Africa, and we worked very closely with the World Bank who was also advising the ministry,” he said.
Unlike many other developing countries, the Saudi mining law doesn’t require foreign investors to have a local partner in the Kingdom.
Leon believes that environmental, social, and governance, known as ESG, are pivotal factors to consider in the sector.
With the new law, a mining license also has to be reviewed by the Ministry of Environment, Water, and Agriculture.
“The framework follows not just national best practice, but principles around ESG,” he added.
Saudi Arabia’s Cabinet approved the new law to boost foreign investment in the sector as part of efforts to diversify its economy away from hydrocarbons.