Two of the most influential and economically powerful Gulf Cooperation Council (‘GCC’) countries: Saudi Arabia and United Arab Emirates (‘UAE’) are developing their mining sectors to be more environmentally friendly. These two countries could set an example for the whole region in environment-friendly mining, which could also spill over to other sectors. UAE-based MCT Group (construction and oil & gas) entered into a partnership deal with Clean Earth Technologies (‘CET’), a Singapore-based environment-friendly technologies producer. The aim of this partnership is to broaden environmental awareness within the mining sector in the GCC region. This correlates with the 2022 United Nations Climate Change Conference (‘COP27’) meeting which recently took place in Egypt. The Kingdom of Saudi Arabia also increased its budgeted investment into eco-friendly mining, adhering to the Paris Agreement while catering to the increase in mineral demand.
Overview of the GCC mining sector
According to the Fraser Institute’s 2021 annual mining survey GCC countries do not rank as desirable mining capital inflow destinations. This is largely thanks to the dominant historical focus on oil and gas (‘O&G’) resources within the region while under-exploiting minerals. If the GCC countries decide to further expand the aluminum sector, which is considered the key economic driver in the region; this can be achieved with strong government backing, cheaper energy costs, economies of scale with infrastructure and ownership of most advanced smelting technologies. Currently, the GCC mining sector is making rapid advancements towards further exploiting the mineral resources of the region as an effort towards diversifying their economies and decreasing reliance on the O&G sector. The GCC has increased funding into non-oil-related sectors such as mining or extraction of their deposits – gold, silver, iron ore, copper and bauxite. As the GCC countries were historically largely reliant on their oil-related industry, their natural mineral deposits have been largely left untouched. With the assistance of said investments, it is predicted the industry will see greater growth than it has seen in the last decade. However, said growth can be stunted with the constant disruption from the pressing concerns of sustainability practices. This means mining companies need to go a step further in highlighting what they stand for.
Saudi Arabia Mining Market in 2020 with growth forecast l Research and Markets
United Arab Emirates Mining Market in 2020 with growth forecast l Research and Markets
What drove the change into the environmentally friendly territory?
Increased international pressure towards reduced carbon emission coupled with the possibility of further financial gain and an improved positive public image are all drivers of this change for environmentally friendly mining. Industrial discussions with the Kingdom of Saudi Arabia focused on National Industrial Development as part of Vision 2030 which is a strategic framework to reduce their dependence on oil and diversify the economy while developing public sectors. They expect mining to rise as the third pillar of the Kingdom, behind energy and petrochemicals -. It has been reported 1.3 trillion USD worth of potential mineral value – copper, gold, iron ore, phosphate and rare earth minerals – are essential to sustainable future technologies. The Paris Agreement goals will raise the demand for some metals significantly – at least by 400% – which can be supported single-handedly by Saudi Arabia if they begin exploiting these resources. However, they also need to adhere to the Paris Agreement. This is partly why Saudi Arabia started its own Green Initiative, it aims to unify the sustainability efforts within the Kingdom. It aims to reduce emissions by 4%, plant 10 billion trees and increase protected land zones by 30%.
Saudi Arabia has a geographical advantage, connecting North Africa, Europe and Asia with road, rail and port infrastructure. This and having sound and developed electric networks is crucial for a highly developed and environmental-friendly mining industry,
What will hold for the future of GCC mining?
GCC mining impacts the environment as diesel machinery is used to power mines. There is also an adverse impact on cost due to the high fuel costs to operate said machinery. Further budget is to be expensed as diesel usage accounts to 7% of global greenhouse emissions, therefore replacing old machinery with new technology. With electrification, they can move away from the high costs, increase productivity and also adhere to the Paris Agreement.
The order placed by the UAE is for producing a special environment-protective reagent, produced by CET which is used in gold processing and makes cyanide acid-free. MCT will be the one manufacturing said product in their facility in Dubai. Produced reagents will also be marketed by them within other regions as a subsidiary of the Singaporean company, both within the UAE and throughout the Middle East. This will also further influence the expansion of the environmentally friendly initiative within the mining sector.
The short-term aim is 700 tons produced in 2023, however, plans are made for phased expansion depending on the market. This will open new opportunities within the region for clean ecological practices.
As MCT Group currently provides engineering products and technical assistance services within the oil & gas, transportation, infrastructure and marine sectors, it is possible, that their clean ecological initiatives will be able to expand within these sectors as well.
This could also be largely thanks to higher expected electrification within the mining industry, which would make its infrastructure more economically sustainable. This will enable them to optimize all equipment and processes by integrating a stable and efficient system that would maximize energy and resource usage. It is reported that companies have provided support for CO2-free mining which is possible and desirable.
In conclusion, fully integrating electrification and digital systems would reduce overall costs and improve the mine’s performance while significantly decreasing the environmental impact. Examples of solutions would include increased safety through automation, reduced noise and increased air quality – resulting in lower ventilation requirements further reducing costs -. These benefits would also increase the lifecycle of any mine, mineral processing plant or enterprise. This wouldn’t be without challenges however as it would require extensive training – for the employees – and cooperation with other entities – governments, and other companies -. As for the cooperation challenges, there will be an increased need for trade financing and corporate payment services. These will be essential to be able to maintain the rapid development and growth of the mining industry while being able to satisfy the demand effectively and efficiently.
References
- TECHNICAL REVIEW MIDDLE EAST (2019): “Middle East’s mining sector offers growth opportunities for private players” l https://www.technicalreviewmiddleeast.com/construction/mining/middle-east-s-mining-sector-offers-growth-opportunities-for-private-players
- MATHEW J. (2022): “MCT strikes mega-deal with Singapore” l https://www.arabianbusiness.com/industries/uaes-mct-group-singapore-based-cet-strikes-partnership-deal-to-launch-environmental-friendly-tech-in-gold-mining
- ALMOUSE M; et al (2021): “A view to the future of mining in the Middle East” l https://www.plantmachineryvehicles.com/equipment/machinery/a-view-to-the-future-of-mining-in-the-middle-east
- SAUDI PRESS AGENCY (2022): “Saudi Arabia is setting new standards for a sustainable and ESG-compliant mining industry” l https://www.zawya.com/en/business/energy/saudi-arabia-is-setting-new-standards-for-a-sustainable-and-esg-compliant-mining-industry-r2mik4cl
- HIJAZI J; AMAN E. (2021): “GCC region should embrace the mining value chain to catch up with the clean energy race” l https://www.mining.com/web/gcc-region-should-embrace-the-mining-value-chain-to-catch-up-with-the-clean-energy-race/
- AFRICAN MINING MARKET (2022): “Contours of the GCC ESG ecosystem set to accelerate” l https://africanminingmarket.com/contours-of-the-gcc-esg-ecosystem-set-to-accelerate/14001/
- JOHN I. (2022): “GCC ‘green finance’ sector has potential to unlock $2trln GDP, over 1mln jobs” l https://www.zawya.com/en/wealth/wealth-management/gcc-green-finance-sector-has-potential-to-unlock-2trln-gdp-over-1mln-jobs-rgawlrif
