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New Oman gold and copper finds seen boosting mining sector

MUSCAT Recent discoveries of gold and copper in Oman have raised hopes of a revival of mining in the Gulf state which centuries ago supplied the metals used to adorn the fabled golden courts of the Queen of Sheba.

Archaeological digs in the northern city of Sohar have revealed mines dating back to the 10th century BC and which produced around one million tonnes of gold and copper.

The region was mined well into the 20th century and the state-run Oman Mining Company (OMC) exported 20 million tonnes of minerals, including chromite, copper, cobalt, silver, lead and nickel from 1983 to 1994 before the sites were depleted. Now, the discoveries of potentially commercial quantities of gold and copper in the north have renewed interest in the industry, and independent oil producer Oman is eyeing foreign investment in the sector to help it diversify its income away from oil and gas sales. In 2000, the government granted exploration rights to Japan's Metal Mining Agency and the local National Mining Company (NMC). In April, NMC discovered 2.5 million tonnes of gold and copper at Wadi Hatta in the north, near the border with the UAE. General Manager Bob Close estimates the deposits to be worth $100 million and believes there is plenty more to be found.

'We have only scratched the surface. There's a lot to be found,' Close said. 'We have only explored five per cent of our concession. There could be as much as 30 million tonnes of gold and copper deposits to be found.'

Despite the upbeat outlook, industry experts say restrictions and red tape continue to hindernvestment in the mining sector. They urged the government to approve an eagerly-awaited mining law that is still with the cabinet. 'Oman has a glittering history of mineral exports. We can't understand why the new mining law is not out yet to seriously revive the sector,' Jihad Ahmad, local representative of Japan's Metal Mining Agency, said.

The Gulf Arab state said last year it was reviewing mining laws which would allow private investors 100 per cent project ownership following the agreements it signed with NMC and the Japanese company.

Hilal Al Azri, director general of minerals in the Commerce Ministry, said the law would considerably reduce costs and royalties as well as make mining a profitable enterprise.

A mining application now costs 25,000 rials ($65,000) and a prospecting permit 50,000 rials. Royalties range from two per cent on the net value of industrial minerals to 15 per cent on metal minerals.

'We are paying about 10 times the rate most companies would pay elsewhere in the world in licensing. They should make it easier by reducing bureaucracy for investors to explore and make profit (from) their discovery,' said NMC's Close.

'Moreover, investors need more freedom to select the areas they want to explore instead of the sites being chosen for them,' he added.

Restrictions on doing the actually mining also apply, further hindering development plans.

The government's OMC is the only firm currently allowed to mine. It produces a meagre 800 kg (1,764 lb) of gold a year in Yanqul in the north and refines imported copper from abroad at a rate of 25,000 tonnes a year.

Plans to privatise the firm were shelved two years ago.

'The company does not have the modern technology nor the know-how necessary to seriously mine for minerals,' said Rashid Amour, an Omani economist at Sultan Qaboos University.

A 1997 government-sponsored survey showed mineral deposits covering an area of up to 4,000 square km (1,545 square miles) but experts say Oman needs to provide businesses with much more information if it wants them to invest.

'What we have now is only rudimental statistics which won't help us to seriously attract foreign investors,' said Khalid Al Rawahi, minerals researcher at Sultan Qaboos University.

Industry sources said Oman had drafted the new mining act as part of efforts to remove obstacles to its entry into the World Trade Organisation, which it joined in October 2000.

Current laws require foreigners to set up projects with local partners, but Oman increased foreign ownership rights from 49 per cent to up to 70 per cent in its bid to join the WTO.

Oman is trying to diversify revenues away from crude exports, which make up 70 per cent of its income. Government statistics show Oman earned 30 million rials in 2000 from minerals. The mineral earning for 2001 has not yet been published but it was 27 million rials up to October.