Golden Compass Aims to Fulfill a Role in the Kingdom’s Mining Value Chain
As Saudi Arabia enters a new era of mining, with untapped mineral deposits valued at over $ 1.3 trillion, there is a need for local exploration, drilling and processing expertise. .
One company that plans to mine this is Golden Compass, a Jeddah-based mining operator launched in 2016 with a focus on gold, limestone, copper and silica – which is used in a range of products from microchips to panels. solar.
Golden Compass has two main sources of income: the identification and valuation of underground resources, and the actual mining and extraction of minerals.
Founder and Managing Director Meshary Al-Ali began his mining career with a stint in Australia, before spending nine years with Ma’aden in Saudi Arabia – the largest miner in the Gulf region – where he eventually moved to was promoted to Senior Project Engineer.
Al-Ali said he stepped down from Ma’aden to create a startup that “will be the largest mining consultancy and services company in Saudi Arabia in the first phase, and the Middle East in the second phase.”
Starting with a small team of geologists and mining engineers, Golden Compass has grown to 120 employees.
Its first successful investment round took place in 2018, using Saudi venture capital firm Naif Al Rajhi Investment Group. The size of this deal remains confidential, but it gave NRI a controlling stake and, shortly thereafter, NRI injected an additional SR 20million ($ 5.3million).
In 2020, 10% of Golden Compass was purchased by Saud Al Rajhi Investment Group (NRI and Saud are both part of the Al Rajhi banking dynasty) for SR 7million, valuing the company at SR 70million.
A third round of investment is being finalized, details of which are again confidential, with an IPO slated for 2028.
Al-Ali told Arab News that the need for such levels of investment stems from the amount of equipment required in the mining sector.
“Big mining companies don’t necessarily want to invest their capital in rigs, drills and bulldozers, which are expensive and also depreciate quickly,” Al-Ali said.
He added: “If you are a multinational mining company winning a concession for a gold or copper mine in Saudi Arabia, you usually won’t mine it yourself.
“You will outsource this to a certified operator specializing in exploration, resource and reserve estimation and coring – and with its own fleet of rigs, bulldozers, drills, processing facilities, laboratories and of course labor. And all of this requires huge capital investments – over RS 50 million so far, in our case.
“We do the exploration, surveying, blasting, mining, drilling – the whole circle of operations. We have become a one-stop-shop of services for mining companies.
The company is on a rapid upward trajectory, with revenues of SR 30 million in 2020 and SR 27 million in 2021, a drop in part due to changes in leadership at their main client Ma’aden, causing a delay in the closing of a contract. However, Golden Compass forecasts a turnover of SR 100 million for the current fiscal year.
“Saudi Arabia’s mining sector is booming,” Al-Ali said. “It really started with the new mining code on January 1, 2021. Saudi Arabia is now marketing its mining industry to the world and wants to attract more global players.
“How? By enacting a very strong law that will protect the investments of foreign companies and provide easy access to information and data – for example through the National Geological Database and the Mapping Program, which updates a lot of historical information redundant.
“International mining companies now have a very strong law to protect them and a good business environment in a stable country with confirmed mineral reserves – and the Saudi government is now backing mining companies with 70% funding. So this is a total package.
Another important new initiative is Saudi Arabia’s Fast Track Exploration Program, where the Kingdom’s Ministry of Industry and Mineral Resources seeks to “motivate and encourage small-scale exploration companies”.
Golden Compass has bid on some of these contracts and the winners will be announced later this year.
Mining has three phases. Upstream includes exploration and extraction. Midstream is made up of processing. And downstream is the production of finished products.
“So far, more than 80 percent of Saudi Arabia’s mining sector has focused upstream,” Al-Ali noted. “But the goal now is for the country to be involved in the whole value chain.”
He said one way to achieve this is to set up factories that turn the Kingdom’s abundant silica into solar panels, with the transfer of technology and know-how, as well as the potential creation of many jobs.
“Saudi Arabia needs to diversify its income over the next 20 years,” Al-Ali said. “I believe the leaders of our mining industry are on the right track and building a healthy, sustainable and transparent system for investors and mining companies.”