by Ramadhan Rajab
There is a consensus that Somalia has huge potential for
producing industrial minerals, that could help re-establish the
country’s economy.
But commercial exploration, mining and processing has yet to
commence, and insecurity and political instability is still
endemic, given the weak central government has varying degrees
of control outside the capital Mogadishu (and in some areas no
control at all). Meanwhile, the country lacks a comprehensive
regulatory framework for the time when a central government
truly comes into its own.
Geologist Mohamed Ahmed Minjir, founder of the Geological
Society of Somalia (GSS), based in Mogadishu, as well as chief
executive of Integra Consulting, based in Nairobi and
Mogadishu, said Somalia’s industrial minerals
resources had yet to be comprehensively surveyed.
He told IM that the country had "huge
potential" for mining minerals, but these lay unexploited.
Before the outbreak of the civil war in 1991 that toppled the
government – and infamously failed to replace it with
an alternative - he said there were a number of multinational
exploration and mining companies that had set up in Somalia and
many others were eyeing the market. But they all quit the
country when companies and governments declared contracts to be
on hold under 'force majeure’ clauses during the
civil war.
Now peace is slowly returning, this legal issue is still a
problem. "The declaration brought into question the legitimacy
of contracts, as they were signed with the old Somali
Democratic Republic (SDR) [which collapsed in 1991] and today
we have the federal state with a national government and
regional governments, therefore we need to have a taskforce to
review old contracts," he said. With proper government
guidance, this is doable, however, with multinationals having
the necessary muscle and market networks to fast track
exploitation of mineral resources.
Minjir said Somalia must first create enabling laws and form
a taskforce to review all past contracts and deals signed
before the civil wars: "This will help eliminate unnecessary
conflicts as well as aligning agreements to federalism as most
of the deals were signed when Somalia had a centralised
governance system. Upholding such contracts in a changed
political arrangement will be a recipe for chaos," he said.
Minerals reserves
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A young woman holds
the Somali flag during a demonstration by a local
militia, formed to provide security in Marka,
Somalia
AU UN IST PHOTO / Tobin Jone, Via
flickr |
So, assuming this work can be done, what minerals reserves
could be available?
Engineer Abdulkadir Abiikar Hussein, a geologist and
technical director general at Somalia’s Ministry
of Petroleum and Mineral Resources said data compiled by Somali
National University and the Russian government before the civil
war shows that there is untapped and unexploited deposits of
sepiolite, south of El Bur, in the semi-autonomous state of
Galmudug, in central Somaliland, which could be exported
through Hobyo port, 150 kilometres from El Bur. Abiikar claimed
these sepiolite reserves are among the world’s
largest, estimated to be about 100,000 tonnes. Also, kaolin
reserves can be found between Mogadishu and Marka, along the
coast, 30 kilometres south-west; and in the unrecognised
breakaway state of Somaliland, between Las Gal and Merodile, in
northern Somalia, he said.
The coastal sand dunes between Mogadishu and Marka, he said,
also have potential reserves of zircon, kyanite, ilmenite and
silica sand. "Piezo quartz, vital for making electronics like
mobile phones, is found in large reserves," he added, "in
Lafaruug and Da’arburug on the Berbera-Hargesia
road and in Elayo [both in] Somaliland."
Abiikar said that there were feldspar reserves in Laferuug
(in Somaliland), Bur Degis (north-west of Mogadishu), Bur Mado
(in northern Somalia), and Waaf Dhai, (in southern Somalia).
Meanwhile, pure gypsum or anhydrite deposits are in Suria
Malableh and south of Berbera – both locations in
Somaliland – an in Jiigleey, 45 kilometres north of
Buulo Burte, north of Mogadishu.
About 40 kilometres north of Baydhabo, north west of
Mogadishu, there are shallow deposits of high grade bauxite, he
added. Salt rock deposits are found in Galmudug, Zeila
(Somaliland), as well as in Hafun and Hurdia (both in Puntland
– another autonomous region).
There are also aggregate deposits near Bosaso
(Puntland’s capital), Hargeisa
(Somaliland’s capital), Kismayo (southern
Somalia), and Baydhabo.
The data given by Abiikar is corroborated by US Geological
Survey (USGS) data, whose 2014 yearbook stresses that
Somalia’s mineral resources have not been
exploited due to a lack of updated geological surveys and
insecurity.
Abiikar, however, told IM that "the
estimated potential shows Somalia is one of the final frontiers
with huge reserves and opportunities. If freshly evaluated and
exploited, it will help quench the world’s growing
thirst for industrial minerals" he said.
Working operations
Minjir said currently there is no formal exploration or
mining but only small scale and artisanal operations mostly by
family or community-owned business.
"There is mining in parts of Hargeisa and Mogadishu but
these are small operations due to lack of technical expertise
and equipment - the reason we need big companies," he said.
Hassan Dudde, chairman and managing director of the Somali
Economic Forum, agreed, saying: "Despite the massive promise
from the industry it remains untapped, because of instability
that deters investment, and unavailability of official
information on the potential of the sector."
If exploited, however, the industrial minerals sector could
diversify Somali’s earnings, reducing its reliance
on agriculture. "To make Somalia viable for exploration and
mining we are pushing for necessary regulatory frameworks as
well as wooing foreign investors, through forums and summits
like the Somalia Investment Summit, scheduled for April 29 in
Dubai," he said.
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The land has barely
settled: A former pro-government militia member
prepares to conduct a mock mine-sweep in November 2012,
in the central
Somali town of Belet Weyne in the Hiraan region of
Somalia, approx. 300km
north west of the capital Mogadishu, during a
technical and tactical training
course run by the Djiboutian contingent of the African
Union Mission in
Somalia (AMISOM) which involves the driving of military
trucks, de-mining,
first responder medical training and
communications.
AU-UN IST PHOTO / STUART PRICE. Via
Flickr |
Risk factor
Although the Somalia industrial minerals sector has massive
potential it remains a high risk destination, said Emma Gordon,
senior east Africa analyst at UK-based consulting firm Verisk
Maplecroft. As well as insecurity, she explained that an
investor intending to set up in Somalia for exploration would
also have to battle with clan politics and complex
administrative issues. For instance, Somaliland does not even
recognise the authority of Mogadishu and has its own tribal and
clan tensions; Puntland, while it recognises the central
government, maintains natural resources should be under its
control, making negotiations and striking contracts difficult,
she said.
"In Somalia, we have three competing authorities all of whom
believe they have ownership or rights over the natural
resources. Central Somalia, Somaliland Administration and the
semi-autonomous area of Puntland each believe they have to
licence those minerals that fall within their territories to
generate revenue. So to those who want to get into the country
the challenge is who do they need to negotiate with," she told
IM. To boot, legislation is also not clear as
the country has yet to agree a constitution upon which all
enabling laws can be founded upon.
"So, the biggest obstacle is how do you make sure you have a
valid contract. We have seen this problem with both oil and gas
as well as the mining sector companies, particularly in
Somaliland where their operations have been declared illegal.
Therefore, they have to face and get over legislative hurdles
before even getting into the country," she explained.
And while there may be fewer regulatory risks in southern
Somalia, as the central government holds sway (officially), its
weakness means companies are more exposed to security threats
in this region.
"Somalia doesn’t have many civil society groups
in the industrial mineral sector," she said. "They are good in
oil and gas. They talk more of Somalia becoming an oil and gas
base but they do little on the mining front, and we hope they
will concentrate on it too." One sensible step, she said, would
be civic education among locals to ensure their expectations
from the growth of a mineral sector were realistic.
al-Shabaab threat
Of critical importance will be removing the presence of
Islamists al-Shabaab from Somalia as this group’s
activities deters investment and prevents ongoing programs and
work in southern Somalia, she said: "The central government
needs to demonstrate that the security situation is changing,"
she said, but even though peacekeepers Amisom (the African
Union Mission to Somalia) are present, al-Shabaab remains
entrenched at a community level.
Mining operations that require large pieces of land and
large numbers of workers would become vulnerable and will be
targeted by al-Shabaab if it believes firms are contributing
money to the central government, she said.
"But there is hope, with a new President [Mohamed Abdullahi
Mohamed], installed since February 16 who has been
well-received, with a promise to run an efficient and corrupt
free government," she said.
Finally, should all these obstacles be overcome, and Somalia
develops a functioning industrial minerals sector, could the
country fall victim to the so-called 'resource
curse’ and see its riches fuel corruption and
diverted away from investment and spreading wealth?
Minjir warned that Somalia might fall victim in this way if
the industry grows in a random manner: "This is the reason we
are insisting that there must be regulations developed as a
matter of urgency that will articulate or set conditions on how
contracts can be awarded and how industrial mineral revenues
must be shared," he said.
And such reforms may come to pass. While not giving
timelines or specifics, Abiikar said the country was on the
road to developing a mining code that will regulate the
sector.