Oman resuming copper exports after 30 years could fuel economic diversification

Minerals Development Oman's export of copper concentrates from the Lasail Mine is encouraging, says analyst

Minerals Development Oman announced the export of the first shipment of copper concentrates from the Lasail Mine in the Wilayat of Sohar. Photo: Minerals Development Oman

Oman is resuming copper exports after three decades in a move set to help diversify its economy and help the country increase its exposure to mined commodities.

This week, Minerals Development Oman announced the export of the first shipment of copper concentrates from the Lasail Mine in the Wilayat of Sohar, reviving copper mining in Oman after nearly 30 years. The move also underscores the sultanate’s commitment to economic diversification and sustainability.

“At 0.6 per cent, even though mining is a relatively small part of Oman’s economy, contributing a few basis points to overall [gross domestic product], the project should help diversify the economy,” said Michael Widmer, head of metals research at Bank of America.

“The country’s export revenue are heavily geared towards oil and gas, making the investment in metals and mining interesting,” he told The National. “The project is a natural hedge for Oman, although it is worth noting that the site produces mined copper, not necessarily refined.”

Copper mining in Oman halted around 1994. However, since the establishment of Minerals Development Oman in 2017, there have been extensive exploration efforts to continue copper production in the country, according to Oman Mining Company, which is fully owned by MDO.

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The Lasail Mine averages 500,000 tonnes of copper ore annually and produces high-quality copper concentrates with purity levels ranging from 18 per cent to 22 per cent, MDO said in a statement on Thursday.

“The export of the first shipment from the Lasail Mine is a testament to our ability to transform challenges into tangible opportunities for growth. We are equally enthusiastic about the forthcoming operations at the Al Baydha mine, which will further enhance the value of this project and support the sustainability of Oman’s mining sector,” Mattar Al Badi, chief executive of MDO, said.

MDO plans to start operations at Al Baydha, in the Wilayat of Liwa, by 2025-2026, the company said. The mines boast a combined reserve of approximately 2.78 million tonnes of copper ore.

The mining sector has made “remarkable strides in exploration and extraction, enabling us to reopen dormant mines and maximise their value”, Mr Al Badi said. “These advancements not only strengthen the sector’s sustainability but also amplify its economic and social contributions.”

The first phase of the redevelopment is expected to span four to five years with exploration efforts in surrounding areas aimed at “increasing reserves and ensuring long-term production sustainability”.

Known for its conductivity, copper is integral to the clean energy transition and future technologies, including electric vehicles and advanced battery systems. The base metal is also used in wiring, solar panels and pipes.

“Like other countries in the region, Oman is looking to increase its exposure to mined commodities, essential in the energy transition and electrification of the global economy,” Mr Widmer said. “That growth comes from a very low base, so it is encouraging that steps are now being taken to develop assets.”

Copper demand is projected to grow from 25 million metric tonnes today to about 50 tonnes by 2035, a record high that will grow to 53 tonnes by 2050, according to ratings agency S&P. Power and automotive applications will have to be deployed at scale by 2035 to meet the 2050 net-zero targets, it said.

With global demand for copper expected to surge, the Lasail project represents a strategic investment in Oman’s economic future, according to MDO.

Asked about the impact of resuming copper exports on Oman's future in energy transition, Mr Widmer noted that the volumes are relatively small and the mine has a short lifespan.

“The global copper market is about 25 million tonnes in size, so Omani copper only makes a small contribution; yet, there are few copper mining projects in the pipeline globally, so the production increase from Oman is worth noting and goes against global trends,” he added.

The market size of copper worldwide amounted to nearly $170 billion in 2022, and by 2030, the market value is anticipated to increase by $90 billion, according to Statista.

It is experiencing significant growth, driven by the high demand for copper in the Asia-Pacific region, particularly in China, due to its extensive use in electrical wiring and construction industries, according to market research and advisory firm Technavio.

Technological innovations, such as the increasing adoption of EVs and renewable energy, are further fuelling the demand, it said, adding that the market is also “facing challenges from the volatility in copper prices, which can impact the profitability of copper producers and consumers alike”.

A report by Oxford Business Group found that following a period of mixed results for Oman’s mining and mineral processing sector, in which copper exports fell, the segment appears set to rebound. Output of copper ore dropped to zero in 2016, after falling 42.9 per cent in 2015 from 72,100 tonnes per annum to 41,200 tonnes, the report said, citing data from the Central Bank of Oman.

Economic growth in Oman expanded to 1.9 per cent on an annual basis in the first half of 2024, from 1.2 per cent last year, the International Monetary Fund recently said. While growth is projected to remain at 1.2 per cent in 2024, slowed by extended oil production curbs by the Opec+ bloc, it is expected to rebound this year. The growth will be supported by higher hydrocarbon production and acceleration of non-hydrocarbon growth, the Washington-based fund said.