Thursday, April 24, 2014

MENA Mining (xi): Yemen


MENA Mining (xi): Yemen

 Yemen is a country that now is facing an acute economic distress. Discussing political events is not my task here, and this table shows the current situation:

Source: © World Bank Doing Business in the Arab World 2011

More information can be acquired from Doing Business in Yemen 2011 by World Bank

I guess that this paragraph from the Cantex Mine Development Corporation’s Website may be relevant to describe what is going on:

“In the media Yemen has (at best) a tarnished image. It seems every week of late one hears of the conflict in the northern reaches of the country, separatist movements in the south, Al Queda training centers… Whilst these events are factual they present a very skewed image of what is actually happening on the ground.”

Geology of Yemen is in detail described by the Petroleum Exploration and Production Authority (PEPA) and on this page of Ministry of Oil and Minerals.

Beautiful INTERNATIONAL GEOLOGICAL MAP OF THE MIDDLE EAST (reproduced is a part of it) can be downloaded from this resource

This Mining page of the General Investment Authority states:

“The extensive number and measurable reserves of Yemeni rocks and minerals provide opportunities for a variety of industrial use products. Metallic mineral reserves are possibly the most lucrative, with tones of Gold, Zinc, Lead, Silver, Copper, Cobalt, Platinum, Iron and Titanium already discovered and partially mined. Non-metallic minerals, including Limestone, Dolomite and Gypsum also provide profitable investment opportunities.”

Here is the slide that portrays the mining operations:

Source: Yemen Mining Policy Reform: A Key To Future Mineral Resources Investment  Dr. Gaber Ali Al-Sanabani, Acting Country Officer, World Bank at The 3rd International Yemen Oil, Gas & Minerals Conference

It is obvious that most of the operations are running in the North-West and Western parts of the country.  In fact Canadian Cantex Mine Development Corp. has a special presentation : : North-West Yemen. Where Success Need not to Be a Dream where it analyses all operation and in particular provide these results.

Source: North-West Yemen. Where Success Need not to Be a Dream. Cantex, 2010 The 3rd International Yemen Oil, Gas & Minerals Conference

The non-hydrocarbon minerals situation is described with this official summary , which is not up to date. Ministry of Oil and Minerals provides the same not updated information on mining companies operating in the country. Here are some:

ZincOx  Resources Plc . The exploitation and development rights to the Jabali zinc deposit are owned by Jabal Salab Company (Yemen) Limited (“Jabal Salab”), in which ZincOx holds a 52% interest. The balance (48%) is held by Ansan Wikfs Investments Limited, a company owned by a prominent Yemeni business family. The projected total cost of US$ 216 million. Information on minerals may be found on this MINDAT pageHowever, the latest studies show that there is presence of Zn-rich dolomite phases and zinc occurring in dolomite cannot be processed economically with today's methods. The company suspended this project“as a result of the uncertain political and security situation in Yemen, the Board determined that none of the Company’s share of its investment in the Jabali Project (£52m) could be recovered with absolute certainty”

One of the companies with a long story of operations in Yemen is Cantex Mine Development Corporation. Detailed description of these operations is found on the Website, as well as the latest update in Interim consolidated financial statements October 31, 2010. Some of them are:

- cooperation with  Vale International SA  in regards to  Suwar, Wadi Qutabah and Al Masna nickel, copper, cobalt and platinum group element projects;

- activities on cooperation of Cantex with Cheetah-Yemen Holdings Ltd. regarding Al Hariqah gold project;

- cumulative expenditures of Cantex on Yemen programs reached $ 22.384 million as of October 31, 2010

Thani Dubai Mining Limited - a wholly owned subsidiary of a privately Thani Investments LLC, based in Dubai, United Arab Emirates,  is currently developing a number of concessions. One of them is the Wadi Medden, located near Al Mukalla ( prefeasibility stage). In 2010 SRK Consulting defined measured and indicated reserves of least 2.2 million ounces. This year Thani announced that the new drilling results have indicated the probable presence of an additional 2.7 million ounces. However, the operations are a long way from the beginning and it is estimated that an expenditure of US$300 million is required until production starts. This technical report provides details of electromagnetic survey at N’teisha gold occurrence (a part of Wadi Medden).

The Arab Mining Company - a joint Arab company headquartered in Jordan, is exploring manganese occurrences in al-Thania area, Marib province. It showed that manganese content is 32.4% - 45.8% and reserve crude material in the concession area is 30.2 million tons.

And finally, a few notes on the investments and incentives for investors.

Two main Laws, the Investment Law No. 22/2002 and the Free Zone Law No. 4/1993 are determining Yemen’s investment environment.

IFC/Yemen Mining Policy Reform ProjectSince September 2006, International Finance Corporation's (IFC) regional advisory service agency, thePrivate Enterprise Partnership Middle East/North Africa (PEP-MENA) jointly with the Ministry of Oil and Minerals, is conducting efforts to develop the country’s mining industry. In 2008, first results were achieved, including an internationally competitive fiscal regime in the form of a mining tax section for the new Income Tax Act. In addition, a Mining Law was drafted, redesign of Mining Law/Regulation was conducted. All these materials were submitted, and this past May the Government of Yemen approved draft regulations on the Law of Mines and Quarries; issued directives for the completion of legal procedures to release the regulations. The new law reflects the best international practices that meet demands of local and foreign investors alike with the mining legislation in neighboring countries.

The main characteristics of the investment climate are as follows:

·                  Arab and foreign investors are given the same treatment as Yemenis.

·                  Simple and easy administrative procedures for obtaining an investment license.

·                  Guarantee of repatriation of investment capital and profits.

·                  Exemptions from custom fees and taxes on fixed assets.

·                  Exemption from taxes on profits for seven years with a possible extension up to 16 years.

·                  Exemption from taxes on real estate, capital and contract authorization fees.

·                   Exemptions from returns as a result of technology utilization licenses for five years.

·                  The right to own land and buildings.

·                  Management of the project at the investor's discretion without any interference.

·                  Adequate guarantees against nationalization, expropriation or sequestration of projects, or the freezing of assets unless done through legal means

Useful Links:

·                  Yemen Business Tax Highlights 2011 by Deloitte

·                  Country Profile: Yemen, August 2008 -- Library of Congress – Federal Research Division

·                  Yemen Economic Update Winter 2010

·                  Yemen Economic Update – Spring 2009. The World Bank

·                  Mining Companies in Yemen, November 2008. Ministry of Oil and Minerals

·                  Doing Business in Yemen © 2005 Pytheas Limited

·                  Yemen Country Note Disaster Risk Management Programs

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