04 September 2016
Muscat - On the back of large investments by the private sector, the mining sector contribution to the national GDP is expected to witness remarkable growth in the coming years. "Mining is one of the five sectors acknowledged for driving growth in the long term and helping the government in its economic diversification strategy. The sector is a major contributor to the national GDP as well as employment generation", said Salim Abdullah al Rawas, chairman of Kunooz Oman Holding.

Talking to the Observer on the sidelines of signing an investment agreement with Oman Investment Fund (OIF), Al Rawas said that while GDP originating from other sectors contracted in the previous years, mining and quarrying sector recorded positive growth in 2015.

Although the figure of the amount in the agreement was not announced, OIF, a sovereign wealth fund, acquired 20 per cent of shares in Kunooz on Thursday.

On the occasion, the company also announced its plans to float 25 per cent of its shares on the Muscat Securities Market as part of initial public offer (IPO) in the first half of 2017. Oman Arab Bank has been appointed financial adviser.

Kunooz Oman Holding was incorporated in January 2014 following the consolidation of five subsidiaries and two associates within the mining, quarrying, transportation and construction materials sectors.

Plans are under way to set up mineral processing and refining facilities in the Port of Duqm's industrial zone mining cluster.

Al Rawas said that the new mining law to be announced by the government is expected to provide a major overhaul of the Sultanate's mining regulations.

"A comprehensive strategy with more transparency for the sector will definitely broaden the base of the sector and its contribution to GDP", he said.

GDP from mining in Oman is expected to be RO 147.46 million by the end of this quarter, according to Trading Economics global macro models and analysts' expectations. In the long-term, the GDP is projected to trend around RO 194.05 million in 2020.

Al Rawas said that the government should have a fast-tracking policy which should not be bureaucratic and time-consuming.

The government is strongly committed to diversifying its economy in order to reduce its reliance on oil exports; the mining and downstream capabilities of Kunooz, therefore, are set to play central role in this strategy.

The inclusion of OIF as a shareholder is set to increase investor confidence, and strengthen Kunooz Oman transformation into a public company.

"A successful IPO can improve Kunooz Oman access to capital, new mining opportunities and help contribute to the Sultanate's strategy to reduce dependence on oil", he said.

In the beginning of this year, four state-owned investment branches of Oman have formed a RO 100-million mining development company -- Mining Development Oman to stimulate the country's mining sector.

While the state firms hold 60 per cent of the shares, the remaining 40 per cent shares equivalent to RO 40 million is to be obtaining from the market through IPO.

Oman's mining sector foresees notable growth in the next few years, following the discovery of sizeable reserves of minerals, gold, copper and rare earths, which will significantly boost mining activities and attract investment to the Sultanate.

© Oman Daily Observer 2016