Saudi Arabia’s state miner will use a windfall from the recent boom in commodity prices to pay off debt as it seeks to strengthen its balance sheet before embarking on international acquisitions, according to a Bloomberg report. The new CEO of Saudi Arabian Mining Co. (Ma’aden) said he plans to halve the ratio of debt to EBITDA over the next five years. Net debt was equivalent to 6.5 times EBITDA in March, according to data compiled by Bloomberg.
The focus will be on “sweating our assets” and ensuring that Ma’aden is “one of the biggest winners” from the commodities rally, Abdulaziz Al Harbi, who was appointed last month, said in an interview. “We are capitalizing on the supercycle.”
Al Harbi, Ma’aden’s third CEO in the past 18 months, said the company needed to prioritize debt reduction after it invested almost $40 billion in Saudi projects in the past several years. “The decision at the moment is not to pay dividends,” he said.
Still, Al Harbi said he was “cautious” on the outlook for commodity prices. A rise in virus cases in India and South America could reduce global demand, while some miners will look to capitalize on the boom by boosting supplies, he said.
Ma’aden is unlikely to buy any foreign companies or mines in the next 12 to 18 months, Al Harbi said. The Saudi firm made its first international acquisition in 2019, when it took over Mauritius-based fertilizer distributor Meridian.