HARD ROCK

Oman 2015 | INDUSTRY & MINING | REVIEW: MINING

A new mining authority and international companies entering the market are turning Oman into a regional mining hub.

Oman's mineral resources have attracted increasing attention from foreign corporations and internal actors over the past decade. Mineral deposits in the Sultanate include chromite, copper, dolomite, zinc, limestone, marble, gypsum, silicon, gold, cobalt, and iron. Between 1996 and 2013, the production of rocks and minerals in Oman increased more than eightfold. Moreover, new expansions and international acquisitions in 2014, should keep this trend going well into the future. Currently, there are more than 150 mining and quarrying operations dedicated to fill material, 183 for crushed rock, 71 for chromite, 57 for marble, three for sandstone, and four each for gypsum, laterite, and clay. One salt mine, and another dune sand operation wrap up the country's diverse mining operations. Meanwhile, new mining laws—such as Ministerial Decision No. 39 of 2013—and the establishment of a new regulatory body, are bringing the industry in line with international standards, a move that will increase international activity in the sector.

According to the latest US Geological Survey, published in 2014, aluminum production rose by 34% between 2011 and 2012, and cement, lime, and limestone all rose by 10% during the same time period. The Sultanate holds about 950 million tons of gypsum reserves—60% of which is exported for use in the construction industry. Oman is the site of significant marble quarrying and production, most of which is exported. In 1999, the International Marble Company (IMC) was established and is currently the country's premier exporter of marble. A study conducted in conjunction with the UN estimated coal reserves at around 122 million tons. At annual production rates of just over half a million tons per annum, these reserves will last well into the future and support increased extraction.

DEVELOPMENTS

New mining operations are fleshing out Oman's mineral extraction capacity. According to the Ministry of Information, the country has begun a new phase of mineral exploration for chromite ore deposits. With dozens of untapped sites already identified, as many as 79 locations—most located in Shinas and Sohar—may hold chrome ore deposits. Meanwhile, private exploration in Oman has uncovered new deposits in coastal areas to the country's west. With the Omani government taking steps to reduce exports of raw minerals, in a push to increase investments in mineral processing and value addition, the country's chrome ore deposits are key to sustaining the growth of Sohar's growing ferrochrome smelting industry. As of 2013 four ferrochrome smelters were in various stages of development in the Sohar Free Zone, representing an investment of around OMR100 million. Together, these smelters will produce an estimated 500,000 tons of ferrochrome annually, some of which will eventually be further processed in downstream units that will also be developed in the free zone.

In 2014, Mawarid Mining LLC, the mining and exploration arm of the MB Group of Companies unveiled plans to develop an advanced underground mine to extract copper concessions in the Batinah North Governorate. According to company executives, the proposed Ghuzayn Underground Copper Mining Project could yield up to 10 million tons of sulphide over a ten-year period. This kind of underground mining reflects a shift in operations for the company. Currently, the company produces copper from the Mandoos mine— an open pit mining operation—located about 45 kilometer from Sohar. Unlike its open pit operations, Guzayn-3, where the massive ore body has been discovered, is below ground. The deposit, estimated to hold millions of tons of volcanogenic massive sulphide ore deposits (VMS), extends some 300 meters underground.

Another development set to shape the industry in the coming years is the purchase of a 51% stake in the Omani gypsum-mining firm Awam Minerals LLC, by Indian-owned UltraTech Cement Middle East Investments. The acquisition underscores the growing importance of Omani gypsum on the global market. Sites owned by Awam Minerals will serve as a captive mine for UltraTech Cement's network of cement plants in India.

Even Oman Oil Company is getting into mining, starting with the signing of a MoU in 2014 with Mawarid Mining and Oman Mining Company to develop the Yanqul Copper Project. The project is located 50 kilometers north of Ibri, in the Al Dhahira governorate. Following the completion of a feasibility study, the oil company plans to invest an equity stake of 41%. The remaining equity will be divided between Mawarid Mining, with 49%, and the Oman Mining Company, with the remaining 10%.

BUREAUCRATIC CHANGE

In 2014, His Majesty Sultan Qaboos bin Said issued Royal Decree No. 49/2014, forming the Public Authority for Mining (PAM). The key articles of the decree are: PAM is affiliated with the Ministry of Commerce and Industry. Enjoying financial and administrative autonomy, it has the power and eligibility to own, manage, and dispense of fixed and moveable funds. The Governorate of Muscat is the locus of PAM administration, with additional branches in other governorates where required. The PAM Chairman of the Board of Directors issues regulations on policy implementation. Decree No. 49/2014 heralds the transfer of powers and prerogatives, allocations, and assets from the Directorate General of Mining at the Ministry of Commerce and Industry, to the PAM. This establishes a more specialized authority to guide Oman's mining operations, as they become an increasingly important part of the country's economy.