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(PHOTO: RAYMOND M. COVENEY, JR. / WIKIMEDIA.ORG)

Over last few decades, Oman has been far less exposed to economic vagaries than its regional and global counterparts, principally due to its prudent economic and fiscal policies and early recognition of the need for economic diversification and strengthening of non-hydrocarbon sectors.

The sultanate’s economic diversification strategy wants to encourage high-quality domestic and foreign investment and provide a secure and stable business climate. This has included a host of incentives such as tax rates that are among the lowest in the world.

This approach has focused on areas where the country has natural competitive advantages, one of which one is mining, the cornerstone of the mineral-rich sultanate’s economic diversification plan.

Although copper mining has been ongoing in the Al Batinah region of Oman for about 6,000 years, much of the country’s mineral resources remain unexploited or underexploited.

Oman’s mining industry is a promising sector to the national economic diversification strategy, a large contributor to the nation’s GDP and a long-term employment generator.

Oman is rich in metals and minerals with extensive amount of superior quality resources available throughout the country. The mountainous region located in the northern part of the country hosts the Semail ophiolites, a huge slab of ocean crust consisting of volcanic rocks and the Earth’s mantle of almost 100,000 square kilometers.

The ophiolites are still intact. Exposed deposits have proven to contain large quantities of valuable metals such as copper, chromium and manganese as well as industrial minerals such as limestone, gypsum and quartz.

Chromium, just to name one, is a metal that has no substitute in stainless steel, the leading end-use, or in superalloys, the major strategic application. Oman holds about 2% of the world’s chromite resources in its 450 chromite deposits with more than fifty active chromite mining operations.

Over the last few years the Government’s economic policy has been focused on industrial diversification to achieve sustainable economic growth and reduced dependence on crude oil exports. The Government’s goals for economic diversification includes the contribution of the non-oil sectors to the country’s economy, increasing it to 91% of GDP and that non-oil exports increase to 13% of GDP by 2020.

Nevertheless, little attention has actually been paid to mining projects that include a commercial or technical value-added component for any of these national minerals as the Government has mainly been financing the mineral industry by investing in primary and secondary aluminum production, thus neglecting to develop the other Oman’s metal and industrial mineral resources.

Apart from economic diversification through vertical expansion in activities dependent on oil, the 9th Five-Year Development Plan has focused on the development of non-oil sectors such as mining, of which it is one of the five economic pillars and key promising sectors.

Promoted by four state-owned investment funds, the government has newly formed Mining Development Oman (MDO), a company with a capital of OMR 100m to be brought initially for 60% by the four government investment vehicles, later for the remaining 40% through investing public offerings.

As a partial investor, the venture is expected to carry out both upstream and downstream activities related to mining projects by seeking partners locally, regionally and internationally, although it has not yet elaborated specific details.

The Public Authority for Mining (PAM), established by Royal Decree in 2014, has drafted a new mining law to help attract investment and develop the sector to enhance its contribution in the country’s gross domestic product.

In the new law, PAM is focusing on offering more attention for investing in the sector, increasing the validity period of mining permits, facilitate the process of acquiring approvals, providing mining areas for investment and identifying the investment competition procedures, setting stricter penalties in regard of mining violations, giving wider powers for inspectors and law enforcement officials, providing legal protection for geological heritage and taking part in community development so as to change the people’s mentality towards mining sector.

The new mining law is awaiting approvals from relevant ministries by the end of 2017.

References: Cambridge University Press, 1980; Forbes, 2012; Fortune, 2012; Oxford Business Group, 2015; Times of Oman, 2017; USGS, 2015.