Ma'aden: The Mining and Basic Materials Sector in Saudi Arabia

The mining and basic materials sector in the Saudi financial market encompasses a wide range of economic activities related to the extraction, manufacturing, and distribution of industrial and precious metals. The sector includes major mining companies such as the Saudi Arabian Mining Company (Ma'aden), which operates in the production of gold, phosphate, aluminum, and copper, in addition to cement and building materials companies that rely on mineral raw materials. This sector is classified under the global Basic Materials category and is considered one of the strategic sectors contributing to achieving the goals of Vision 2030, particularly in diversifying national income sources and reducing reliance on oil. Alongside pure mining companies, the sector includes supporting service companies, such as transportation, chemical processing, and industrial handling services. Under the supervision of specialized government bodies, such as the Ministry of Industry and Mineral Resources, the sector is prioritized in economic policies for investment in exploration, mine development, and industrial infrastructure, attracting global partnerships and technology transfer.

Saudi Vision 2030 represents a major turning point for the mining sector, as the government has set clear goals to raise the contribution of mining and basic materials to the GDP from approximately 2% to around 12% by 2030. This includes stimulating local and foreign investments, adopting policies that facilitate the issuance of licenses and the implementation of major mining projects. Notable features of this phase include launching initiatives to accelerate exploration processes, developing specialized industrial areas for mining, and providing tax and customs incentives to attract investors. A major authority has also been established to oversee the industry and mining, along with training and technical programs to enhance local efficiency. In this context, the Kingdom has witnessed massive investment flows, especially from Ma'aden, which invests approximately $2.5 billion annually in expansion projects and the development of new mines, leading to increased production capacity for gold, phosphate, and aluminum, and enhancing the Kingdom's position as a regional hub for the mining industry.

The Ma'aden sector represents a vital industrial base that contributes to the sustainable development of the Kingdom. Its role extends beyond providing essential raw materials for construction and infrastructure industries to supporting manufacturing industries such as fertilizer production (from phosphate), electronics (from copper and precious metals), and heavy aluminum manufacturing. The sector contributes to creating thousands of direct and indirect job opportunities, enhances the competitiveness of local industries, and encourages the transfer of technology and global expertise into Saudi Arabia. It also provides export opportunities, especially amid the growing global demand for industrial and precious metals. The sector's importance is further highlighted by its ability to contribute to stabilizing the trade balance and generating government revenues outside the oil framework, thus supporting financial sustainability.

The Saudi Arabian Mining Company (Ma'aden) leads the list of companies in the mining sector in the Kingdom, managing gold, phosphate, potassium, aluminum, and copper mines. Ma'aden is distinguished by its ability to execute large projects in collaboration with global companies and expand its operations in major mining areas. Cement companies, such as Hail Cement (symbol: 3001), are part of the basic materials ecosystem, relying on the extraction of raw materials such as limestone and clay to produce cement used in construction projects. Cement companies have seen growth in demand driven by major housing and infrastructure projects, despite challenges related to price fluctuations and energy costs. Competing companies include Qassim Cement, Saudi Cement, Yanbu Cement, and others. These companies' strategies vary between focusing on the local market and expanding towards exports.

The cement sector witnessed notable financial activity in 2024 and 2025, with profits of listed cement companies reaching approximately 2 billion Saudi Riyals during the first nine months of 2024, supported by ongoing major construction projects. For Hail Cement (3001), it recorded a net profit of 15 million Riyals in Q1 2024 (a decrease of 19% compared to the same quarter in 2023), while the net profit for Q4 2023 was approximately 3.2 million Riyals, bringing the total profit for 2023 to 24.6 million Riyals. Quarterly profits fluctuated due to demand volatility and production costs. Regarding dividends, the company approved a cash distribution of 3.5% for Q4 2023. On the other hand, mining companies like Ma'aden are witnessing an expansion in capital expenditure and the addition of new reserves of gold and industrial metals, supporting the sustainability of financial growth in the sector.

Hail Cement's stock (3001) was traded at a relatively low market value before trading was suspended due to the acquisition, with a market value of less than half a billion Riyals by the end of 2023. The price-to-earnings (P/E) ratio was relatively high due to small profits, exceeding 20 points at times. Regarding dividends, the cash yield for the stock was approximately 3.5% in the last distribution for Q4 2023 (equivalent to about 0.40 Riyals per share at a trading price of 11.4 Riyals). Despite regular distributions, net profit remained relatively limited due to cost pressures. In mid-2024, trading of the stock was suspended on the Tadawul market after shareholders approved Qassim Cement's acquisition and initiated delisting procedures.

The Saudi cement market is characterized by high competition among several major companies, including Qassim Cement, Saudi Cement, Yanbu Cement, Eastern Province Cement, and Southern Cement. Each company differs in its geographical location, production capacity, and strategies, with some covering specific areas of the Kingdom and others targeting export expansion. Additionally, Ma'aden stands out as a key player in industrial mining, particularly in gold, phosphate, and aluminum. Competition in the sector is not limited to prices but also includes quality, operational efficiency, and dividend distribution policies. The market has also seen a trend towards mergers and acquisitions, as evidenced by Qassim Cement's acquisition of Hail Cement in 2024, which contributes to enhancing efficiency and reducing excessive competition.

The profits and stock prices of companies in the mining and cement sector are influenced by several economic factors, including oil prices (which determine government spending levels on projects), energy and transportation costs, and global raw material prices. Government policies also play a role in determining demand levels through infrastructure and housing initiatives. On the other hand, fluctuations in global metal markets (such as gold, copper, and phosphate) affect the profitability of mining companies like Ma'aden, while cement companies face challenges related to high inventories and seasonal downturns. Government incentives and investments in the sector enhance its resilience and ability to adapt to changing economic conditions.

The sector has witnessed several significant developments in 2024 and 2025, most notably Qassim Cement's acquisition of Hail Cement, leading to the suspension of trading for stock 3001 and the initiation of delisting procedures. Cement companies have reported strong profits driven by increased demand for infrastructure projects, with total sector profits reaching approximately 2 billion Riyals during the first nine months of 2024. In the mining sector, Ma'aden continues to inject substantial annual investments to expand exploration operations and increase gold and phosphate production. It has also signed several new agreements with global companies to develop additional mines, enhancing the Kingdom's position as a regional hub for the mining industry. The period has also seen government initiatives to support the sector, such as investment facilitation and training programs.

The mining and cement sector in Saudi Arabia faces several challenges, including fluctuating energy prices, rising operational costs, local demand volatility, and increased inventories during certain periods. However, growth prospects remain strong due to government support and plans to export products to neighboring markets. Companies are striving to improve operational efficiency, develop production lines, and adopt new technologies in exploration and manufacturing. Further mergers and acquisitions are expected to enhance the sector's competitiveness. The future vision focuses on increasing the sector's contribution to GDP, developing higher value-added products, and attracting foreign investments and technological partnerships.

The Saudi government plays a pivotal role in supporting the mining and basic materials sector by issuing encouraging policies and regulations, providing investment incentives for the private sector, and establishing specialized industrial zones. Supervisory bodies such as the Ministry of Industry and Mineral Resources and the Mining Authority have been established to monitor project implementation and ensure companies comply with environmental and operational standards. The government is working to facilitate licensing and exploration procedures and provide technical and vocational training for national cadres, enhancing the sector's readiness to face regional and global competition. Programs have also been launched to increase the local content ratio in the mining industry and enhance cooperation with global companies for technology and knowledge transfer.

The mining industry is one of the cornerstones of Saudi Vision 2030, as the government aims to transform the Kingdom into a regional hub for mining and basic industries. The vision outlines plans to increase the sector's contribution to GDP, raise national employment levels, and develop advanced infrastructure for mines and factories. It also aims to explore more untapped mineral resources, expand refining and manufacturing capacity, and support research innovation in mining. Local companies benefit from government financing programs and opportunities for partnerships with global companies, enabling technology transfer and the development of the entire industrial supply chain within the Kingdom.

The mining and basic materials sector attracts interest from local and international investors due to its pivotal role in the Saudi economy and the ongoing demand for its products. The presence of listed companies in the Tadawul market, such as Ma'aden and Hail Cement (before delisting), indicates the sector's transparency and reliability. With the government's direction towards developing large-scale infrastructure and mining projects, new investment opportunities are emerging in exploration, manufacturing, and supporting services. However, investors should carefully analyze financial data and regulatory news, monitor market developments and factors affecting profitability, and consult a licensed financial advisor before making any investment decisions.