30 May Interview with Naif Al Awaid, Group CEO, Kunooz Oman Holding
How important is the private sector in building up Oman’s new economy, and what kind of support do they require?
Around 70% of the success of Vision 2040 lies in the development of the private sector. The government is launching initial public offerings and actively divesting government companies. This move will create more private sector entities that can freely look at different directions of investment and growth to enhance their bottom lines. However, our financial institutions and banks need to be more aggressive. Although many local small and medium-sized enterprises (SMEs) have been successful in working on projects, compared to the number of SMEs in the market, their presence is minimal. The segment needs to be enhanced, which cannot happen without supportive funding partners. The government and financial sector must innovate to create better opportunities for local SMEs. This will have a strong impact on mitigating unemployment, which could become a major challenge.
Can you give us an overview of Kunooz Oman Holding’s operations and its current growth targets?
Kunooz Oman Holding is 80% private and 20% owned by Minerals Development Oman. Our focus area is the mining sector. We have five subsidiaries and three associate companies, including a logistics company. We are looking to grow into different activities involved in mining and logistics. We aim to rid ourselves of any factors that add costs and enhance elements that make us profitable and help us grow. We want to boost our logistics activity to be more of a distributor for different sectors. We are considering a cold storage facility in the Rusayl area. Most of our mining products are for export and are delivered through Omans’ economic zones and their adjacent ports. We are currently undergoing feasibility studies to process basalt. We have dolomite. There is considerable demand for the mineral’s high magnesium content that can be used in steel and automotive industries. We are also focused on gypsum for the construction sector and producing limestone for use in different industries.
Moving forward, we aim to focus on our primary assets, which are our people. We are trying to analyze our organizational structure and talent pool to implement possible changes or enhancements. We need to employ the right leaders who can make an impact on themselves, their community and the organization. To do so, correct process systems need to be in place. A final focus is on business development; we aim to probe opportunities within Oman and beyond and are carefully considering investment in many areas. In terms of long-term growth, we cannot stay just within Oman. We should explore opportunities outside the country in the GCC region or Africa where there are massive opportunities in mining. No country has everything. While we are actively working on attracting investment into the country, we also need to have greater objectives. Developing Omani companies to work as international players must remain a critical goal. We need to go outside of our comfort zone and challenge ourselves to take on greater opportunities.
What steps need to be taken for Oman to reach its goal of creating a regional mining hub?
Minerals Development Oman (MDO) is the primary driver of the mining sector and has implemented an ambitious growth strategy. However, the public sector wants to see more action. Oman’s mining sector is currently immature and will only reach maturity when the private sector and the government act together. We need to increase our infrastructure such as mineral ports and terminals. MDO is tendering for a terminal in Minji. We are currently handling a considerable volume of mining export movement through the general cargo section of the Port of Salalah and the Port of Sohar. However, when minerals are far away from these terminals, more terminals and manufacturing facilities need to be created. Oman’s diverse geographical area expands over the Arabian Gulf, Oman Sea and Arabian Sea. We have a diverse geography with an assortment of minerals available. We need to look at where minerals are in the country and subsequently attract strategic and technology partners. Additionally, we need to process raw materials within Oman. When we process a product in the country, we add value to it, raise its rate of selling, keep investments close and create employment. Currently, we are studying different proposals for establishing local factories.
In terms of logistics, Oman needs to ensure its supply chain is ready to deliver ahead of finding a considerable market; we need to be proactive instead of reactive. The government has established an extensive net of roads that enable us to transport our products and services within the country. However, it will need to be enhanced in the future as our industry grows. We also need to consider new technologies such as the Internet of Things and blockchain as well as green energy and carbon dioxide reduction.
How critical is enhancing safety in meeting Oman’s mining targets?
In the past, safety was not considered as a crucial factor in mining. However, it is now a top priority. We need to acquire best practices to create an attractive environment for mining companies and investment. We need to protect our workforce, our environment and local communities. High safety measures will also increase productivity. We are trying to establish a solid culture of safety within our organization and make it a critical part of day-to-day operations. Safety needs to be seen as a part of our workforce’s general skillset and not just an additional responsibility. We are looking to ensure that our people are not exposed to dangers. Our trucks have determined speed limits and monitoring devices that ensure there is appropriate control and defensive driving on roads. We also deal with dangerous materials in our blasting activities and need to maintain low noise levels. Technology plays a significant role in creating a safe environment. Our material and equipment selection in the future will be focused on both higher productivity and safety. Finances and economics come and go in any organization, but losing a person’s life can never be compensated. We need to maintain this perspective and put everyone on the same track. We are currently involved with different entities within the government to further our safety goals, such as the Ministry of Energy and Minerals and Oman Energy Association or OPAL. We will benefit greatly from knowledge transfer from the oil and gas industry in this area.
How important is addressing the local community when carrying out mining operations?
We need to mitigate any harmful or unsafe practices while making sure our mining operations benefit nearby communities. We need to carefully consider how we develop around communities. This involves capitalizing on their labor forces and creating opportunities for local SMEs. Local partners are key to mitigating different local risks that may be difficult to identify. We also need to pay attention to sustainability. Mining operations can be done while protecting the environment. The most important factor is awareness. We must ensure that the environmental impact analysis has been done. The government has been very intelligent in allocating concession areas, which were not identified by luck but through strategic planning. We are currently looking to adopt a solar system in our mining areas and are looking into dust control. Implementing green measures is important to both protect the local environment and attract investment.
Why is Oman an attractive destination for foreign direct investment, and what more needs to be done to increase foreign participation in the market?
Oman has immense untapped potential that makes growth of the economy extremely viable. The nation has a very diverse culture and geography, which makes it excellent for a variety of sectors, including tourism. Tourism is one of the pillars of the country’s Vision 2040 economic transformation agenda. There are also opportunities in logistics. The country is in the Arabian Sea and is a safe and direct transport route for other GCC countries. There is huge potential to build tank farms in various locations such as Duqm. Oman contains an abundance of mineral wealth that can be explored. Presently, MDO and private companies are trying to put more focus on the sector.
Oman maintains steady foreign relations with many countries, which are open windows for knowledge exchange and investments. Investors require stability and areas where they can secure capital. A topic of concern in the global financial world is anti-money laundering. Our country is applying stringent rules in this regard. We have actively worked to position the country as a very safe corner for clean investment. Moving forward, the government needs to give the same incentives to international investors entering the market as local players, which is already in the pipeline. Oman has a population of 5 million. If we could attract more residents through international investments, we could up our consumption levels to three times its size, which would create opportunities in the form of new services, hospitals, telecommunications infrastructure, schools and tourism. This will have a direct impact on countering unemployment and creating new innovative areas of the economy. These are the seeds of economic growth that need to be supported.