Examining Somalia’s untapped industrial mineral potential

By IM Staff
Published: Thursday, 27 April 2017

Somalia's untapped industrial mineral potential could help re-establish the country's economy but it faces challenges amid a muddled regulatory framework

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

Regulation1
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.

Regulation2  
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.