Barrick Gold said on Sunday it is forming a joint venture with Saudi Arabian Mining Co (Ma'aden) to run its Jabal Sayid copper asset in the kingdom, a move that could see the long-delayed mine finally begin production in late 2015.
Ma'aden, which is controlled by the Saudi state, has agreed to buy the 50 percent interest in the project, located some 120km southeast of Medina, for $210 million.
The deal is a boost for Barrick as it lets the world's largest gold miner finally get back on track a project that has been mired in regulatory and licensing woes. It also fits well with the Saudi state's efforts to create a stronger industrial base in the kingdom, beyond oil refining and export.
Toronto-based Barrick acquired the Jabal Sayid asset via its C$7.3 billion ($6.8 billion) purchase of copper miner Equinox in 2011. Most of the construction at the asset had been complete for a while, but output was delayed over permit problems and legacy issues over mining licenses.
Barrick said the tie-up with Ma'aden, which is expected to close in the fourth quarter of 2014, will move the project along and get the mine into production in late 2015.
"This joint venture will enable the Jabal Sayid project to move forward with the benefit of Ma'aden's extensive experience in the Saudi Arabian mining sector, combined with Barrick's technical and operating expertise," Chief Executive Jamie Sokalsky said in a statement.
When fully operational, the asset is expected to produce 100 million to 130 million pounds of copper in concentrate annually over the first five years.
The Barrick partnership is Ma'aden's latest move to diversify. Ma'aden, formed in the late 1990s to develop Saudi Arabia's mineral resources, was wholly owned by the government before half its stock was floated on the Saudi Stock Exchange in 2008.
The company originally focused on mining gold, but has been forging alliances with large North American firms, and recently signed a $5 billion financing deal for a huge $7.5 billion phosphate project in the kingdom.
The phosphate project in the northern city of Waad al-Shimal is a joint venture between Ma'aden, Saudi Basic Industries Corp and North American fertilizer maker Mosaic Co.
Ma'aden and US aluminum maker Alcoa Inc have also partnered and run a massive $10.8 billion aluminum smelter in the kingdom.
A source familiar with discussions between Ma'aden and Barrick said talks to form an alliance have run since last year.
The source, who was not authorized to publicly discuss the details, said the partnership could be a first step toward broader ventures between both parties.
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