23/06/2016 07:05 AST
Minerals Development Oman (MDO), the newly established executive arm of the Public Authority for Mining (PAM), envisions a major role for itself in attracting international investment and technical know-how in the monetisation of the Sultanate’s prodigious mineral resources.
The goal, according to officials of the wholly government owned entity, is a key part of its strategy to unleash the potential of the Omani mining and minerals processing sector to ultimately help drive employment generation, economic development and GDP growth.
“Minerals Development Oman will be the catalyst that aims to fuse together Oman’s mineral wealth, with the necessary investment and talent, to give strong impetus to economic diversification of the Sultanate,” a senior official said.
As part of its strategy for supporting the commercialisation of the minerals sector in Oman, MDO aims to join hands with “global strategic partners”, as well as competent local players, in establishing subsidiaries for developing the nation’s mineral assets.
According to the official, the size of MDO’s shareholding in each of these subsidiaries, as well as their respective corporate structures, will be determined by their managements and boards based on the nature of the projects in question, the added value to Oman, and the technical and commercial expertise offered by the respective strategic partner.
Once these subsidiaries are fully developed, MDO will explore a partial or complete exit from these entities, he said. This would be achieved via one or more of the following options: (i) going public via an offering on the Muscat Securities Market (MSM), (ii) making a dual public offering with global financial markets that are interested in minerals (London, India, Singapore, Hong Kong, and so on), or (iii) through the sale of all or part of the shares to international mining companies and investors.
In the upshot, MDO would stand to gain substantial sale values against these developed concessions or mines from international companies, far more than the value paid for the acquisition of licenses from individuals, the official said.
Thus, in addition to the financial return on these exit strategies, the Sultanate will ensure that only serious companies will be able to afford such an exit price and hence these companies will be able to work, produce and develop these assets, the official said.
Furthermore, MDO has the option to reinvest earnings from such exits into new locations and minerals.
It can also increase its investments in downstream and manufacturing projects — actions that in turn will sustain MDO’s growth and that of the wider mining sector, he noted.
“In the long term, MDO can make sovereign investments outside the Sultanate after having gained experience and confidence from its achievements, while also having suitably equipped itself with the right staff, expertise and resources,” the official added.
Sixty per cent of the equity in MDO is owned by four government entities: the State General Reserve Fund (SGRF), Oman Investment Fund (OIF), Oman Oil Company (OOC) and Oman National Investments Development Company (TANMIA).
The remaining 40 per cent will be offered for public subscription via an Initial Public Offering (IPO) proposed to be floated on the MSM before the end of this year.
Oman Daily Observer
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