Turning national champions into global brands

mining
(File photo: Jordan News)
mining

Hamzeh S. Al-Alayani

The writer is a board member of a Jordanian public-sector government investments management company and a regular commentator on regional energy and industrial matters.

Establishing national champions is a distinct objective of a nation's growth strategy. Several considerations underpin this objective, including enhancing national security by promoting self-sufficiency in critical industries and supporting job-rich and inclusive growth. This approach aims to create globally competitive companies, ensuring economic growth and security.اضافة اعلان

The mining sector in Jordan is considered one of the main pillars of the Kingdom’s economy, as it plays an essential role in strengthening the national economy along with the rest of the other economic sectors. The contribution of the mining sector to the gross domestic product in 2021 was about 9.2 percent and accounted for 30.4 percent of the total national exports.

It effectively contributes to employing the local workforce and meeting the local market's needs for raw materials, intermediate, and final products related to this sector. It also provides currencies through exports and supplies the state treasury with mining taxes and fees.

Building up national champions will speed up the nation's industrialization to leverage the performance requirements, combined with policies encouraging joint ventures or some degree of domestic ownership.

The mining sector in Jordan has excellent potential to grow
The mining sector in Jordan has excellent potential to grow based on a broad strategy and committed public policy that sets the direction for the industry and demonstrates the government's commitment to the sector. This shows positive signs to existing and potential developers about the role and path that the mining sector will play in the economy, promoting the transition from traditional extraction of raw material practices to the derivatives industry.
The mining sector in Jordan has excellent potential to grow based on a broad strategy and committed public policy that sets the direction for the industry and demonstrates the government's commitment to the sector.
National champions in Jordan's mining sector are part of a more extensive suite of dynamic changes. Jordan is endowed with enormous wealth in the form of natural resources to ensure broad-based sustainable development. Some specific focus issues can be to work with Jordanian champions, such as the Arab Potash Company and Phosphate Company, to encourage downstream industries to maximize returns and identify synergies.

The transition of the mining industry into downstream products and the application of clean energy and zero emissions strategies will bring economic, environmental, and social benefits to the entire country. These practices will create value in this newly dynamic and fiercely competitive landscape, generate higher-income jobs, and increase revenue for the government through exporting high-value brands.

Industrial policy to shape the economy
The government must foster industrial policy to shape the economy by targeting specific industries, firms, or economic activities. This policy can catalyze the mining industry through various tools such as subsidies, energy transition paths, tax incentives, infrastructure development, protective regulations, and research and development support.

Despite the government's competing objectives, such as securing sustainable economic growth and maintaining financial and fiscal stability, the benefits of implementing the industrial policy and establishing national champions will be higher according to the economic modernization growth vision.

How the rest of the world invests
Various countries have promoted specific firms or industries as national champions. For example, the US government is allocating $39 billion in funding from the $280 billion CHIPS Act to support the development of advanced semiconductor manufacturing capability. These policies are part of the administration's broader approach to industrial policy, including $370 billion in subsidies for clean energy in the Inflation Reduction Act.
National champions in Jordan's mining sector are part of a more extensive suite of dynamic changes. Jordan is endowed with enormous wealth in the form of natural resources to ensure broad-based sustainable development. Some specific focus issues can be to work with Jordanian champions, such as the Arab Potash Company and Phosphate Company, to encourage downstream industries to maximize returns and identify synergies
Meanwhile, Japan is providing subsidies worth more than $500 million to 57 companies to encourage them to invest domestically as part of its efforts to reduce reliance on China. Similarly, the European Union is scaling up its industrial policy by setting aside €160 billion of its COVID-19 recovery fund for digital innovations such as chips, batteries, and climate adaptation.

Along these lines, the Kingdom mining vision, adopted by the Ministry of Energy and Minerals, calls for transparent, equitable, and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development; on the contrary, they are increasingly important.

Create national champions
One of the crucial ways mining might contribute to achieving those goals is by strategically using policies to create national champions.

The government should explore what sorts of policies states might pursue that are informed by both the economic evidence and the legal constraints. The question remains: How can Jordan best preserve its policy space to foster national champions and to embed the mining sector in the fabric of its pursuit of sustainable development objectives, and, importantly, scale-driven cost and profit margin thresholds?


Hamzeh S. Al-Alayani is a Jordanian public-sector government investments management company board member and a regular regional energy and industrial commentator. Hamzeh holds an MBA from the University of Aberdeen, UK, and a BSc in Mechanical Engineering.


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