The Saudi Arabian Mining Company (Maaden) received its first credit ratings from Moody's at "Baa1" and Fitch Ratings at "BBB+" with a "stable" outlook.
The two ratings reflect the leading multi-commodity producer's credit strength, commercial strength, and productivity.
Maaden is among the fastest-growing mining companies in the world and the largest multi-commodity mining and metals company in the Middle East.
The Public Investment Fund (PIF) increased its shareholding to 65.44 percent as they are moving towards expanding the mining business locally and globally.
Last January, Maaden, through Manara, agreed to acquire a 10 percent stake in Brazil's base metals company Vale as part of a strategy to invest in global mining assets.
Maaden stated that the credit score reflects its diversified business model as a world leader in producing multiple commodities, namely phosphate production, and possessing the largest integrated value chain for aluminum in the Middle East.
Maaden stated that the ratings confirm the sustainability of its business base, its leadership in cost rationing, and its strong financial portfolio.
Maaden's CEO, Robert Wilt, said the investment grade ratings come as we undertake a significant transformation program to strengthen the business and meet long-term growth targets.
He pointed out that the new credit ratings further underline Maaden's strong financial position, boosting investor confidence and cementing access to global capital markets.
"More importantly, the ratings underscore our unwavering commitment to deliver on the Saudi Vision 2030 to establish mining as the third pillar of the economy."
- Production
Moody's indicated that the issued rating of Maaden in the category "Baa 1" considers the independent credit strength of the company.
It increased the rating based on the expectation that the agency requires the company to obtain support from its largest shareholder, referring to the A1 classified PIF.
According to Moody, Maaden's rating reflects its strong business profile as a multi-commodity producer producing phosphate-based fertilizers, ammonia, aluminum, and gold.
The investment grade ratings reflect Maaden's diversified multi-commodity business model with global leadership in phosphate production, the Middle East's largest integrated aluminum value chain, and a scalable Base Metals and New Minerals business.
The stable rating outlook reflects Moody's expectation that Ma'aden will continue to pursue its prudent financial policy and maintain robust liquidity, and its credit metrics will remain commensurate with its current rating level.
Moody's further noted that Maaden's revenues have a high share of exports through a diversified international customer base.
It noted that Maaden has diversified from being a gold-producing company by building abundant, world-class phosphate, aluminum, industrial minerals, and copper concentrate operation.
Its performance is expected to improve over time by addressing inefficient processes and investing in newer projects.
- Capital expenditures
Furthermore, Fitch assigned a long-term issuer default rating of BBB+ with a stable outlook to Ma'aden.
It stated that its classification of Maaden reflects the strong relationship between the company and the state, as PIF is its largest shareholder.
Ma'aden's Standalone Credit Profile (SCP) of 'bbb-' reflects the company's large scale and diversification and solid and sustainable cost advantage in the production of ammonia, phosphate fertilizer, and aluminum products due to access to very competitively priced natural gas and vast mineral resources.
The agency predicted a moderation in commodity prices, significant growth capex, and investments in mining assets to increase EBITDA net leverage to 3.1x on average in 2023-2026.
Fitch believes that the strong free cash flow allowed the company to successfully reduce total debt from $13.3 billion in 2019 to $11.2 billion in 2022, and the agency expects it to also decrease to $9.6 billion in 2023.
Maaden is a leading global phosphate fertilizer producer with sufficient access to raw materials to continue expanding its position.
It is also a significant aluminum producer with vertical solid integration from bauxite mining to cast products and rolled sheets production.
