Mining propels Oman’s diversification and decarbonisationMarch 16, 2023
Nasser Al Maqbali, CEO of Minerals Development Oman (MDO), talks to The Energy Year about the future development of Oman’s mining sector, why the country is well positioned to capitalise on its mineral resources and MDO’s main initiatives and projects for remaining a leader in the sector. State-owned MDO operates as the minerals wing of Oman’s Ministry of Energy and Minerals.
What are your key expectations for the future development of Oman’s mining sector?
In the Oman 2040 Vision, the mining sector plays a central role as it has been identified by the government as one of the strategic sectors for the country’s diversification strategy. Among non-hydrocarbons sectors contributing to the nation’s GDP, it recorded one of the most noticeable growth rates in 2022.
Oman has a significant commercial and unexploited wealth of metallic and industrial minerals that can establish modern upstream and downstream mining industries. The country holds sufficient quantities of strategic minerals such as limestone, dolomite, gypsum and silica that can meet regional demand for decades to come.
The country has among the largest and best limestone, silica and dolomite reserves in the world. These minerals can be used, respectively, for pharmaceuticals, for the construction of solar panels and electronic chips, and to produce magnesium, which is required for steel and aluminium production. Moreover, Oman is among the world’s larger exporters of gypsum, holding huge resources.
When it comes to metallic minerals, there is a considerable reserve of copper and chromite. For chromite, we are one of the key players.
What core elements can Oman count on to capitalise on its mineral resources?
Besides the quantities and the high quality of minerals we have, Oman is also strategically positioned to capitalise on them. The country is well connected to the main international markets such as the GCC, India, China and Europe thanks to the well-developed ports network (the ports of Sohar in the north, Duqm in the centre and Salalah in the south), free zones, industrial areas and the domestic infrastructure network.
In addition, the sultanate offers a spectrum of benefits: we have one of the most attractive tax systems, and the Foreign Capital Investment Law offers an attractive scheme for investors. Finally, the country has many free trade agreements in place, including with the US and the EU, and is in discussions to establish one with India too.
What are the main challenges preventing MDO from becoming an end-to-end player in the mining value chain?
At the moment, we are running the largest airborne survey programme in the county to build solid and reliable mineral databases in Oman in parallel with setting up the raw materials processing industry, which will enable us to provide clients with refined high-grade commodities.
However, mining projects take time. For example, it can take up to 10 years for copper projects to advance from the exploration phase to the development and operation phases. The other challenge is the environmental concerns and any social impacts on local communities. We are keen to run our mining projects responsibly without disturbing the social stability in the areas we are working on.
We want our projects to contribute positivity to the welfare of the people, but raising community awareness about what the mining process entails in terms of exploration and drilling takes time and intensive efforts. The last one revolves around competition, as nowadays the mining requirements around the world are at their peak, which means that the demand is skyrocketing for skills, consultancy and contractors and we are competing globally for the same pool, which requires us to be as attractive as possible.
How do you think Oman and MDO can play a role in the shift toward more sustainable means for the energy industry?
Oman can play a major role in green energy, from hydrogen to solar, and if we can exploit this “green power” supply coming from the mining sector, we will be in the position to target a niche market. As mining is the second wing of the Ministry of Energy and Minerals, MDO is well centred to help the country in its decarbonisation journey. We can do so by backing more sustainable energy means – copper, for example, is required for electricity transmission as it is an excellent conductor, and it is used heavily in electric vehicles. We can also promote solutions that can reduce environmental impact.
Peridotite is found in abundance in Oman, and it is known for its natural capability of removing CO2 from the atmosphere through what is known as CO2 mineralisation. This serves as a case study for many places around the world with similar geological formations that can ensure harmful emissions stay out of the atmosphere. We have joined a group of business partners to study the possibility of developing projects in Oman as part of global efforts to reduce emissions.
What are MDO’s main initiatives and projects to support its position as the leading mining company in Oman?
The Ministry of Energy and Minerals has granted us around 22,000 square kilometres of concession areas which were endorsed by royal decrees that were issued last December. We are currently deploying a team to do an airborne survey of several areas, a team conducting the geochemical analysis and another one carrying out exploration drilling, targeting metallic minerals such as copper, gold and chromite. Our contracted labs are working at full steam, and we are quite optimistic about what we will find. Our commitment can be seen in the value of the investment, which is around USD 20 million just for the first exploration phase.
Then, we have many ongoing projects. For copper we have advanced greatly in two projects: the Mazoon project and Block 4. One is already at the FEED stage and the other has almost completed the feasibility study.
Regarding chromite, we own 25% of Oman Chromite Company and we are also developing a project for chromite. In industrial minerals, we have a big project called Shaleem, which we began developing in 2017. After having conducted the geological studies, we found large gypsum reserves and high-purity limestone and dolomite – we are talking about billions of tonnes of these minerals, and we are looking at developing them using our own logistics solutions.
Moreover, we are considering several commercial opportunities to develop industrial salt. One of the projects is developed in collaboration with PDO and is related to the study the possibility of producing different minerals including industrial salt from deep, highly saline waters associated with crude oil extraction. For every barrel of oil, there are nine barrels of water produced. This water is harmful to the environment as you need to reinject it into the aquifer and the saline content of water produced from deepwater extraction is almost three times that of seawater.
This is a pilot, more a research project, which we are conducting to understand whether we can produce something useful out of this water, exploring possibilities for how to reduce its environmental impact and trying to find solutions that can help not only Oman but the whole oil industry, as it is a global problem.
How active are you in promoting the In-Country Value (ICV) programme?
MDO involves small and medium-sized enterprises in almost everything it does. We are engaging with and developing several local consultancies that work in minerals.
Most of the lab, drilling and operations services we do are delivered through SMEs and joiner miners in Oman. We train local companies to conduct operations on the field, helping them to improve the quality of their services and HSE practices and enhancing their work experience.
Moreover, we have also established a long-term technical training programme with the Oman Institute for Oil & Gas (InstOG) to train MDO employees and other individuals from the mining field. We have developed online training for younger Omanis and students. Additionally, we launched the Jadara Internship Program, which offers a six-month training programme for graduates from technical and business majors.
Where do you see the mining sector in Oman in the next few years?
The potential for Oman’s mining sector is huge and all the core ingredients for success are on the table: the mineral wealth, the infrastructure and the country’s strategic position. MDO is at the centre of developing the sector, and I assess that there are important opportunities for both local and foreign investors.
We are also optimistic and confident that we will benefit from all the experience the Ministry of Energy and Minerals – formerly the Ministry of Oil and Gas – gained from the oil and gas industry over almost 55 years. This experience will be applied to create a solid regulatory framework, aiming to attract investors and lay the foundations of a sound ecosystem that will enable the minerals sector to grow and thrive in the future.
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