MINING

Oman 2018 | INDUSTRY & MINING | INTERVIEW

While huge opportunities abound for developing mining in the coming years, much will depend on the sector's ability to work with the government to improve transportation networks.

Dean Cunningham Dr. Salim Hamed Al Busaidi

What can the Public Authority for Mining (PAM) do to boost the sector?

Dean Cunningham The new mining law will give clarity and accelerate the speed at which licenses are granted. A discussion with the government and private sector needs to happen, whereby we can openly have a debate so that both parties understand each other's long-term requirements, agendas, and what we would both like to achieve. As far as transporting gypsum, even if we build a railway line, it will take another five to 10 years before it happens. Nor can we simply build a railway network in Salalah just for the gypsum industry; it is expensive, and the return on capital is not there. Because of this, we need to find other options of how to try and bring the transport costs down and find solutions on the logistics side that will bring significant growth to the Omani mining market in this area.

DR. Salim Hamed Al Busaidi The government really needs to focus on what port facilities are needed by the private sector to be able to export mining products from Oman. Mineral commodities differ in their shipping requirements. For example, if we are exporting loose material we need to handle this in a particular manner. It is possible to run a conveyor through the sea so there is no need for the ship to dock. It is important to have these facilities. This requires government departments such as the Ministry of Transport to address the needs of companies to export their products while seeing which available products in Oman need to be transported. For example, if you transport ferrochrome it needs to be containerized, but you cannot put limestone into a container. Gypsum goes directly into the ship's hold. Some facilities have been introduced at the Port of Salalah to load loose materials onto ships using special tools and equipment, but this option is not available at Sohar Port yet. Loading via conveyor belt is better and easier.

What are your main objectives for the coming year?

DC For us, 2017 has been a tough year. There will be further cost reductions across the group, possibly delaying the capital expansion and pushing it out to 2018. Kunooz will also have to find smarter ways to run its business so that, ultimately, when the market does turn, we can focus on giving something back to our shareholders. In all of our businesses we are looking at multitasking across the board. We are also improving the utilization and efficiency of the existing staff in our businesses. In my experience, when the revenue line starts to pick up because commodity prices pick up, two or three months later our cost line will start to follow, which is why we have started a strategy to prevent the cost line from picking up. Though we might increase costs in some areas, I want to keep costs relatively stable. That will be the challenge for me in any revenue-improving environment. That is the one area I will put a great deal of effort into in the long term to manage costs.

SHAB The sector will maintain its growth, as the mineral opportunities in Oman are quite promising. There is always a new product being introduced to investors. I hope to see magnesium coming up in Oman one day. China is currently the main producer of this and has reduced the price significantly by lowering environmental protections, particularly in the case of CO2 emissions, whose restrictions are not the same as in Europe. The Chinese have consequently reduced the price of magnesium from USD6,000 per ton to USD2,000 per ton. Another idea is to have magnesium metal production in Oman. If there is demand and the right studies are done first, then perhaps Oman could also be a magnesium producer. Maadin Enterprises would certainly be interested if magnesium existed in commercially viable quantities.