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Islamic finance facility to support Omani trade and diversification

Mena / 26-03-18 / by
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Strategic & Precious Metals Processing (SPMP), an Omani firm and associate company of Tri-Star Resources, has raised a US$30mn sharia-compliant loan from Alizz Islamic Bank to be used for a combination of project and trade finance purposes.

The new finance facility will rank alongside the company’s existing debt provided by Bank Nizwa, bringing SPMP’s total debt facility to US$70mn. Tri-Star holds a 40% equity interest in SPMP.

Part of the loan will go towards the company’s construction of an antimony roasting facility in Oman, the first in the country, to process mixed antimony and gold ores. With a capacity of 20,000 tonnes of metal per year, it is designed to produce antimony metal (Regulus) for export and value-added downstream antimony trioxide (ATO) for the European flame retardant markets and the wider global chemical markets. It will process its own and third-party concentrates.

Commenting on the loan, Karen O’Mahony, acting CEO of Tri-Star, says the company is “at an exciting stage in the project” and is now ready to “move through commissioning to first metal production”.

The aim of antimony roasting facility is to make Oman “a world hub for value-added mineral processing” and help the country as it aims to diversify its revenue streams.

“What makes Oman so important is not only its strategic location between resource rich nations and world consumers, or its great ports and world-class infrastructure and low energy costs, but also the understanding and appreciation of the metals and minerals business, from manufacturing to trading,” the company writes on its website.

Salaam Al Shaksy, CEO of Alizz Islamic Bank, says the loan is proof that “Islamic banking can spur more private sector growth and employment within new and prospective industries and contribute to Oman’s economic diversification”.

Islamic finance is playing an increasingly important role in the region, especially as the GCC countries seek to implement ambitious diversification plans to reduce their heavy reliance on oil.

According to trade finance bankers speaking at the GTR Mena Trade & Export Finance Week 2018 in February, Islamic trade finance products are in “huge demand”, as Haytham Elmaayergi, global head of transaction banking at the Abu Dhabi Islamic Bank, put it. With many new Islamic finance structures emerging in the market, he expects to see a boost in new trade flows with Turkey and Southeast Asia in particular.

Krishnakumar Duraiswamy, head of trade finance at Abu Dhabi Commercial Bank, agreed. “The product itself has come a long way. Where there was a limited number of products in the past, now Islamic products can actually cover the entire working capital cycle. That’s why we’ve seen a growth, which is obviously based on the demand that we have in the market,” he said.

In a recent in-depth sector report, credit rating agency Moody’s predicts that Islamic financing assets will grow at 7% this year, thus continuing to outpace conventional counterparts. This will leave the market share of Islamic financing in core markets at 40% of total financial assets.

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