KURDISH GOVERNMENT WOOS INVESTORS TO ITS UNTAPPED MINING SECTOR

[Wiljor]

KURDISH GOVERNMENT WOOS INVESTORS TO ITS UNTAPPED MINING SECTOR Iraq, June 11, 2016  The Kurdistan Region’s Ministry of Natural Resources (MNR) invited local and international companies last week, to explore and invest in the Region’s mining sector and untapped mineral resources.    This is the first time the KRG is officially inviting investors to develop blocks where they believe substantial mineral resources are to be found. The Ministry has identified 7 blocks for exploration in its three provinces of Dohuk, Erbil and Sulaimani.   The Region’s main source of income is natural resources such as oil and gas and tapping the underground minerals is hoped to supplement government revenue that has been badly affected by the falling oil prices and a persistent budgetary dispute with the Iraqi government.   “Investment in minerals will bring raw materials to Kurdistan for those working in this industry and since we have those resources it’s better that we invest in and extract them as we have to do that anyway,” Omer Darwesh, a businessman from Sulaimani told Rudaw.     Investment in minerals will bring raw materials to Kurdistan for those working in this industry,  Darwesh, a trader in iron and steel, believes that in addition to supplying the region with the materials it needs, the industry itself will also strengthen KRG’s finances.   Darwesh said that at the moment businessmen like him resort to recycling to get the iron they need which they could run out of soon. “We use scrap materials in our factories but if they extract raw iron, for example, it is better as scrap material going to run out soon and not much left.”    The businessman knows firsthand how the minerals industry could pour cash into the region. “In this business (steel) most of the money stays in the country, about 90% of its revenue, because we sell and export about 80-85% of it to the center and south of Iraq. This will be very productive for Kurdistan’s economy.”   Among the minerals the Kurdish government has listed are Lead, Zinc, Copper, Chrome, Nickel, Cobalt, Manganese and Iron “which are believed to have derived from magmatic, hydrothermal and sedimentary origins, beside or in association with some other non-metallic mineral deposits such as Barite, Talc & Asbestos,”   Michael Howard, a senior advisor to the natural resources ministry believes that developing the minerals sector would provide an opportunity for local and foreign investor partnership and more job opportunities for people and income for the KRG.   “The potential benefits to the KRG lie in increased revenue and jobs,” Howard told Rudaw in an email. “Domestic investors can enter Joint ventures with international companies. Investors will be required to have a strong localization program with the aim of growing local managerial and operational capacity. Bidders should also present a strong community support program that addresses the impact on local communities and the environment, The idea is to create a win win for both investor and the KRG.”   When a decade ago the Kurdish region started to explore its oil and gas sector numerous foreign companies among them giants such as ExxonMobil, Chevron, Total as well as smaller firms poured in and signed contracts for exploration and extraction.     The potential benefits to the KRG lie in increased revenue and jobs.   Despite protests from Baghdad and disputes between Erbil and central government these firms set out to work, encouraged by the region’s own welcoming laws and business-friendly environment. Experts however, argue that the Kurdish government should lay out clear rules and legal basis for the mineral sector to avoid issues faced in the oil sector.   “What’s the legal base of the MNR invitation?” asks Dr. Bilal Wahab, director of the Center for Development and Natural Resources at the American University in Iraq-Sulaimani (AUIS). “We do not have the law of minerals in KRG yet.”   Wahab believes that companies need assurances in order to come and invest in the region.   “Even for the oil and gas the KRG had a law and contract model but still faced problems with Baghdad so how can you convince companies to come without the law and contract model,” he added.   The Iraqi constitution gives different parts of the country the right to explore and develop their natural resources, something the KRG has put into practice especially in the oil and gas sector.   Kurdish parliamentarians defend the region’s right to its resources, though they may differ on the mechanism. Sherko Jawdat, head of the parliamentary industry and natural resources committee advises against inviting investors to the new mineral sector before a law that is sitting has been parliament in passed.   “There is no law to invest in minerals in Kurdistan yet, so the invitation has no legal framework,” Jawdat told Rudaw.    “They should not make the invitation now,” he added. “There is a draft in parliament but it has not passed yet,”    The Ministry of Natural Resources however, allays this concern by having the right authority to explore the sector.    “A draft metallic minerals law has been there for some time but not made its way through parliament, which as you know is not functioning,” MNR Advisor Michael Howard explained. “Until it is passed, the KRG and the Ministry for Natural Resources has the authority under existing laws to press ahead with inviting investment in exploration and development and to license mineral extraction and export.”     How can you convince companies to come without the law and contract model?   Shwan Zulal, a Political Risk and Energy Analyst based in London foresees opposition from Baghdad for the Kurdish move, but believes in the meantime that it will not deter investors.    “It is inevitable that Baghdad will not like this and just like the oil and gas PSCs, it will resist it, but going by the precedent set by the PSC, it will have little impact,” he said. “Some investors may deem it risky but won’t deter everyone, the risk is more about monetization and a look at oil industry for examples.”   The Kurdish government itself argues that exporting metallic minerals abroad is one of the main goals of the new plan, but it will also develop the region’s industrial sector and provide the necessary material for local factories as it has been done successfully with cement, said Mukhlis Salim of the KRG Board of Investment.   The Kurdish government is embarking on a project for which it does not have any experience. Nor the necessary funds, warns Dr. Ezzat Sabir of parliament’s finance committee.   “At this stage there is a weak market for these minerals and to extract and invest costs a lot of money, so the KRG does not need that and it won’t bring any new income to Kurdistan.” Sabir told Rudaw.   But Zulal believes that valuable minerals will find their own capital: “It is more likely that a smaller and more intrepid explorers will show interest at this stage but if the assets prove to be valuable, the larger miners may move in. the financial crisis will have an impact on investors decision but the major issue in the investors mind will be monetization, transparency and political stability,”    (rudaw)

http://iraqdailyjournal.com/story-z13315267

[sandfly]

THANKS

[TennesseeCherokee]

There will be many mining companies clammoring for a slice of this big ole pie.

[four wheel drift]

Be nice to be able to get into a ETF in the beginning.

FWD

GO RV

[jcfrag]

Right now I'd settle for an RV ! ?