- I. Introduction
- 1. Why a Source Book?
- 2. Opportunities and Challenges
- 3. The Extractive Industries
- II. Cross-Cutting Topics
- 4. Transparency and Accountability
- III. The Extractive Industries Value Chain
- 5. Policy, Legal and Contractual Framework
- 6. Sector Organization and Institutions
- 7. Fiscal Design and Administration
- 8. Revenue Management and Distribution
- 9. Sustainable Development
Potential international investors have been strongly discouraged to commit funds to develop Somalia's extractive industries since the start of the longstanding civil war in 1991.
Somalia’s mineral-mining output is a small part of its formal economy; artisanal and small scale mining (ASM, for more information please see library of 50 ASM downloads) activity, much of it informal, is prevalent, however. This reflects a combination of factors: lack of security and/or available infrastructure; and the comparative absence of commercial discoveries, both for reasons of low quantity and quality of ores. This is despite encouraging local geography, which "suggests the presence of valuable mineral deposits".
Overall, the mineral industry produces small quantities of largely unexploited reserves of iron ore, tin, tantalum, gypsum, bauxite, copper, salt, sand, gravel, gemstones, granite, marble, niobium (columbium), salt, sandstone, tantalum, feldspar, iron ore, kaolin, limestone, quartz, silica sand, tin, and uranium.
The local geology suggests the presence of valuable mineral deposits, but both quantity and quality are too low for mining to be commercially worthwhile. No commercially exploitable quantities of minerals have been found in Somalia, with the possible exception of uranium (for which at this time there is no market). However, as of 1992, only a few significant mining sites had been located, and mineral extraction played a very minor role in the economy.
Somalia has no significant, extant, petroleum industry; this is despite claims that Somalia's oil reserves "may amount to as much as 110 billion barrels, according to a June report published by the Mogadishu-based Heritage Institute for Policy Studies."
Previously, international oil companies (IOCs) including Royal Dutch Shell and Exxon Mobil operated in Somalia seeking to profitably extract such reserves, however these firms withdrew from the country due to the civil war, placing their Production Sharing Contracts into force majeure. Subsequently, petroleum exploration companies such as Soma Oil & Gas have invested exploration funds (with regards to Soma's case, $40m USD) in offshore exploration, geographically removed from the civil war but within reach of regionally-prevalent maritime piracy; and that official efforts are being made to encourage the return of the above IOCs to Somalia. Furthermore, different parts of the federal state of Somalia have government agencies and ministries in place to, inter alia, promote upstream petroleum sector, e.g. the Puntland Petroleum and Mineral Agency. However, the net effect of all of these efforts has yet to result in substantive development of upstream or midstream petroleum in Somalia, with the downstream industry also under-developed; this is likely to continue unless the current security situation is transformed positively, and the political status of Somaliland is agreed. Whilst the federal Government continues (e.g. in 2014) to predict a return to substantive production predicated on improved security, an expansion of Mogadishu port and the construction of a new port (both to better facilitate upstream investment and development), that optimism is not obviously reflected in the current situation. In a further discouraging development for potential investors, in 2015 the United Nations called for a moratorium on any new petroleum exploration in Somalia.