RIYADH, (Reuters) – State-controlled Saudi Arabian Mining Co (Maaden) said on Monday it signed an agreement with local firm Olayan Descon to build a magnesite processing plant.
The plant will cost 95 million riyals ($25.3 million) and produce 140,000 tonnes per year of magnesite over the next 20 years, Maaden said in a statement on the bourse’s website.
Maaden, Saudi Arabia’s largest mining firm by market value, did not say how much a stake it will hold in the joint-venture.
The plant will turn white mineral magnesite into caustic calcinated magnesia which can be used in agriculture, construction, and fuel additives and dead burned magnesia which can be used for glass and refractory production.
The contract with Olayan Descon covers both mine infrastructure work and the construction of the processing plant, Maaden said.
“Work at both sites will begin as soon as mobilisation is complete,” Maaden said.
“This important new project … expands Maaden’s growing industrial minerals portfolio,” Abdullah Dabbagh, Maaden’s Chief Executive, said in an emailed statement.
The plant will be in the southern city of Medina and process magnesite deposits from the al-Gazalah, about 100 miles southwest of Hail, Maaden said in an emailed statement.
Maaden is investing about 60 billion riyals to develop the kingdom’s phosphate, bauxite, gold and industrial minerals and help reduce its reliance on oil.
Maaden’s gold output reached 146,000 ounces in 2008.
It is also building a phosphate and fertilizer plant in a joint-venture with Saudi Basic Industries Corp (SABIC) with production expected to start in 2010.
Rio Tinto Alcan abandoned its 49-percent stake in a 740,000 tonne-per-year aluminium smelter joint-venture project with Maaden in December because of the global financial crisis.
In May, Maaden said it will press ahead with the plan.
Last year Maaden started operations at its kaolin and bauxite mine near Az-Zabirah which produces kaolin for the ceramic industry and industrial grade bauxite for the cement industry.