Amid a wider government reshuffle, Saudi Arabia announced last Friday that it is dividing the Ministry of Energy, Industry and Mineral Resources into two separate entities, a move that left many international observers pondering the reasoning behind the split.
The Ministry of Energy, Industry and Mineral Resources had been led by Khalid al-Falih, who will retain the position of Minister of Energy, while the Ministry of Industry and Mineral Resources will be headed by Bandar Alkhorayef, a private sector investor and executive.
The new ministry will become fully independent from January 1, 2020, as the Kingdom seeks to diversify its economy away from oil as part of the Vision 2030 agenda. For this reason, growing the industry and mining sectors is essential.
“In light of the ongoing investment in Saudi Arabia and Saudi Vision 2030, the old Ministry of Energy, Industry and Minerals was too large… the most natural view is that the Ministry needed to be split up to become more functional,” said geopolitical analyst, and director of Dutch consultancy Verocy, Cyril Widdershoven.
“It is also a strange thing that the Ministry of Energy, which is focused on oil, gas and energy, was the same ministry that was dealing with minerals. It’s a logical choice to split it up,” added Widdershoven.
Alkhorayef is a top executive at Alkhorayef Group, and the vice chairman of Arabian Agricultural Services. In addition, he is a board member of the Riyadh Chamber of Commerce and Industry, and a member of the Saudi Economic Association, National Industrial Committee, and on the board of trustees at the Riyadh Economic Forum.
He was also a board member of AlWatan newspaper from 2000 to 2016, Amaco from 2009 to 2013, Saudi Finance House from 2009 to 2011, and Sama Airlines from 2005 to 2010.
Alkhorayef will have a huge task ahead of him, as the Saudi mining and mineral resources sector remains an attractive, yet somewhat untapped destination for foreign investors in the Middle East region.
According to a report published by Fitch Solutions on the mining sector earlier this year, the Kingdom offers relatively low risks to investors with regards to the quality of its transport network and utility costs, as well as limited bureaucracy surrounding trade flows.
In its 2019 budget, Saudi Arabia allocated 33 billion riyals ($8.79 billion) for the energy, industry, and mining and logistics sectors. In March, Saudi Energy Minister al-Falih had announced that the mining sector alone holds $1.3 trillion worth of resources, making it a key sector for foreign investments.
Meanwhile, Saudi Arabia has recently been making strides to reform its business and industry sector. Vision 2030 calls for an expansion of the private sector’s contribution of GDP to 65 percent, from its current 40 percent. The World Bank’s Ease of Doing Business 2019 report found that Saudi Arabia ranked fourth in terms of the number of reforms that would contribute to improving the country’s business environment amongst G20 nations.SHOW MORE