Oman signs nickel extraction deal with UK's Knights Bay

The mineral exploration agreement is the sultanate's first with a foreign partner

Central Muscat. Demand for nickel is set to increase as electric vehicles become more popular. Silvia Razgova / The National

Oman has signed a deal with the UK's Knights Bay to extract nickel in the sultanate's first mineral exploration agreement with a foreign partner.

The initial investment in the exploration and evaluation phase is about $25 million to $30 million in the first three years, Oman News Agency quoted the sultanate's Ministry of Energy and Minerals as saying on Thursday.

Last year, Oman and Britain signed a Sovereign Investment Partnership deal to work more closely on increasing high-value investment into both countries.

Oman’s Commerce Minister Mohammed Al Yousef said at the time that the Arab country was keen to support British investors looking to inject capital in sectors such as clean energy, mining, manufacturing, logistics, tourism and fisheries.

Demand for nickel, a crucial ingredient in lithium-ion battery cells, is set to increase as the adoption of electric vehicles increases around the world.

EVs will make up about half of new car sales worldwide by 2035 as the push for net-zero carbon emissions picks up pace, Goldman Sachs Research said in a February report.

Sales will soar to 73 million units in 2040, from about 2 million in 2020, with the percentage of EVs in global car sales projected to rise to 61 per cent, from 2 per cent, during the period, the US investment bank said.

Last month, Saudi Arabia's Ministry of Investment signed 13 preliminary agreements with Oman in sectors such as biochemicals, energy, mining, financial investment, logistics, maritime transport and information technology.

Oman, the largest non-Opec producer in the Middle East, has been investing heavily in sectors such as renewable energy and tourism in an effort to diversify its economy.

As is the case with other Gulf countries, it is currently enjoying a surge in economic activity linked to higher oil prices.

Oman’s net oil revenue in the first 10 months of 2022 jumped by about 40 per cent to 6.19 billion Omani rials ($16.10 billion) while gas revenue surged by about 80 per cent to 3.05 billion rials.

Oman expects a budget deficit of 1.3 billion rials in 2023, or 3 per cent of its gross domestic product, the sultanate's Finance Ministry said in a December.