New Mining Law authorises seizure of undeveloped concessions

Muscat, April 6 – Mining licence holders are liable to forfeit their rights to their concessions if they fail to make the requisite initial investments in exploration or prospecting activities under the newly enacted Oman Mining Law — a measure that will end the longstanding practice of many licensees accused of permanently holding on these assets while doing little to harness this national wealth.
This was affirmed at a media briefing hosted last week by the Public Authority for Mining (PAM) in collaboration with Omanexpo, organisers of the upcoming Oman Mining Expo which runs from April 15-17, 2019 at the Oman Convention and Exhibition Centre. The three-day expo and companion conference, billed as the largest of its kind in the Middle East, will showcase investment opportunities in the Sultanate’s promising mining industry.
Later in a discussion on the new Mining Law, among other industry-related developments, PAM Chief Executive Officer Eng Hilal al Busaidi, said: “There are three key advantages linked to the new legislation: Firstly, it expedites the process of obtaining mining licenses, the awarding of concession blocks against competitive bidding, and the processing of applications for no-objection certificates in a time-bound fashion. Secondly, it outlaws illegal mining activities and demands that all mining operations be carried out in a professional manner. Thirdly, it greatly strengthens the ability of the Authority to manage the sector in a supportive way.”
Leading figures from Oman’s mining industry took part in the deliberations. Sharing their thoughts were: Dr Ali al Rajhi, Director General, PAM; Nasser Maqbali, CEO, Mineral Development Oman (MDO); Mohammed Shabibi, Vice Chairman, Gulf Mining Group; Ravi Sharma, Managing Director, Bedrock Mineral Resource Consulting (BMRC), and Indrajeet Kumar, Exhibition Director, Omanexpo.
According to Mohammed Shabibi of Gulf Mining Group, the new law will make it attractive for “serious” local and international players to venture with confidence into the mining and mineral processing sector in the Sultanate.
“There are a lot of provisions in the new law that are advantageous to serious miners. Under the previous system, licence-holders typically held on to their concessions for years without doing anything to develop their assets. They behaved like they were owners of the concessions. But this trend has changed under the new law.
Licence-holders have a specific tenure ranging from 1 to 3 years to undertake the stipulated exploration activities. Failure to do so would mean that the PAM can repossess those concessions and hand them to serious investors. After all, these assets represent the wealth of the nation, and must be harnessed for economic development.”
Furthermore, the new framework, backed by concession agreements ranging from 20-30 years, will make it possible for investors to show their assets as collateral when seeking bank finance, Mohammed Shabibi noted.
The veteran miner also welcomed the provision in the new law that no longer requires mining firms to undertake community and social investments on their own in the neighbourhoods in which they operate. Under the old dispensation, miners were obliged to earmark 5 per cent of their net profits towards community programmes — a measure that required them to coordinate with local walis and community leaders in the effective and verifiable delivery of these programmes.
“Under the new system, licence holders are required to pay the equivalent of 1 per cent of their royalty towards a CSR fund, which will be administered by a professionally-run government agency on behalf of the investors. Consequently, the burden of implementing the community development programmes is no longer on the mining companies, per se, but on the fund. This will enable us to concentrate on our mining activities.”