In early June 2020, Saudi Arabia issued a new Mining Law aimed at promoting mining in Saudi Arabia. The New Law provides that the Ministry of Industry and Mineral Resources will have the authority to issue the regulations, forms, procedures, and instructions necessary to implement the New Law.
The New Law provides for the creation of a new mining fund (“Fund”) to provide sustainable finance for the development of the mining sector as well as to support geological survey and exploration programs. The Fund is to be financed by fees for licenses and other services provided by the Ministry, fines imposed under the New Law, surface rents, financial returns from competitive bids, and gifts, donations, and endowments.
Until the publication of the New Law’s implementing regulations and any additional regulations governing the Fund, the nature and mechanics of the Fund remain undefined. We can speculate that the Fund will serve the Saudi mining sector much as the Saudi Industrial Development Fund serves Saudi industry: by providing financial support in the form of medium- and long-term soft loans to businesses operating in the targeted sectors.
The New Law largely tracks the Old Law’s prohibition of mining licenses for:
- Lands occupied by Holy Places or military establishments;
- Lands specified by a Council of Ministers resolution; and
- Lands reserved for hydrocarbon3 operations or as hydrocarbon exploration areas.
- An applicant may apply for a license for a specific subsurface layer; the Ministry may place restrictions on a specific layer, in accordance with the Regulations.
- If the Ministry receives multiple license applications for the same site, priority shall be given to the earlier filed application as registered in the Application Registry, provided that:
- The requirements provided for are met .
- The license application fees are paid and other license requirements are met in accordance with the Regulations.
- The Ministry may designate lands or maritime areas the licenses for which may only be granted through bidding, in accordance with this Law and its Regulations.
- An applicant for a mining license, a small mine license, or a general purpose license shall include in his application an environmental and social impact assessment and a plan for site reclamation and closure as specified in the Regulations. The applicant shall, pursuant to the license and in accordance with the Regulations, take the measures necessary to preserve and protect water resources, the environment, and wildlife against hazardous waste or any other environmental damage.
- For more information please visit this web site Mining Investment Law link here
Exempted and Non-exempted Lands and Areas
Subject to this Law and relevant laws, mining activities may be carried out on State-owned or privately owned lands, or on lands part of which is owned by the State and the other part is privately owned, or in maritime areas.
2) The following shall be excluded from the provision of paragraph (1) of this Article:
a) Lands of holy sites.
b) Lands of military installations, or areas reserved for hydrocarbon exploration or operations,
unless the relevant minister issues a decision to lift the restriction upon the Minister’s request.
c) Lands and maritime areas excluded pursuant to a decision by the Council of Ministers.
Licensing General Provisions
1) The Ministry shall set the conditions for all types of licenses, and the procedures for their
issuance, renewal, extension, transfer, and amendment, as well as the procedures for
relinquishment of the license or part of the license site, in accordance with this Law and its Regulations.
2) Applications for license issuance, renewal, extension, transfer, amendment, as well as for
relinquishment of a license or part of a license site as stipulated in this Law shall be filed with the Ministry, as per the forms and procedures set out in the Regulations
Without prejudice to the provisions of this Law and its Regulations, a license may be terminated only in the following cases:
1) If the licensee defaults in the payment of amounts due to the State for more than 180 days.
2) If the licensee provides the Ministry with substantially inaccurate information relating to his
activities or particulars.
3) If the licensee fails, within 60 days after receipt of a written notice, to fulfill the obligations
prescribed by this Law, its Regulations, and the terms and conditions of the license.
4) If the licensee fails, within the period specified in the notice, to rectify the violation of which he was notified, or if he repeats such violation.
5) If the licensee fails, within 180 days after receipt of the Ministry’s written notice, to take necessary measures to preserve the environment, wildlife, archaeological sites, or tourist sites. If the license is terminated, the licensee or any related parties may not apply for another license for the same site or part thereof within three years. The Regulations shall determine the procedures for license termination
Rights and Obligations
If a force majeure event prevents, hinders, or delays the licensee’s performance of any of his obligations within the specified time, such failure or delay shall not be deemed an act of negligence or default. In such case, the ministry may extend the period prescribed to perform such obligations for a period not less than the duration of the force majeure event or, if possible, grant the licensee an alternative site according to the type of ore and license. In this Article, force majeure shall mean events which arise from unexpected circumstances at the time of the issuance of the license and which are legally recognized as such; such events are not attributed to either party and they render the licensee›s performance of his obligations under the license impossible
Payment of the exploitation license for Class “A” minerals shall be as follows:
a) For a person not subject to income tax:
First: An amount equal to the income tax on the annual net income less than the amount of due zakat.
Second: An amount for each ton of produced ore or a percentage of the net revenues
resulting from the activity covered by the license, in accordance with the Regulations
and upon agreement with the Ministry of Finance. Such amount shall be waived for the
first five years from the license issuance date.
b) For a person subject to income tax:
1) An amount for each ton of produced ore or a percentage of the net revenue resulting
from the activity covered by the license in addition to the income tax, subject to the
Regulations and upon agreement with the Ministry of Finance. Such amount shall be
waived for the first five years from the license issuance date.
2) A holder of an exploitation license for Class “B” and Class “C” minerals shall, upon agreement with the Ministry of Finance, pay an amount for exploitation as specified in the Regulations, in addition to applicable zakat, income tax, and other amounts due to relevant agencies.
3) The Minister may, upon agreement with the Minister of Finance, reduce the fee for any mineral or mixture thereof if processed in the Kingdom, in accordance with the Regulations.
4) The Regulations shall, upon agreement with the Ministry of Finance, determine the surface rentals for State-owned lands, and the fees for other licenses and services.
Violations and Penalties
Without prejudice to Article 25 of this Law, the following acts shall be deemed in violation of this Law:
a) Carrying out any mining activity without a license.
b) Not complying with this Law, its Regulations, or license terms and conditions.
c) Providing misleading or false information to the Ministry.
d) Delaying the submission of information or reports requested by the Ministry, or failing
to do so.
e) Defaulting in payment of amounts due under this Law and its Regulations.
2) Without prejudice to any harsher penalty provided in any other law, any person who commits any of the violations referred to in paragraph (1) of this Article shall be subject to one or more of the following penalties:
a) A fine not exceeding one million riyals for each violation.
b) Suspension of activity.
c) Revocation of license.
d) Confiscation of machinery and equipment used in the commission of the violation.
3) The Ministry shall, pursuant to a decision by the committee referred to in Article 57 of this Law, recover all minerals, ores, and their derivatives which result from operations carried out in violation of this Law and revenues derived therefrom, and shall collect the fees for exploited and extracted ores and minerals.
The Ministry shall, as specified in the Regulations and in the manner it deems appropriate, publish the full text of the following documents:
1) Decisions of a general nature.
2) Decisions of license issuance, renewal, extension, termination, and transfer.
3) Notifications relating to liens registered on licenses.
4) Decisions designating mineral reserve areas and mining complexes, or terminating such designation.
5) Bidding announcements.
6) Other decisions or documents provided for in the Regulations.
This Law shall supersede the Mining Investment Law promulgated by Royal Decree No. (M/47), dated 201425/8/H, and shall repeal any provisions conflicting therewith. Notwithstanding paragraph (1) of this Article, the rights granted under the Mining Investment Law promulgated by Royal Decree No. (M/47), dated 201425/8/H shall remain effective after the entry into force of this Law. The financial provisions prescribed under this Law and its Regulations shall apply to the holders of such rights as of the date this Law enters into force.
The Ministry of Industry and Mineral Resources.
- Visit the online Licenses e-service to apply click here
- Fill the application
- Pay the fees
- It will be reviewed, and you will be notified of the application progress/verdict
A Person can obtain more than 1 licence
It takes about 7 days for the application to be processed
A reconnaissance license shall entitle the licensee to survey and explore the site designated in the license. The licensee shall have a non-exclusive right over the license site to:
- Examine the deposits covered by the license and collect samples;
- Prospect the area covered by the license, except for areas excluded under this law
- Use geophysical and geochemical methods, as well as other scientific methods;
- Carry out any other reconnaissance activity commonly used in the preliminary examination of lands with potential minerals or ores
- Have access to non-confidential maps and data maintained by the ministry.
- Any other rights stipulated by the regulations.
An exploration license shall grant the licensee to the following exclusive rights over the license site:
- Exploring the minerals covered by the license.
- Collecting samples from the license site to determine whether the site contains minerals covered by the license, provided that they are not sold or commercially exploited.
- Using any exploration method that precedes commercial production.
- Establishing camps as well as facilities necessary for the protection of exploration machinery and equipment.
- Using sand, gravel, or similar materials to the extent necessary to achieve the purposes of the license.
- Obtaining, during the validity of the exploration license, an exploitation license for areas within the exploration license site, provided the licensee fulfills all the obligations and satisfies the exploitation license requirements specified in this Law and its Regulations, and proves the economic viability of exploiting ores and minerals. If the exploration license expires before deciding on the exploitation license application, the exploration license shall be automatically extended until a decision on the application is rendered. In such case, the licensee shall be exempted from paying the fees for the extended period.
- Any other rights provided for by the Regulations.
Exploitation License (General Purpose Licence, Small Mine Licence, Mining Licences):
- Without prejudice to the provisions of Article 32 of the Law, the exploitation license shall grant its holder the right to invest in mining operations and the extraction of ores and minerals, including any direct or indirect activity necessary to achieve the objectives of mining investment, as specified in the Regulations.
- A licensee who discovers deposits of minerals not covered by the license may, within 90 days from the date of the discovery, file an application with the Ministry for an exploitation license for such deposits or for the modification of the current license.
- An exploitation license shall not entitle its holder to own any part of the land covered by the license, nor shall it entitle him any other right not expressly provided therein.
- Without prejudice to the provisions of Article 35 of this Law and in accordance with the license terms and conditions, the holder of an exploitation license shall, for the purpose of exploiting minerals covered by the license, have the following exclusive rights:
- Producing and exploiting minerals covered by the license within the license site, by digging, polishing, concentration, smelting, and processing.
- Transporting and selling minerals/ores in their original condition or after refinement, as specified in the Regulations
- Exporting minerals and ores for commercial purposes.
- Exporting non-commercial samples, as specified in the Regulations. 24 Mining Investment Law Mining Investment Law 25 Part 6 Financial Provisions Article 46 Article 47 Article 48 Mining Investment Law 25
- Constructing, operating, and maintaining mines, buildings, laboratories, workshops, pipelines, processing plants, waste disposal dumps, and other facilities necessary to achieve the purposes of the mining activity covered by the license.
- Establishing networks of water, electricity, telephone, sewage, rainwater drainage, and pipes, as well as power plants, railways and private roads, upon the Ministry’s written approval.
- Conducting surveys and carrying out exploration operations for ores and minerals on the license site after notifying the Ministry.
- Using rocks, gravel, sand, and similar materials available at the license site to the extent necessary to achieve the purposes of the license, subject to payment of the prescribed fees.
- Using available water resources to carry out the licensee’s operations, in accordance with Article 33 of this Law