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The announcement in May 2015 that Australian mining company, Savannah, had discovered gold and copper ore deposits caught the attention of the mining community both in Oman and internationally. Despite […]

The announcement in May 2015 that Australian mining company, Savannah, had discovered gold and copper ore deposits caught the attention of the mining community both in Oman and internationally. Despite gold being at its lowest price in five years, the discovery is noteworthy for a number of reasons. From a commercial standpoint, local and international players will have been bolstered by the news that there are still plentiful and lucrative resources to explore in Oman. Perhaps more importantly, it will provide a necessary test of the efficiency of the newly formed Public Authority for Mining.

Although the mining industry around the world has recently faced difficulties due to the low price of minerals, Oman’s mining sector has proved that it has the potential to be a contributor of significance to the country’s economic diversification. The sector has faced several difficulties over the past five years, with mineral production being reduced from $441.5 million in 2011 to $383.4 million in 2013. However, 2015 has been somewhat different. While industrial activities reduced their contribution to GDP by 2.4% between March 2014 and March 2015, the contribution of mining rose by 10%, from $76.3 to $84 million. While the oil and gas and services sectors had a more significant impact, the sharp increase in the performance of mining is indicative of lucrative prospects.

This can only be supported, however, with a much more efficient administration. Mining in Oman requires a variety of licenses, each from a different ministry or public authority. While this is necessary to ensure that proper practice, health and safety, and environmental issues are taken care of, inefficiency has led to massive delays in the approval of various projects. In an interview with TBY, Abdullah Ahmed Al Hadi and Mohammed Yahya Al-Shabibi, the Chairman & CEO of Gulf Mining Group, outlined his concerns in this area; “In reality, we want to see more efficiency. For us in the private sector, time is very important and the government has caused some delays. We are a profit-oriented organization and so we cannot survive if there are too many delays.“
Inefficient or slow bureaucracy is a critical issue for the private sector. As mining licenses only last for one year in Oman, as opposed to five in the Kingdom of Saudi Arabia, this is also a major problem considering that license approvals can take “up to eleven months,“ according to Mr. Al Hadi and Mr. Al-Shabibi. With delays of such length, companies will be forced either to wait for licence approval and suffer the economic consequences, or risk hefty fines. Considering that the mining industry is inherently profit driven, the latter certainly seems a more attractive option.

Established in September 2014, the Public Authority for Mining has a directive to provide more attention to the needs of the mining sector, both in terms of regulation, and facilitation. The recent discovery of gold provides it with an opportunity to showcase newfound efficiency and support the private sector. Whether or not the discovery is assessed to be as commercially significant as originally thought by Savannah, the public authority is under pressure to make swift and efficient decisions to provide the best support it can.
The discovery of gold is certainly the most significant piece of news for Oman’s mining sector in 2015. However, with just over a year in existence, the full extent of the Authority’s impact is yet to be determined. Due to the challenges currently faced by the mining sector, it has been proverbially thrown in at the deep end, and will be held accountable by the private sector if a marked improvement in the efficiency of processes is not made. Low prices and reduced gas subsidies have slashed profits across the board, and so cost-effective practice and efficient production are critical for mining companies. The Public Authority for Mining must follow suit.

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