Ready for the next step
Our revised strategy will take Ma’aden to its next logical phase of growth. Our new vision as the champion of the Saudi mining sector is to continue our rapid development of the Kingdom’s rich mineral endownment whilst positioning ourselves to pursue global opportunities. We have invested in recent years in building a world-class portfolio of mines and assets in the Kingdom and made it a priority to ensure that we extract the maximum value from these investments. We will make our contribution to the wider economy as our growth leads to development in new industries and remote regions of the country.
In October 2016, the Ma’aden board approved a new vision and 2025 strategy. Our new vision seeks to ensure that Ma’aden is well positioned to manage the opportunities and challenges it now faces.
Our new vision is: “a sustainable mining champion with global presence.”
Saudi Vision 2030 and the National Transformation Program (NTP) will generate new challenges and offer new opportunities for the mining sector. These opportunities and challenges are driven largely by the changing national and global contexts. The global economic and mining realities have also been undergoing significant changes.
Saudi Vision 2030 envisages a mining sector that will contribute more to the national economy by maximizing the value of the Kingdom’s mineral resources.
Saudi Vision 2030 declares that this will be achieved through structural reforms and intensified exploration to facilitate more private sector investments, strategic international partnerships and enhanced competitiveness of national companies.
The NTP also identifies further development of the mining sector as a strategic objective to further diversify the Kingdom’s economy and boost the number of job opportunities for Saudis. It has set a goal for the Kingdom’s mining sector of contributing SAR97 billion to the GDP by 2020 and creating 90,000 job opportunities in the process.
This clearly signals increased growth and a stronger role for the private sector. The higher focus and expectation of the mining sector is coupled with considerable emphasis on sustainability – non-oil exports, environment, water, local content, talent, innovation and technology. It points to the need for a prioritized and comprehensive strategy and well defined initiatives to develop the Saudi industrial ecosystem to enable the mining industry to make a larger contribution towards job creation and GDP.
As the largest mining company in Saudi Arabia, Ma’aden has already played the role of a leader in developing the sector. We recognize that the ambitious targets for the sector as stated in Vision 2030, present an important opportunity to strengthen this role. As the champion of mining, we will do more to develop the industry for the benefit of the company’s stakeholders and the Kingdom’s economy.
The global mining industry continued to suffer in 2016 from low commodity prices, which in some cases worsened during the year from 2015 levels. The industry did achieve growth and higher production levels primarily as a result of previously planned projects, but has been experiencing a sharp decline in revenues.
Despite the current global economic conditions and the commodity market situation, the long-term outlook for the mining industry remains strong, particularly in the commodities in which Ma’aden has focussed its investments. Demand for the products we produce have good long term growth characteristics and we remain confident that in time we will see a recovery from current relatively weak levels.
Leading mining companies, including Ma’aden, have taken action over the past two years to strengthen operational excellence and reduce costs across all aspects of the organization and operations. This is an ongoing process.
Our 2025 strategy is built on three key elements that are designed to address the changes in both the national and international context of our business:
- Operational, capital and commercial excellence and the focus on sustainability make up the foundation of our strategy.
Our emphasis on excellence is aimed at extracting optimum value from our current assets and maximizing efficiency. We have invested in building a world-class portfolio of mines and assets in the Kingdom and made it a priority to ensure that we extract the maximum value from these investments. We have launched a number of initiatives under the umbrella of excellence. These initiatives will result in qualitative and quantitative benefits, ensuring the safety of our people, protecting the environment and the communities in which we operate, and strengthening our cost competitiveness. This, along with our commitment to sustainability, best-in-class capabilities and the use of advanced technology, will help Ma’aden cope better with current market trends and take advantage of the market upturn when it happens.
- Organic growth of our industries in Saudi Arabia is the second key element in the strategy.
Between now and 2025, we see opportunities to expand our existing capacity in phosphate, aluminium, gold, other base metals and industrial minerals. We will do so when market conditions are right and we have the capital to invest. Through this pillar of the strategy, Ma’aden will add more value to Saudi Arabia’s mineral resources for the benefit of our stakeholders. Through this role as champion of the mining sector, we will also make our contribution to the wider economy as our growth leads to the development in new industries and the remote regions of the country.
- Global opportunities make up the third element in our 2025 strategy.
We will look for opportunities that deliver investment value while furthering our goals as Saudi Arabia’s national mining champion, in particular where inorganic growth can directly benefit our business lines in the Kingdom.
Our existing businesses are sufficiently robust to withstand the current commodity price pressure across multiple scenarios. All of our corporate functions and business units have realigned their strategies in line with the 2025 strategy. These realignments are explained in the respective sections of this report
Sustainability and local content
Sustainability is an important part of our vision and enhancing local content is an important part of sustainability and Saudi Vision 2030. We are committed to supporting the United Nations Sustainable Development Goals (SDGs) both by adopting sustainability standards across all our operations and through the strategic sourcing and strengthening of the local content in our supply chain.
We see our role as the Saudi mining champion as a major responsibility and unique opportunity to contribute to localization. Along with a higher contribution to the GDP and creation of thousands of new jobs, Saudi Vision 2030 also envisages growing the GDP share of small and medium enterprises (SMEs) from 20 percent to 35 percent.
We have set an ambitious target of:
- strengthening the local content in our procurements
- encouraging the creation of jobs in our supply chain for Saudi citizens and
- ensuring that a significant portion of our annual spend is allocated to Saudi-owned SMEs.
In strengthening the local content, we will adopt proven best practices and draw lessons from local content development initiatives elsewhere.
We have created a new department under Corporate Strategy to strengthen our sourcing and local content plans. More details of our supply chain achievements are presented in the procurement chapter of this report.