Iraq’s rocky road

In early September the Iraq Mining Conference was held in London, showcasing a series of projects for which the Iraqi government is hoping to gain foreign participation and finance. While much development in the country has previously focused on its oil, gas and petrochemical industries, Iraq also has considerable mineral resources, including iron ore, copper, gypsum, dolomite and marble. According to deputy prime minister Dr. Rowsch N. Shaways, the minerals and mining sector contributed just 6% to Iraq’s GDP in 2009 (compared to about 68% for oil, gas and refining), but has the potential to play a far more significant role, reducing dependency on the hydrocarbon sector.

Of particular interest to the sulphur industry are firstly the huge (at least 100 and possibly up to 500 million tonnes) elemental sulphur deposit at al-Mishraq, which prior to the 2003 invasion was producing over a million tonnes of sulphur per year via Frasch mining, and secondly the major phosphate deposits in the west of the country. Of these latter, Greg Fernette, from the US Geological Survey (USGS) told the conference that Iraq possesses “world class” phosphate reserves. The USGS has been working with its Iraqi counterpart Geosurv in a seven year study to map the country’s mineral reserves, and calculates that the two largest phosphate deposits, Akashat and Swab, have 1.7 and 3.5 billion tonnes of ore respectively, at >21% P2O5 content. The four largest deposits, including these two, have 5.75 billion tonnes, or 9% of the world total. The H3 deposit holds 332 million tonnes at an average 17.9% P2O5, and Ethna 218.7 million tonnes at 18.1%. Overall these figures put Iraq’s phosphate deposits at the second largest in the world, after Morocco. Given the current rush towards major phosphate projects in Morocco, Australia and Saudi Arabia, Iraq has the potential to become extremely rich from these reserves.

Prior to the invasion the phosphate mines were producing about 1.0 million tonnes of rock, with downstream phosphoric acid, triple superphosphate and ammonium phosphate capacity which averaged production of 400,000 t/a P2O5. However, the plants at Akashat, in western Iraq are currently only operating at 10% of capacity. According to Dr. Khaldoun al-Bassam, director general of the state-owned Geosurv agency, rehabilitation of the phosphoric acid plant at Akashat is the top priority for the government in the minerals sector. The downstream production site is close to two open-cast phosphate rock mines. At full production, the 1million t/a P2O5 phosphoric acid plant would have a requirement for 6 million t/a phosphate rock and 1.2 million t/a sulphur. The estimated cost of rehabilitating the Akashat facilities is $280 million: in addition to the estimated $130m cost of the phosphoric acid plant, this comprises the beneficiation unit ($30m), the 600,000 t/a TSP plant ($50m), the 280,000 t/a MAP plant ($40m) and the 655,000 t/a NPK facility ($30m). Output from the rehabilitated Akashat complex would be targeted for markets in the Indian sub-continent and elsewhere in Asia.
As for the Mishraq sulphur facility, production also remains at very low levels (possibly zero), and most sales are from remaining above ground stockpiles. The cost of re-commissioning the Mishraq sulphur facility is estimated at $110 million, returning it to a projected capacity of 820,000 t/a of sulphur. No doubt most of this would go to Akashat to feed sulphuric acid production for the phosphate project.

However, as with many things in Iraq, nothing is ever quite so simple. Just as the inking of a hydrocarbons law took long and tortuous years of argument, and the final recent approval of which this August has caused a breach with the northern Kurdish region, so a review of the country’s mining law is still awaited and its lack could prove a stumbling block for new investors. The security situation also remains very difficult in several parts of the country, and there are continuing issues with power and other infrastructure.

The government recognises the difficulty of attracting overseas investment in the current climate, and is offering a 10-year tax holiday for foreign companies, or 15 years if they work in partnership with an Iraqi company. Both the potential rewards, and the risks, are considerable.