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Oman’s mining ambitions take a leap forward

10 December 2024

 

While Oman is at a disadvantage in terms of hydrocarbon reserves compared to its Gulf neighbours, when it comes to mineral resources, the sultanate, with its considerably large geographical area, enjoys benefits that its Gulf peers – barring Saudi Arabia – do not.

Exploration for mineral resources and mining activities for metals production are fundamental pillars of Oman Vision 2040 – a socio-economic strategy designed to diversify the sultanate’s economy away from oil and gas revenues and harness the potential of non-hydrocarbon industrial sectors.

At the forefront of this ambition is Minerals Development Oman (MDO), which was created in 2017 to explore the country’s mineral resources base and develop the mining sector.

Minerals exploration and production

MDO, a subsidiary of Oman Investment Authority, continues to advance its exploration campaigns across a range of minerals, including copper, chromite, gypsum, limestone, dolomite and silica.

The company had a major success recently when its subsidiary, Mazoon Mining, broke ground on a copper concentrate production project in Yanqul in northwestern Oman.

The Mazoon copper project site, located in the wilayat of Yanqul in Al-Dhahirah Governorate, covers 20 square kilometres (sq km) and comprises five open-pit mines. It is estimated to hold copper ore reserves of 22.9 million tonnes.

The project includes the construction of a processing plant spanning 56,000 square metres, with the capacity to process 2.5 million tonnes a year (t/y) of copper ore.

The Mazoon copper project will have the capacity to produce 115,000 t/y of copper concentrate, at a 21.5% copper grade, making it the largest copper concentrate production project in the sultanate.

Mazoon Mining was granted exclusive rights by Oman’s Energy & Minerals Ministry in 2022 to explore, develop and produce copper concentrates in concession area 12-A1, with gold as a secondary by-product.

Following feasibility studies, Australian/Canadian firm Lycopodium was appointed as the engineering, procurement and construction management contractor for the Yanqul project.

Construction of the processing plant is planned to begin in the first quarter of 2025, and production of copper concentrate is set to commence in the first quarter of 2027.

In addition to the Mazoon copper project, MDO has also initiated the redevelopment of copper mines in Sohar and Liwa, aiming to produce 800,000 t/y of copper ore annually, with confirmed reserves of 2.78 million t/y of copper ore.

In October, the Omani Ministry of Energy & Minerals awarded MDO a concession agreement to explore and develop silica resources in Block 51F in the wilayat of Mahout in Al-Wusta Governorate. The block covers 2,156 sq km and is estimated to hold silica, limestone and dolomite deposits.

Steel production investments

Several other metal production projects in Oman, particularly steel schemes, have also made progress in recent months.

In late October, Brazilian mining major Vale and China’s Jinnan Iron & Steel Group entered a joint venture (JV) to establish an iron ore concentration plant in Oman’s northern city of Sohar.

The Brazilian-Chinese JV intends to invest more than $600m in the iron ore concentration plant project, which will be the first such facility in Oman.

Vale will invest $227m to connect the plant to its agglomerate facilities in the region, while Jinnan will invest about $400m to build, own and operate the plant.

The planned complex, to be located within Sohar Port and Freezone, is scheduled to start operations by mid-2027.

The plant will be able to process 18 million t/y of iron ore and produce 12.6 million t/y of high-grade concentrate.

The proposed iron ore concentration plant project in Sohar is understood to be the second-biggest foreign investment in Oman’s steel industry. As such, it will contribute to the sultanate becoming a key player in the global supply chain for direct reduction grade iron ore (DRI).

Vulcan Green Steel (VGS), the steel arm of Vulcan Green, which is owned by India’s Jindal Steel Group, is developing the largest green steel project in Oman. VGS broke ground on the estimated $3bn project in December 2023.

The planned facility, which covers 2 sq km in the Special Economic Zone at Duqm (Sezad), will have two 2.5 million t/y production lines, comprising DRI units, an electric arc furnace and a hot strip mill. 

The planned facility, set for completion by 2026, will primarily use green hydrogen to produce 5 million t/y of green steel. Once commissioned, it will be the world’s largest renewable energy-based green steel manufacturing complex.

Sezad could also host another large-scale green steel project if Japanese steel manufacturer Kobe Steel and Tokyo-based Mitsui & Company can reach the final investment decision on a preliminary agreement they signed in April 2023 to develop a low-carbon iron metallics project.

The two Japanese firms agreed to conduct a detailed business study in line with the goal of commencing low-carbon dioxide iron metallics production by 2027. The project is expected to produce 5 million t/y of DRI using a process called Midrex, where DRI is produced from iron ores through a natural gas or hydrogen-based shaft furnace.

Polysilicon production

Oman is also set to become a key regional producer of polysilicon once private player United Solar Polysilicon completes the construction of its estimated $1.35bn production facility in Sohar Port and Freezone in 2025. 

The polysilicon plant will have the capacity to produce 100,000 t/y of high-quality metallurgical silicon. United Solar Polysilicon broke ground on the factory, which will be spread across 160,000 square metres, in March this year.

United Solar Polysilicon made further progress with the project in July when it awarded a contract to provide water services to Sohar-based Majis Industrial Services, a subsidiary of Omani state energy conglomerate OQ Group. 

Polysilicon is a high-purity form of silicon, which is a key raw material in producing solar photovoltaic panels. Polysilicon production involves pouring the liquid metallurgical silicon from the furnace into moulds and then cooling it through mould or continuous casting. After cooling, the metallurgical silicon is ground and packaged for global export.

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Indrajit Sen

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    Saudi Arabia-based Saipem Nasser Saeed Al‑Hajri Contracting Company (SNSH) – a joint venture of Italian contractor Saipem and local contractor Nasser Saeed Al‑Hajri & Partners Company for Contracting – has kicked off work on the Uthmaniyah gas compression plant package in Saudi Arabia.

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    The scope covers the EPC of a new compression plant serving the non-associated Uthmaniyah gas field, Saipem said in its statement. Saipem added that “the new compression plant will extend the production life of the field, helping to support the growing energy demand of the Kingdom of Saudi Arabia”.

    The contract for the Uthmaniyah gas compression plant package is the first EPC project awarded under Aramco’s National EPC Champion programme, Euronext Milan-listed Saipem said.

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    The Uthmaniyah gas compression plant contract is one of nine EPC packages under the broader Shedgum and Uthmaniyah gas compression project. The packages are:

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    Separately, Aramco was said to be in negotiations with a consortium of China’s Sinopec and Dammam-based Al‑Qahtani Pipe Coating Industries for package 4 (Uthmaniyah gas compression pipelines). However, the consortium fell short of providing bond guarantees and did not meet other Aramco requirements, leading to its break-up, sources told MEED. Aramco may now open discussions with other bidders for the package.

    Meanwhile, Khobar-based Arkad Engineering & Construction has emerged as the lowest bidder for package 3 (Shedgum gas compression pipelines), with Aramco expected to award the contract in June, according to sources.

    Contractors submitted bids for packages of the Shedgum and Uthmaniya gas compression capacity expansion project in January, MEED previously reported.

    The Saudi energy giant is understood to have started the solicitation of interest process for the main EPC contract tendering exercise in the fourth quarter of 2024.

    Aramco subsequently issued the tenders for the EPC packages of the scheme during the second quarter of last year and set an initial bid submission deadline of 17 August.

    Aramco then extended the bid submission deadline to 17 November, 7 December, and then to January, according to sources.

    In line with its aim of increasing gas production and processing capacity by 80% by 2030, with 2021 as its baseline, Aramco is investing significant capital in gas projects in the kingdom.

    Photo credit: Saipem via

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  • KJO selects contractors for Dorra gas project offshore packages

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    US-based McDermott International has secured offshore package 2A, valued at about $1.5bn, according to sources.

    A consortium of India’s Larsen & Toubro Energy Hydrocarbon (L&TEH) and Italian contractor Saipem has secured package 2B, sources told MEED. Estimated at about $3.7bn, package 2B is the largest of the three offshore EPC packages under the Dorra field facilities project.

    MEED reported in March that the L&TEH/Saipem consortium had emerged as the lowest bidder for offshore package 2B.

    Contractors submitted bids for offshore packages 2A and 2B by the 9 March deadline, MEED previously reported. Bid validity was understood to expire on 15 August, prompting KJO to issue letters of intent to the selected contractors earlier this month, sources said.

    Offshore package scopes

    The EPC scope of work on the two offshore packages of the Dorra gas field facilities project is as follows:

    Package 2A – Dorra gas field wellhead topsides, flowlines and umbilicals

    • Seven gas wellhead platforms or topsides, with production routed to the central gathering platform
    • Corrosion-resistant, alloy-lined intra-field flowlines and umbilicals connecting the gas wellhead platforms to the central gathering platform and the auxiliary platform

    Package 2B: Dorra central gathering platform complex, export pipelines and cables

    • Central gathering platform
    • Auxiliary platform
    • Dorra accommodation platform
    • Flare platform
    • Bridge platform
    • Pipelines for gas and condensate transmission to each shareholder
    • Produced water pipeline from the central gathering platform to Al-Khafji field and from the planned onshore processing facility next to the Al-Zour refinery in Kuwait to Al-Khafji field
    • Recovered monoethylene glycol (MEG) pipeline from Al-Khafji field to the central gathering platform
    • Control and power system linking Al-Khafji onshore facilities to offshore units
    • Offshore central control room at Dorra accommodation platform.

    Regarding the first offshore package, MEED reported in October last year that KJO awarded India’s L&TEH a contract estimated at $140m-$150m. Offshore package 1 covers the EPC of seven offshore jackets and the laying of intra-field pipelines.

    Separately, KJO is understood to be holding discussions for package 3 with Spanish contractor Tecnicas Reunidas, which emerged as the lowest bidder, as MEED reported in March. Sources said a final client decision on the award is pending.

    Onshore package scope

    The scope of work on the only onshore package of the Dorra gas field facilities project is as follows:

    Package 3: Onshore gas processing facilities

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      • Operator building
      • Operations, maintenance and engineering building
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      • Warehouse
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      • Nitrogen generation system
      • Diesel storage and distribution system
      • Fuel gas system
      • Closed drain and slop tank system
      • Hazardous area open drains system
      • Industrial water system
      • Drinking water system
      • Flare gas recovery system and a low-pressure flare system
      • Fire water system
      • Emergency diesel generator
      • Sewage treatment

    Discovered in 1965, the Dorra gas field is estimated to hold 20 trillion cubic metres of gas and 310 million barrels of oil.

    Saudi Arabia and Kuwait have been pressing ahead with their plan to jointly produce 1 billion cubic feet a day (cf/d) of gas from the Dorra gas field.

    The two countries have been producing oil from the Neutral Zone – primarily from the onshore Wafra field and offshore Khafji field – since at least the 1950s. With a growing need to increase natural gas production, they have been working to exploit the Dorra offshore field, understood to be the only gas field in the Neutral Zone.

    Progress has been hampered by a dispute over ownership of the Dorra gas field. Iran, which refers to the field as Arash, claims it partially extends into Iranian territory and asserts that Tehran should be a stakeholder in its development. Kuwait and Saudi Arabia maintain that the field lies entirely within their jointly administered Neutral Zone – also known as the Divided Zone – and that Iran has no legal basis for its claim.

    In February 2024, Kuwait and Saudi Arabia reiterated their claim to the Dorra field in a joint statement issued during an official meeting in Riyadh between Kuwaiti Emir Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah and Saudi Crown Prince and Prime Minister Mohammed Bin Salman Bin Abdulaziz Al-Saud.

    France-based Technip Energies has performed the entire concept study and feed work on the overall Dorra gas field development programme.

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    Indrajit Sen