Iraq on Wednesday rolled out the red carpet for the private sector with the aim of developing its untapped natural resources, as the Opec member struggles to diversify its oil-reliant economy.
The country's Ministry of Industry and Minerals began a two-day conference in Baghdad to encourage investment in mineral exploration and petrochemicals as well as the fertiliser and cement industries, highlighting the large reserves of minerals available and the abundant energy to exploit them.
During the event, Minister of Industry and Minerals Kahlid Battal Najam offered investors long-term partnership opportunities in a long list of state-linked phosphate, nitrogen, sulphur, fertiliser and glass production projects.
Mr Najam also promised tax exemptions, export subsidies and the lifting of tariffs on imported raw materials for projects for up to 10 years.
Prime Minister Mohammed Shia Al Sudani said that businesses coming to Iraq would be able to operate in a safe environment with the full co-operation of the government, which would soon undergo economic reforms.
Improved security
Mr Al Sudani emphasised his country was now safe for business, saying it desperately needs help in looking for new sources of income outside of oil.
“Today we are confidently talking about a new Iraq,” Mr Al Sudani told the conference. “An Iraq that is stable, independent, unified, prosperous and strong.
“From a security perspective, thanks to be to God, we are now in our best condition, as our security forces control all Iraq and they are capable of maintaining security and peace.”
He said ISIS was “no longer a threat and there are only small groups hiding in caves and mountains, not controlling even 1 metre in Iraq”.
Between 2014 and 2017, the terrorist group overran almost one third of the country before it was declared militarily defeated, having fought bloody last-stand battles in northern and western Iraqi cities such as Mosul and Tikrit.
“Now is the appropriate time to call all investors to seize all the investment opportunities,” Mr Al Sudani said.
The event is far from the first time Iraq has offered investment opportunities in the non-oil sector. In 2008, it tried to offer investors licences to establish new projects in rehabilitated idle factories, but these efforts were derailed by red tape, political wrangling and security issues.
Only a few projects, mainly in the cement and a few in fertiliser industries, succeeded. A similar push occurred during a Kuwait reconstruction conference in early 2018, but once again, Iraq struggled to attract investors.
Mohammed Ali Salih, chief executive of Baghdad-based Kahirat Al Kanz trading company, told The National that bureaucracy, nepotism, corruption and lack of modern investment regulations are the main challenges.
He has been trying to get a licence for a phosphate factory for the past four years, to no avail.
“Iraq has a strong potential but the environment is not suitable,” he said.
Many industries, including fertiliser and cement production, saw a golden era in the late 1970s and early 1980s, exporting hundreds of thousands of tonnes of product as well as meeting local demand.
Diversifying away from oil
Iraq, Opec’s second-largest producer, holds about 153.1 billion barrels of proven oil reserves. It is highly reliant on crude revenue, which makes up nearly 95 per cent of its income.
The country exports about 3.3 million barrels of oil per day, while production in the semi-autonomous Kurdish region amounts to more than 450,000 bpd.
However, Iraq is not only a country rich in oil and natural gas — it also sits on a wealth of minerals.
Iraq was among the first countries in Middle East to initiate mineral exploration in early 1950s and non-oil industry accounted for 23 per cent of its gross domestic product during the 1970s, the Ministry of Industry and Minerals reported.
But decades of war since the 1980s, UN-imposed economic sanctions during the 1990s, and political and security instability that followed the 2003 US-led invasion that toppled Saddam Hussein derailed development in the sector.
The country’s minerals have never been fully explored by either local or foreign companies.
Iraq is thought to have the some of the world's highest sulphur reserves at up to 400 million tonnes, according to the Iraq Geological Survey Commission.
It also has the largest marine phosphate deposits, almost 10 billion tonnes — making it also the second-largest phosphate reserves in the world after Morocco, amounting to 8 per cent of total world reserves.
Geologists say the country has even more untapped resources and minerals, including sand that can be used for filters, specialised construction and fracking in the oil industry, as well as salt, gypsum, limestone, marble and bauxite, in addition to metallic deposits such as strata-bound zinc, lead, copper, chromium, nickel, iron and manganese.
