MINING

Oman 2019 | INDUSTRY & MINING | B2B

Beyond merely earning a profit, mining companies in the Sultanate are looking to create greater value, bringing greater benefits to Oman.

Nasser Saif Al Maqbali
NASSER SAIF AL MAQBALI
Deputy CEO
Minerals Development Oman (MDO)
Mohammed Yahya Al-Shabibi
MOHAMMED YAHYA AL-SHABIBI
Vice Chairman
Gulf Mining Group (GMG)

How does your business model help develop the mining industry?

Nasser Saif Al Maqbali MDO is a holding company with many subsidiaries. Some of the subsidiaries will be working with international companies and some with local. MDO may hold the majority or minority depending on the project, technology required, and the stage that a partner comes and joins MDO. That model was selected because we want to work across the entire value chain of minerals. We are a government-owned commercial company but we are also tasked to help develop the sector so that model will help us bring the required technology and finance and share the wealth with other local investors. We can build on the strength of our stakeholders in the mining industries; they have a wealth of experience so we are not starting from zero and are building from their experience as they help us with access to data. The strength also comes from the reputation in terms of their business model and investment as well as our access to technical and management.

Which mining segments are you expanding into?

Mohammed Yahya Al-Shabibi GMG is the largest chrome producer in Oman; the company has adopted a value-added component to chrome products, which is deemed mandatory by the Omani government. Instead of merely exporting raw material to international markets, we plan to expand the market segment of our products. At present, we produce between 3,000 and 3,500 tons of pure high carbon ferrochrome per month, which is exported to mainly Europe and other markets such as China, South Korea, and the US. The company is currently in the process of raising funds after acquiring a mining license from PAM to mine for potassium chloride deposits (potash), and we are in contact with international and local financial institutions for partnership and funding. Since it is a multi-phased project, the plan is to start drilling wells during the trial period, starting from 2H2018 until end-2019. Following the trial period, the quantity and the concentration of potash will be determined. Two plants will be established after the commercialization of the project: a processing plant on location, and a blending plant in Duqm to blend the potash with sulfate.

Why is the mining industry in Oman well situated for growth?

NSAM Infrastructure is one of Oman's strengths, which is why foreign mining investors come here. We have multiple ports and the road network is among the best in the world. In terms of airports, we are connected with airports in Duqm, Salalah, Sohar, and Muscat. Oman has a strategic location, situated close to India, China, and Europe. Equally important, Oman is a politically stable country and has an advantage in this area compared to many countries in the Middle East. We have no enemies and are friends of everyone. In terms of technical knowledge, Oman has a good education system and access to reasonably cheap labor. Therefore, we have the right ingredients for a successful business model in mining considering the vast amount of unexplored resources of minerals.

How will the upcoming mining law change the investment climate in Oman?

MYA All interested parties are looking optimistically at the new law. Introducing the law has taken longer than expected, but the government had to wait for the mining lab to produce complete and comprehensive results. Current regulations allow for an annual renewable license, which means that investors and financial institutions are pushed out of their comfort zones. Moreover, the law makes it more viable to use our assets and name for banking facilities, rather than relying on the mining license. Investors view a one-year license as temporary, because it may not be renewed the following year. In comparison, a five-year license would allow financial institutions to breathe and receive solid banking facilities. The new law will allow more time for investment, but if a company does not invest, the government has the right to take back the mine.