Saudi Mining Company Kilomass Secures Lithium Exploration Deal in Somaliland

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Kilomass, a major Saudi Arabian mining company, has secured a license to explore lithium deposits in the Republic of Somaliland, marking a significant development for the the country’s mining sector. The deal aligns with Kilomass’s strategy to expand beyond Saudi Arabia, where it is a key player in the exploration and development of gold, copper, and phosphate supporting the kingdom’s Vision 2030 economic diversification plan.

“The Deputy Minister of the Ministry of Energy and Minerals, Mr. Syed Ahmed Jibril, together with the Director General of the Ministry, Mr. Mohamed Osman Syed, received an investment company called Kilomass that is interested in investing in various minerals in the country,” said a statement from the ministry’s Facebook page. It is unclear why the ministry did not state that Kilomass has already secured mining concessions in Somaliland to explore lithium.

Another statement posted on X by Mr. Mohamed Osman Saed, the Director General of the Ministry of Energy and Minerals added that the delegation from Kilomass includes its CEO Mr. Faisal HamdanAl-Sobhi.

Lithium, crucial for batteries and electric vehicles, represents a high-value mineral with soaring global demand, making Kilomass’s lithium exploration endeavor in Somaliland potentially lucrative. In its native Saudi Arabia, Kilomass hosts several major mining projects, including in the Arabian Shield region.

The interest in Somaliland’s lithium reserves has also gained international attention. Recently, U.S. Congressman Chris Smith highlighted the strategic importance of these resources globally during a congressional hearing, underscoring their potential, and that a Taiwanese company is also interested in exploring it in Somaliland.

While Somaliland has secured major deals like DP World’s development of the world-class Berbera port and free trade zone, it has faced an uphill battle attracting direct foreign investment due to its lack of recognition. On the other hand, there have been embarrassing instances where government ministries made major announcements that included a multi-billion dollar investment deal with a non-existent bank, an oil refinery that turned out to be an advanced scam, and a less-than-equitable fishing license scheme with unscrupulous foreign con artists. Most of these instances were due to inexperienced public servants, minimum due diligence, and a lack of proper oversight and vetting of foreign investors.

To ensure mineral resource development benefits are distributed equitably, it is crucial to involve local communities. Botswana’s diamond mining industry, through the Debswana partnership with De Beers, ensures substantial revenues from diamond mining are reinvested into national development projects, significantly improving healthcare, education, and infrastructure. Similarly, the Papua New Guinea LNG project includes equity stakes for landowners, ensuring they receive royalties, dividends, along with infrastructure and social services.

For Somaliland, adopting similar models could ensure local communities benefit from the exploration and mining of lithium and other minerals. Key strategies could include: revenue sharing agreements, community development funds, local employment and training programs, and strict environmental and social safeguards.

As Kilomass embarks on its exploration activities in Somaliland, incorporating these principles could help ensure local communities see tangible benefits from mineral resource development with minimal frictions, fostering economic growth and social progress in Somaliland. This collaboration, if managed equitably, is poised to unlock significant economic potential, reinforcing Somaliland’s position on the global mining map while ensuring sustainable and inclusive development for local communities.

Attempts to reach Ministry of Energy and Minerals on specifics of the deal with Kilomass where unsuccessful.