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HOUSE_OVERSIGHT_016178

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Exports will largely depend on market conditions Part of the NTP relies on growing Saudi exports, including that of the mining industry. While it is easy build a plant, the timing of when there projects come online and how it coincides with the cycle matters. The ability to dump will largely depend on the position on the cost curve, which seems to be fading with the recent reduction of subsidies. The conglomerate model to continue Saudi Arabia has historically adapted the conglomerate model to build up its industrial sectors, such as petrochemicals (SABIC), metals & mining (Maaden) and steel (Hadeed). We believe the government continues to focus on this model in its NTP plan and will use a number of vehicles to expand the sectors in question: Maaden in metals & mining and the new military company in defence. Maaden has transformed from a pure gold producer to one of the largest conglomerates in Saudi Arabia at the moment. Through three key Joint-Ventures (JVs), the company is a top producer of DAP (Diammonium Phosphate) and gold and aluminium. The NTP clearly sets the stage for Maaden to grow even further but is unclear on how this is to be achieved and what it would mean for shareholders. Also, in our view, the all-in-one model has delivered subpar returns globally and the trend is towards the streamlining of operations and specialised vehicles. As an example, the largest petrochemical and agrichem companies, Dow and Dupont, plan to merge and then split into three different businesses, providing more specialisation. We can see the advantages of the specialised entity model as it provides cost synergies, efficiency and a clear strategy for the company. Also, in the conglomerate model, certain parts of the company are often dwarfed as other revenues streams represent a larger contribution to returns. Board and management could be more or solely focused on the sub-segment had if it is a stand- alone entity they have to monitor and manage, in our view. Table 23: Nation

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