Ma'aden reports threefold surge in second-quarter net income on sales boost

The Saudi Arabian Mining Company, one of the Gulf's biggest miners, has reported a more than threefold jump in second-quarter net income as commodity prices surge and sales climb on strong demand for its products.

Ma’aden, as the Riyadh-listed company is known, posted a record net profit of 4.03 billion Saudi riyals ($1.07bn) in the three months to the end of June, up from 1.13bn riyals in the same period last year, it said in a filing to the Tadawul exchange, where its shares are traded.

Earnings before interest, taxes, depreciation and amortisation increased to 6.9bn riyals, reflecting robust sales performance.

Revenue for the April to June period surged more than 94 per cent to 11.87bn riyals. Gross profit for the reporting period rose by about 200 per cent to 6.15bn riyals.

The company attributed the rise in quarterly income to “higher average realised sales prices” of almost all its industrial mineral products.

Higher sales volume — mainly from ammonia, primary aluminium, ammonia phosphate fertiliser and industrial mineral products — also supported earnings growth during the period, it said.

The company also had a higher income contribution from joint ventures, as well as income from time deposits.

For the first six months of the year, Ma'aden's net income surged more than 200 per cent on an annual basis to a record 6.2bn riyals. Sales jumped 80 per cent 20.8bn riyals during the period.

“Ma’aden delivered a record first half, driven by enhanced operations, leading to increased sales,” said chief executive Robert Wilt.

“This record performance, supported by favourable market dynamics, was delivered while … making progress towards our ESG [environment, social and governance] goals.”

Commodity prices have risen sharply this year, driven by supply chain bottlenecks. The Ukraine-Russia conflict has added to market disruption, accelerating the price rise.

Commodities such as gold, which is considered an inflation hedge, have risen in recent weeks. Spot gold was trading near $1,786.71 an ounce at 12.52pm UAE time on Thursday, after hitting its highest since July 5, at $1,807.79 on Wednesday.

Ma’aden, which is majority-owned by the kingdom’s Public Investment Fund, is central to Riyadh’s economic diversification strategy. The expansion of the industrial and mining sectors is one of the key objectives of the kingdom’s Vision 2030 agenda.

The mining law to boost foreign direct investment in the sector, which came into effect last year, is expected to help the Arab world’s largest economy explore mineral resources worth about 5 trillion riyals and tap into gold reserves with about 20 million ounces, Invest Saudi said last year.

“As we look to the rest of 2022, we will continue to invest in our production capacity across our current portfolio to meet demand, whilst exploring Saudi Arabia’s untapped mineral resources to ensure long-term sustainable growth,” Mr Wilt said.

Earlier this year, Ma’aden signed a deal to build the world’s largest solar-powered steam plant to be used to refine bauxite into alumina, as part of its expansion strategy.

In April, Ma’aden and Emirates Global Aluminium, the UAE’s biggest industrial company outside the oil and gas sector, agreed to extend a pact to collaborate on greener aluminium smelting technology as part of their push to boost sustainable production.

The agreement extends an initial pact signed in 2018 and allows companies to jointly explore and develop new aluminium smelting technology with lower greenhouse gas emissions, they said at the time.

The company said its Ammonia III plant increased production, contributing to higher overall sales.

Production at Ma’aden Wa’ad Al Shamaal Phosphate company also continued to increase during the first half of 2022, leading to a 15 per cent jump in the volume of phosphate fertiliser sales.

Ma’aden is also on track to increase its current gold mining capacity by 70 per cent with a new plant in Mansourah Massarah — which is in its commissioning phase — set to be the largest gold project in the kingdom, the company said.