MENA Mining (x): Oman - 2

THIS ORIGINAL POST WAS PUBLISHED August 05, 2011

MENA Mining (x): Oman - 2

This is a continuation of the previous post.

Copper/Gold

Around the third millennium BC Oman appears in various documents as “Majan” a land whose seafaring people carried the commodity precious at the time: copper. Copper was in great demand in Sumerian cities, which referred to Majan as “The Mountain of Copper”. The country has copper reserves of around 4.3 million tons at 2.2% Cu and resources of 21.6Mt at 1.8% Cu.  Despite copper mining in Oman for about 5,000 years, only recently it was discovered that some, but not all, copper deposits in Oman additionally contain gold.  The average size of the Oman copper deposit is about 8 MT each, and a gold-rich deposit of this size would contain about 150,000 tons of copper and 6-8 tons of gold.  Thus, gold has remarkable potential in Oman, which is the only Gulf country with substantial gold reserves other than Saudi Arabia.

Modern copper mining started in 1983 at Lasil, Aarja and Bayda with fully integrated mine, smelter and refinery. It totaled production of 14,000 tons of electrolytic copper annually.   The Wilayat of Yanqul contains copper ore in commercial quantities and large deposits are expected on the Batinah coast. Many other mountains are sitting on huge copper reserves, awaiting better extraction techniques. This June it was reported that recent survey in Mahab 4 and Maqail South Blocks of Sohar area revealed the possibility of substantial deposits of copper – which is a new page in development of mineral.

 

Mawarid Mining  was established in 1997 as National Mining Company and is the first private sector mining company to engage in the exploration and development of copper/gold.

Operates several open pit copper mines and processes ore at its Copper Concentrate facility in the Al Batinah region;

Major mining and processing operations are located in the Al Batinah region

Ore occurs as shallow open pit copper massive sulphide deposits. Mines have a cut-off grade of 0.3% copper and average grades of 2-3% copper.

Copper ore is hauled by trucks to Mawarid’s Lasail concentrator (20 km West of Sohar): upgrades mined ore (2-3% copper content), to 18% - 24% copper grade;  throughput of 105 tons/hour with 90% availability.

Concentrate is sold for further processing to the international market for export and to Oman Mining Company LLC  that operates the Lasail smelter and refinery complex adjacent to the concentrator.

In 2010 an US-based Gentor Resources Inc, started a program to develop copper deposits in the in the Samayil Ophiolite, northern Oman. It has initiated initial drilling program at copper/gold properties near Sohar.

A Muscat-based Al Thuraya Mining LLC is a joint venture with Indian Jindal Aluminium Ltd. operating since 2008 is presently in the process to find out the potential on the eastern side of the Northern Mountains of Oman for copper.

 Australian mining Alara Resources Limited explores two projects: Daris Copper-Gold in the Sohar area in a Daris Resources LLC joint venture with Al Tamman Trading Establishment LLC.  Alara will invest up to a total of $7 million for 70% shareholding. Alara also secured rights to earn-in up to a 70% interest in the Awtad Copper-Gold Project that is adjacent to Daris.

Alara is also forming a new joint venture company, Alara Resources LLC (AlaraCo) with Sur United International Co LLC, to identify, secure and commercially exploit other resource projects in Oman.

Manganese

Manganese production in Oman is conducted on a low scale with modest demand. As it was reported last June the mainstream price of manganese ore 30% (28% rejection) is in the range of USD4.4-4.5/dmtu CFR China. The same source cites two producers with monthly production of 1,000 -2,000 tons of manganese ore 30%(28% rejection).

Potentially promising deposits are located in the Sharqiya region of Oman – they are developed by  Al Tamman Trading Establishment LLC on concessions in Al Mintirib Wilayat,  Mintirib, Al Qabil, Al Mudhaibi and Jaalan. A beneficiation plant is slated to be established in the Sohar Industrial Estate. This page describes the manganese operations of the company.

Minerals City

Takamul Investment Company, a majority Omani government owned investment vehicle, plans to establish a Minerals City in the Sultanate to serve as a hub for a number of minerals-based processing projects. The Mineral City will have three major minerals derivatives projects: a magnesium-ferrosilicon project (estimated cost: $250 million); a 40,000-tonne capacity silicon carbide processing facility ($40 million - in partnership with SNAM Abrasives of India); and a $450 million project for a salt/soda ash project (in partnership with the Tata Group).

Vale in Oman

Considering strategic location of Sultanate, and abundance of gas, the world top iron ore miner Vale established a special relationship with Oman.

 The first Vale's production unit  line in started its operations last June at Sohar Industrial Port and the integrated steel complex of Jindal Shadeed Iron and Steel is scheduled to soon begin using Vale's iron ore pellets in iron casting for structural work, automobiles, airplanes and ships. The second unit will begin production by the end of 2011; two units will have an annual production of 9MT. Vale owns 70% of Vale Oman Pelletising Co, Oman Oil Company – 30%. The pellet plants are located in an area where Vale has a distribution center with capacity to handle 40 Mtpy.

Source: WOMP. The Mining E-Journal.

Due to the lack of basic iron ore in the Sultanate, the project imports basic raw iron materials from Brazil, while benefiting from locally produced limestone and natural gas. This June it was announced that Vale has set up a new company in Oman to explore mining opportunities in the Sultanate - Vale Oman Minerals Exploration; that is scheduled to conduct geophysical tests for potential base metals.

Doing Business and Mining Investments

The Oman Chamber of Commerce and Industry provides a special page for the subject matter and you may download this Doing business in Oman

Oman is in the top 30 ranking list as to its legal provisions for doing business:

 

Source: Investment Climate & Opportunities by The Omani Centre for Investment Promotion and Export Development (OCIPED)

Mining activities in Oman are governed by the Mining Law (Royal Decree 27 of 2003) that covers all major issues. As an example, for establishing joint ventures:

Ministry of Commerce and Industry issues a mining concession/license to an Omani company or individual

Local license holders can partner with foreign investors if the license holder lacks the technology/resources to develop business

A mine exploitation agreement is executed.

 The Oman Law Blog has this useful explanation: Company Formation FAQ’s

This slide summarizes incentives for miners in Oman:

 Source: Gentor Resources - Copper in Oman TSX-V Listing - July 2011

Useful links:

• Laws and Regulations on Foreign Investment  in the Middle East : UAE, Saudi Arabia, Qatar, Bahrain and Oman
• INVESTOR’S GUIDE -- Prepared by:  Economic Research Department 2007
• Country factsheet. Establishing a business in Oman. December 2009
• OMAN - THE DEVELOPMENT EXPERIENCE AND INVESTMENT CLIMATE – Ministry of National Economy, 2008
• Doing Business in Oman – U.K. Trade & Investment  2010
• Doing Business In Oman: A Country Commercial Guide for U.S. Companies
• FAQs for Investment detailed description of investment process
• Sultanate of Oman Legal Provisions Compiled by: Embassy of Switzerland in Saudi Arabia
• THE LAW OF INCOME TAX ON COMPANIES
• THE LEGAL ASPECTS OF DOING BUSINESS IN OMAN  - Primer:  Said Al Shahry Law Office’s “A Legal Guide To Doing Business In Oman”

MENA Mining (ix): Oman - 1

THIS ORIGINAL POST WAS PUBLISHED August 03, 2011

MENA Mining (ix): Oman - 1

Oman is a country that is strategically located outside the Persian Gulf, and has a very promising geologic structure.  By 2020 the Sultanate of Oman stems to diversify its economy by means of development of new industries, and among these plans substantial attention is focused on mining. Development of industry would require a lot of materials that are produced from extracted natural resources, thus the Government encourages investments in mining.

This beautiful presentation: Sultanate of Oman by Gentor gives a short historical and present day overview, while a special Gentor’s Website section provides technical geologic data

Commission for the Geological Maps of the Middle East provides detailed description of the geology of Oman with this map:

 Source: Geological Maps of the Middle East

Here I will look on some crucial points of non-hydrocarbons mining industry. Surprisingly enough such a small country is endowed with good mineral resources due to its exclusive geologic composition - due to the presence of the world’s largest intact and best-exposed obducted Samail ophiolite. Metallic minerals are represented with gold, chromite, copper, nickel, cobalt, vanadium, platinum, palladium, lead, zinc and other precious metals (An interesting presentation can be found here – although it discusses oil and gas, but gives a good understanding of geology:Hydrocarbon Potential of  Middle Eastern Basins of the Gulf. Geology & Geopolitics mix!). However, the potential of mining sector still remains unlocked and the biggest task now is to find out and exploit what resources are the most feasible and can be exploited to their full potential.

During the past 40 years mining industry in the Sultanate experienced spectacular growth. As to the available data (as of May 2010):

·                  Production of minerals and rocks, increased to RO 168.87 million in 2008 as against RO 95.86 million in 2007; 

·                   Number of quarrying and mining operations going on in Oman stood at 150 for fill material, 71 for chromite, 183 (crusher), 57 (marble), three (sandstone), four (each for gypsum, laterite and clay), two (each for copper and limestone for cement and limestone for export), and one (salt and dune sand)

·                  Copper is planned to be mined in Shinas, Liwa, Ghuzayn, Washihi, Al Ajal, Rakah and Hayl As Safil deposits

·                  Four companies are conducting exploration for manganese.

·                  Several companies have received exploration licenses: five for laterite, four for manganese, three for gyspum, two for dolomite, 12 for copper and one each for silica sand/quartzite and limestone.

 Chromite

At this time chrome ores seem to be one of the leading investor attractions for non-hydrocarbons miners.

The world reserves of chromite ores are estimated to be 1.52 billion MT. About 2% of these reserves (30 million MT) are located in the Sultanate of Oman.  Mining was active since early 1980s, but metallurgical grade chromite ores started to be exported only in recent years as response to rising demand from China and general shortages of ferrochrome worldwide. The country has about 450 chrome deposits and currently 71 mining operations are going on. As the result of low production costs, all year operations due to good weather, and excellent infrastructure present,chromite ores from Oman have the lowest production cost as compared to ores from other countries. According to the Ministry of National Economy, output of chromite ore surged from 407,822 MT in 2007 to 784,082 MT in 2008.

Chromite Ores are mainly located in the mountainous region of Sohar, Somail and Sur. The quality of metallurgical grade chromite ores from Somail is the highest in terms of Cr2O3 content. The grade from Somail region is 32% - 42%. The most abundantly available grade is the 34% Cr2O3 content. Higher grades -  45% Cr2O3 are available in limited quantity.

  Source: PGE Abundance in Chromitites of the Northern Samail Ophiolite, Oman

One of the appealing to investors features of Oman is the presence of abundant mid-grade chrome ore deposits and availability of cheap energy – thus making the Sultanate an ideal spot for location of ferrochrome smelters. This is further enhanced by excellent transport and logistics infrastructure that provides access to the world consumer markets.

Al Tamman Trading Establishment LLC (a wholly owned subsidiary of diversified Omani business house, Muscat Overseas Group) is the biggest producer and exporter of Omani chrome ore, mined from two deposits at Samad A’Shan in Al Mudhaibi wilayat, and at Wadi Rajmi off the Sohar-Shinas road.  The chrome ore is filled into shipping containers and exported out of Port Sultan Qaboos, primarily to Chinese and Indian markets. This page describes the chromite operations of the company. Records maintained by the Port Services Corporation (PSC), which operates and manages the Muscat port, around 1,000 containers filled with lumpy and concentrated chrome ore are shipped by Al Tamman out of PSQ every month. The first ferrochrome smelter in the Sultanate is being constructed in a joint venture between Al Tamman Trading Establishment and  Indsil Hydro Power and Manganese Ltd at the plant at Sohar with estimated commencement in July 2012. This will be a 75,000 MT per annum capacity ferrochrome plant with estimated investment of $70 million. As part of the ferrochrome smelter project, Al Tamman Trading Establishment is also planning to develop a 100,000 MT capacity beneficiation plant for low grade chrome and manganese ores.

Oman Chromite Company SAOG (founded in 1991; based in Sohar) engages in mining chromite deposits - drilling, blasting, excavating, and transporting chromite ore from the mountains near Sohar. The Company produces different types of chrome ore, including metallurgical grade ore and refractory grade ore in different sizes (up to 25 millimeters) and specifications.

Gulf Mining Group has played a major role in establishing Omani chrome ore in the world market. Starting off on a modest scale in 2006, it is now one of the key producer and exporter. The Group offers chrome ore in lumpy and fines form with chrome content ranging 24% - 42%. Oman’s first chrome ore beneficiation plant is managed by the Group at Wadi Mahram in Wilayat Samayil; intake capacity of 15,000 MT per month.

 Hatton FZE operates one of the largest chromite quarry in Somail area, south of Muscat, Oman. The chromite ores are of various grades and ranges from 30% to 42%. The production capacity is 2,000 MT per day or 40,000 MT per month or 480,000 MT per year. Since Oman is a desert and almost never rains, production can continue year round.