PANDEMIC CHALLENGES: Publicly traded mining company posts RO 634K net loss
Partly state-owned Oman Chromite SAOG posted a net loss of RO 634K for fiscal 2020, as opposed to a net profit of RO 346K in 2019 on the back of a steep slump in chromite ore production, among other challenges.
The publicly traded firm, set up by Royal Decree as a joint stock company in 1991, reported a 45.8-per cent decline in the production of chromite ore — a key raw material in the manufacture of ferrochrome and stainless steel, as well as heat-resistant material for kilns. Output plummeted to 10,597 metric tonnes (MT) in 2020, down from 19,545 MT a year earlier.
“This drop was due to the decrease in chromite reserves in the company’s existing sites and the high amount of waste material that must be removed before reaching the chrome ore in the old mines,” said Humaid bin Masoud al Maqbali, Chairman of the Board of Directors.
“Though the company obtained eight exploration licences in the year 2020, the company was not able to acquire neither significant exploration nor mining licences in the proper time to enhance production for the year 2020,” Al Maqbali stated in the Chairman’s Report for the year.
Domestic sales and exports of chromite ore totalled 9,096 MT last year, representing a hefty 66 per cent drop from the previous year’s figure of 27,087 MT. Sales were impacted by a decline in the prices of metallurgical grade ore — used primarily for ferrochrome and stainless production — amid the global economic slowdown last year, aggravated by the pandemic. Consequently, total revenues slumped 54 per cent to RO 1.1 million last year, down from RO 2.38 million in 2019.
According to Abdulmonem al Murshidi, CEO, exploration activities carried out by the company during 2020 will help buoy chrome ore output during 2021. “These exploration activities resulted in (uncovering) economically viable quantities, which will cover the production plans for the year 2021. These discoveries were found in one of the company’s old fields and in two new sites,” he said in a report accompanying the Chairman’s report.
He noted however that the company will still need to secure additional quantities to meet its production goals over the coming years.
Adding to the company’s challenges, the CEO pointed out, was a “temporary freeze” imposed by the Ministry of Energy and Minerals on the issuance of new exploration licences to new sites. “It is expected that the Ministry will soon put in place new mechanisms and conditions for assigning the mining investment areas in the Sultanate,” he stated.
Representing the government’s interest in Oman Chromite is Mineral Development Oman (15 per cent), which is a subsidiary of Oman Investment Authority, the integrated sovereign wealth fund of the Sultanate.
Other key shareholders include Mohammed Moosa Abdullah al Yousuf (16 per cent), Mohammed Al Barwani Holding LLC (13.6 per cent), Oman Mining (10 per cent), Fincorp (10 per cent) and Al Qurum Establishment (10 per cent).
CONRAD PRABHU
@conradprabhu
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