State-controlled Saudi Arabian Mining Company (Maaden) plans to invest SR21 billion ($5.6 billion) in a phosphate project as part of a new industrial city in the country's north, the company's chief executive was quoted by Saudi state media as saying.

Saudi Arabia's cabinet approved in its weekly cabinet on Monday the establishment of a new industrial city in the country's north - Waad Al-Shimal City for Mining Industries in which the new project in Umm Wual would be located.

Maaden said recently the preliminary feasibility study to exploit phosphate deposits at Umm Wual proved viable.

The Umm Wual project would add nearly 1.5 million tonnes annually of phosphorus oxide to Maaden's planned phosphate capacity.

Khalid al-Mudaifer said the SR21 billion will cover the cost of extracting and treating the phosphate ore.

It would also fund the building of seven new plants with a total production capacity of 16 million tonnes per year of phosphate concentrate, sulphuric acid, phosphoric acid, as well as plants to produce calcium monophosphate and calcium diphosphate. Production is expected to start before the end of 2016, Mudaifer said.

Saudi Arabia, home to the world's largest oil reserves, is keen to develop its mining industry to diversify the economy away from relying on oil.

Saudi oil minister Ali al-Naimi was quoted as saying on state news agency SPA that the project would add SR15 billion in annual revenues to the gross domestic product (GDP).

The phosphate ore is located near a gas field in Jalamid where extensive exploration is taking place.

Feedstock and other fuel has been allocated to the Maaden's project, SPA quoted Prince Faisal bin Turki, adviser at the Saudi oil ministry, as saying, without specifying how much fuel or feedstock the project will use.-Reuters