State-owned Saudi Arabian Mining Company (Maaden) launched on Saturday an initial public offering to raise SR9.25 billion ($2.47 billion) in the Middle East's biggest mining IPO, valuing the firm at $4.9 billion.

Maaden plans to sell 462.5 million of stock - equivalent to 50 per cent of its share capital - at 20 riyals each with subscriptions closing on July 14, according to the bourse regulator, the Capital Market Authority (CMA).

The IPO is to cover some of the costs of projects led by the company, mainly a 740,000-tonne aluminium smelter with Rio Tinto and a 3-million tonnes phosphate and by-products plant with Saudi Basic Industries CorpSabic).

The other 50 per cent of Maaden's capital is held by the Public Investment Fund (PIF), a state fund under the helm of the finance ministry. Only Saudi investors will be able to buy the stock.

Maaden-Rio Tinto's aluminium smelter will cost $7.53 billion and plans to export 70 per cent of the production, vice-President Abdallah al-Fallaj said in remarks published this week.

The Saudi firm has secured loans worth several billion dollars from Saudi and Korean institutions for the phosphate project with Sabic.

Maaden estimates its total investments at SR60 billion, including phosphate, bauxite, gold and industrial minerals. The investments are part of government plans to diversify an economy that heavily depends on oil.

It said last year the bill for the phosphate venture had soared to SR21 billion, 62 per cent more than it had initially expected, due to a rise in labour and material costs. The aluminium smelter's initial cost was $7 billion.-Reuters