Mining in Libya may become 'more important' than oil: minister

London — Mining in Libya may eventually become a more significant economic activity than oil production as the country seeks to reduce its economic dependency on oil, Libyan Economy Minister Ali Al-Issawi said Wednesday.

"Libya has gold, magnesium and iron ore ....... (mining) could eventually become more important than oil," Al-Issawi said at an event at the Arab-British Chamber of Commerce in London. "Because of our focus on oil we have lost many other opportunities – we are trying to attract investment to areas other than oil."

Oil in Libya is currently "cheaper than water," partly because of the country's subsidies to the oil industry, which are expected to be reviewed in a move to liberalize domestic oil prices and stem "huge" losses made in domestic energy generation, the minister said. Other changes envisaged include plans for renewable energy generation including by solar power, he said.

Currently Libya's metallics mining industry is largely underdeveloped, although tests on samples and reserves are being undertaken by the country's industrial research institution, Al-Issawi said.

"The Russians and the Italians may be interested," he said, noting that foreign investors may own up to 100% of mining ventures.

Studies have in recent years been undertaken into indicated iron ore reserves of approximately 3.5 billion mt in the Libyan Sahara, which could provide steelmaker Lisco, the Libyan Iron and Steel Company, a domestic source of iron ore.

In 2010, Steel Business Briefing reported that a French study group had identified mineralized iron ore areas through exploratory drilling in the Wadi ash Shati area, approximately 1,000 km south of Tripoli.

A project to develop the reserves had previously been delayed because the phosphorous content was too high, but this could be reduced using the appropriate technology, the mining studies industrial research center said at the time.

A spike in seaborne iron ore prices to a five-year high in mid-2019 – following production curbs stemming from miner Vale's fatal tailings dams disaster in Brazil and disruptions elsewhere – has attracted new investors to iron ore mining.

Prices for gold, typically considered a safe haven for investors, hit a seven-year high in late February as the spread of the coronavirus outbreak brought down equities and base metals prices.

Al-Issawi said Libya's economy is recovering, although the country "is still in a transit period after the regime change in 2011." The country's geographic location favors commodities trade with both Europe and Africa, and an exchange rate reform began in 2018, he said.

"The great support we need is not money, but foreign investment and stock exchange support," the minister said.

He said that Libya's economic growth rate this year is expected to be very low because the country's oil industry is producing at its "minimum capacity," reinforcing the need to diversify away from oil.

S&P Global Platts reported last week that Libya's oil production has fallen to its lowest since 2011 due to a blockade since January on key oil terminals and exports by the self-styled Libyan National Army.