Al Khobar Saudi Arabian Mining Co (Maaden) will boost exploration in the vast Arabian Shield region and develop new mines in a bid to double gold resources to 20 million ounces by 2020, its chairman said.

Abdallah Saif Al Saif said the state-run miner's existing mines contained 10 million ounces of gold resources in 2009.

"Maaden is going to centralise exploration activities, to give it more focus," he told Reuters. "We have a plan to develop about four gold mines in the central area that will make up (for) the decline in other mines. I think it will be hopefully within two to three years."

Maaden is spending about 60 billion Saudi riyals (Dh58.7 billion) to develop the kingdom's phosphate, bauxite, gold, industrial minerals and others.

Saudi Arabia, home to the world's largest oil reserves, is keen to develop its mining industry for economic diversification away from oil. The kingdom has one of the largest phosphate deposits in the world as well as deposits of bauxite and other base metals. Most of Saudi Arabia's oil comes from the Eastern coast, while minerals are located in the Arabian shield, on the western coast of the world's top oil exporter.

Maaden currently operates five gold mines: Mahd ad Dahab, Al Hajar, Sukhaybarat, Bulghah, and Al Amar.

The US Geological survey reported in its 2008 minerals yearbook that the Mahd ad Dahab mine was expected to be shut in 2013.

But Al Saif said Maaden had managed to reduce the decline rate of the mine with new technology, extending its life by many years. He did not give further details.

Maaden plans a 400km water pipeline to bring sewage treated water from Taif, in the western region, to the Central Arabian Gold Region (CAGR) where it has identified gold mines, he said, addressing potential water supply problems.

The firm currently produces about 166,000 ounces of gold a year and aims to raise it once new facilities come on stream, Al Saif said.

He added that the Arabian Shield - a mineral rich expanse on the western coast of Saudi Arabia - is not well explored yet and Maaden was putting together a medium to long-term programme which would also cover copper, zinc, nickel and iron, among other minerals.

"Demand for all metals is increasing, prices are improving and that justifies exploring and developing other minerals," he said.

Gold was quoted at $1,381 an ounce on Monday, short of the $1,430 an ounce record high it set earlier in December, but still up around 26 per cent on the year. Some industrial metals have set record highs or multi-year highs recently.

Maaden and US Alcoa are building the world's largest fully integrated aluminium complex in Ras Az Zawr, on the Gulf coast, fast becoming Saudi Arabia's mining cluster.

The first phase includes a smelter, slated to start commercial operations by the end of 2012, and a rolling mill due to come on line in the first quarter of 2013. Maaden holds a 75 per cent share in the project. Alcoa cut its stake from 40 per cent earlier this year. Al Saif said Alcoa's share may go back to 40 per cent five years after the project's start-up.

Also, a diammonium phosphate plant will be operational within 2011.