Mining for profits increases foreign investment in Oman

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• Sultanate expects mining revenues to hit $634m by end of year
• Mineral resources remain largely untapped
• Australia-based Alara partners to operate copper-gold mine

Oman is emerging as a hub for industrial minerals with dozens of mining sites covering an area of 2,000 sq km. But experts believe the sector’s true potential will be realised over the next decade. 

Mining is one of the Omani government’s focuses under its economic diversification programme.

It has attracted interest from both foreign and local operators after the sultanate became the first GCC producer and exporter of ferrochrome, an alloy of chromium and iron. 

Omani non-hydrocarbon exports are projected to reach an all-time high of 26.9 percent of GDP in 2023, according to Fitch Ratings, bolstered in part by an uptick in its mining sector as new projects such as the Al Washihi Majaza copper-gold mine prepare to begin operations.

• Omani carbon removal pioneer wins $1.2m Earthshot Prize
• Omani steel producer to build $3bn green steel facility

The forecast coincides with Sultan Haitham bin Tariq Al Said issuing royal decrees assigning a further 12 exploration blocks, with eight assigned to virgin areas and four for mining as the country seeks to attract more investment in the sector.

In 2020, 110 new mining blocks for exploration and investment were announced, with licences issued to several local and foreign companies. 

“Mining is a relatively recent and growing part of Oman’s efforts to diversify their industry away from oil and gas,” Ionut Lazar, principal consultant, CRU Group, a global commodities business intelligence company, told AGBI.

“While relatively under-explored compared to more traditional mining destinations, we know that it is home to substantial deposits of mainly base metal polymetallic ore, including primarily copper, lead, zinc and gold.

“There have also been resources identified for chrome ore and manganese, with longer lead times for development.

“With copper and gold prices in particular set to remain attractive to new investments, it is likely that new projects will be incentivised to begin production in the next decade.”

Revenues from mining in Oman are expected to reach $634 million by the end of 2022, say Trading Economics analysts, rising to around $660 million next year and $686 million in 2024.

Oman is one of the world’s largest gypsum exporters by weight. It also holds approximately 30 million metric tons of chromite, while copper mining companies are also active in the sultanate. 

Although numerous quarrying and mining operations are underway, Oman’s mineral resources are still relatively untapped, with large deposits of metals and industrial minerals waiting to be unearthed. 

But it is the peridotite outcrops in the northern Oman mountains that have recently made headlines.

Peridotite occupies the largest proportion of exposed ophiolitic rocks which stretch more than 600km, with a width of 150km and a depth of 3km, making it one of the most abundant rocks in the north of the country. 

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Omani company 44.01 was named one of the winners of the 2022 Earthshot Prize earlier this month for its technique that uses mineralisation in peridotite to remove carbon from the atmosphere and turn it into rock. By 2040, the firm aspires to have removed 1 billion tonnes of CO2 from the atmosphere.

Unlike carbon storage, which involves burying CO2 underground in disused oil wells or aquifers, mineralisation removes it forever.

Oman has large deposits of peridotite, so carbon mineralisation could also be a boon for workers in the region and provide new roles for engineers and geologists currently working in the fossil fuel industry, said Talal Hasan, 44.01’s founder.

“The answers to the problems our planet faces can often be found in the natural world,” Hasan said.

“At 44.01, we have found a natural process that removes carbon and we’ve accelerated it. We believe this process is replicable globally.”

The sector has grown rapidly since the government established the Public Authority for Mining (PAM) in 2014 and, two years later, Minerals Development Oman (MDO) as a new holding company.

In August 2020, a royal decree dissolved the Public Authority for Mining and transferred its powers to the newly created Ministry of Energy and Minerals, with the aim of increasing competitiveness.

CRU Group’s Lazar explained that since the formation of MDO to attract investments, it is growing in size and remit.

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“Between MDO and Oman Oil, there is substantial financial muscle to promote new project development, but there is also considerable appetite for strategic partnerships with willing foreign investors,” Lazar said.

“The investment environment is relatively attractive, and foreign investors have operated well in other commodities including aluminium, steel and fertilisers.“

He added that the deposits found so far are small but good grade and lend themselves to small- to medium-scale mining, similar to operations found in neighbouring Saudi Arabia.

One company that has been attracted to the country is Australia-based Alara Resources, which is part of a joint venture to operate the Al Washihi Majaza copper-gold mine, due for commissioning in the first half of 2023. It also has exploration licences in the sultanate.

“The Al Washhi Majaza Copper-Gold Project has continued to literally rise out of the ground over the past month,” Atmavireshwar Sthapak, Alara Resources managing director, said.

“This exciting period is expected to see Alara successfully transition from being a pure explorer into a resources company holding a majority stake in a new mine producing a commodity critical to a range of production processes, in both the so-called ’new’ and ‘old’ industrial sectors.”

The company holds a 51 percent stake in Al Hadeetha Resources, a joint venture with Al Hadeetha and Al Tasnim, the first international partnership awarded a copper mining licence in Oman.

The site reportedly has over 16 million tonnes of copper resources and 10 million tonnes of mineable reserves.