Economic diversification is the mandate of Oman's ninth five-year development plan, and mining is one of the five priority sectors identified in it. GDP numbers from mining in the Sultanate have increased by over OMR7 million (USD18.1 million), to OMR139.60 million in 2016 from OMR132.40 million in 2015, according to Trading Economics' latest data. In addition, as of December 2016, more than 300 mining operations are currently active.
However, the government has realized the potential of the mining sector to boost economic growth, not only by its contribution to GDP, but also through the opportunities to further develop industry vertically and horizontally in power, steel, and cement, among others. “The government of Oman aims to export value-added minerals rather than sell raw materials abroad. Therefore, we decided to support this plan and add value to our exports by developing new plants,” Ahmed Abdullah Al-Hadi, Vice Chairman and CEO of Gulf Mining Materials, told TBY.
Being one of the largest countries in the GCC region, second only to Saudi Arabia, Oman's mining sector is currently relatively untapped, with vast mineral resources. The sector is set to grow and attract more investments with new discoveries of sizeable reserves of minerals, including gold, copper, and rare earths. According to a white paper on Oman's mining scene, released in early 2017 at the Oman Mining Expo, the sector has been growing at a 20% rate over the last year alone.
Hence, there is rising interest from both local and foreign operators to take part. To turn this intrigue into sector development, the Sultanate introduced a highly anticipated mining law focused on making the environment more striking for FDI. The new law is spearheaded by the Public Authority of Mining (PAM), established by Royal Decree in 2014. CEO of PAM, Hilal Mohammed Hamoud Al Busaidi, speaking on the new legislation, told TBY, “The mining law took effort and time to formulate because we wanted it to be as attractive to investment as possible.”
The new legislation aims to improve the ease of doing business in the sector with four main improvements. To begin with, the period to hold a license has been extended to 20 years, both indicating and providing a more stable environment in which to invest. Secondly, the new law provides a more detailed description of the mining licenses. The licensing process is expected to be streamlined and will be offered in “ready-to-invest” mining blocks. This addresses investor desire for clearer and more transparent policies to protect their investment.
In addition, the law aims to solve disputes with local communities by introducing a government body to intervene, Mining Development Oman (MDO). Last but certainly not least, mining fees will adapt as the market changes. This way, investors shall not have to cope with the burden of having fixed fees if the market situation becomes less profitable.
The new law is part of a new national mining strategy to revamp the sector. The strategy is expected to be announced in early 2018. Such developments suggest a concerted effort to reduce the sector's red tape and finalize the one-stop shop approach investors appreciate.
In terms of long-term development, Oman is considering the ways in which the mining sector's growth can be linked to other priority industries. The abundance of mineable reserves will require improved transport and logistics links to aid in connecting these reserves with Oman's strategic ports and other gateways. Also, the aforementioned white paper recommends the establishment of an institute for minerals and materials technology, which would align with national strategies to create a technology and innovation-based economy.