Three natural resources could rescue the Syrian economy- but?

The Khunayfis phosphate mines in eastern Homs-14 May 2018 (Khunayfis Phosphate Mines Directorate)

The Khunayfis phosphate mines in eastern Homs-14 May 2018 (Khunayfis Phosphate Mines Directorate)

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Enab Baladi – Ali Darwish

After ten years of war, Syria’s economy is spiraling swiftly downward, partly affected by the tightened Western economic sanctions. The Syrian regime lost control of most oil-producing fields in favor of the Kurdish-led Syrian Democratic Forces (SDF). Yet, the areas under its control have mineral wealth that has not yet been invested or have been monopolized by one of its main allies, Russia or Iran. 

The Syrian regime has two significant resources which could stimulate the economy somewhat: oil shales, which exist in the town of Khanasir, south of Aleppo, and magnesium-rich rocks in Hama. However, these resources have not been exploited or invested yet. 

Magnesium – a mineral wealth that the regime avoids investing

Syria’s state SANA news agency reported that the workers of the Hama Cement Company found huge layers of magnesium-rich intrusive rocks, which are unfit for cement making, inside the pure limestone quarries.

The layers of magnesium-rich rocks exist in the shape of a mountain with a height of 30 meters and a weight of 1.5 million tons. 

The rocks “constitute a major obstacle to the extraction process of pure limestone in the quarries of the company. Besides, these hunks of magnesium rocks are found in the middle of the limestone quarries, impeding the movement of stone crushers,” Ali Ja’abo, General Manager of Hama Cement Company, told SANA.

He added that transporting the magnesium-rich rocks from the quarries would cost the company four billion Syrian Pounds (One USD equals 3,230 SYP), and it would pose a threat to the pure lime investment.  

However, magnesium-rich rocks could be used in concrete block manufacturing and could yield revenues of 3.7 billion.  

Magnesium can be used in many industries, and it comes after iron and aluminum in the manufacture of metal structures such as aircraft parts and automobile engines. Magnesium alloys can also be used in the aerospace, electronic, and pharmaceutical industries.

11 years since oil shale discovery

The Syrian regime’s Ministry of Oil and Mineral Reserves announced that the oil shale (fine-grained sedimentary rock) was first discovered in the town of Khanasir, south of Aleppo, in May 2010. However, the government has not yet taken actual action to invest in it. 

According to the Syrian Investment Agency, the oil shale, which is found in abundance in Khanasir, seems adequate for establishing quarries in the future. The location has met the geotechnical and hydrogeological conditions for mining; the thickness of the oil shale is between 25 and 63 meters. 

According to its website, the Syrian Investment Agency proposed the oil shale investment project at an estimated cost of 800 million USD. 

The project aims to extract bitumen from impregnated rocks or oil shale that can be directly burned to generate electricity. Oil shale can be refined to produce 

  • Diesel fuel, gasoline, and liquid petroleum gas (LPG)
  • Asphalt for road paving
  • Cement
  • Oil-shale ashes and residues can be used a soil fertilizer
  • Oil shale can also be used to make plastics, industrial chemicals, and agricultural pesticides.  

The Ministry of Oil and Mineral Reserves signed a memorandum of cooperation with the Russian company Ross Geology. One of its provisions was to invest in concrete blocks made from oil shale ashes. However, the memorandum of cooperation has not entered into force yet. 

In September 2020, al-Thawra, an official government newspaper, criticized the government’s lack of investment in shale oil, although its neighboring country, Jordan, relies on oil shale to meet a significant part of its electric energy needs.   

Oil shale can also be used as an alternative to fuel for power generation and other uses such as producing liquid petroleum gas (LPG) cylinders.  

Many parts of the Syrian regime-held areas face daily power cuts and a lack of fixed power rationing hours. The Ministry of Electricity justifies this by the growing demand for power in winter, the replacement of power cables or electricity transmission lines, and the exposure of gas and oil pipelines to attacks, which force their shutdowns.

Why are oil shale and magnesium neglected?

Political economy researcher Yahya al-Sayed Omar told Enab Baladi that the decade-long war and the regime-run institutions’ bureaucratic red tape and centralization inhibit the investment in these resources; oil shale and magnesium. “Making a single investment decision may take years.” 

According to researcher al-Sayed Omar, investing in a new resource will positively push the economy forward.  In the Syrian case, investing in such resources would support the economy of the Syrian state in energy and other fields.

However, he noted that it is necessary to refer to a critical issue. That is resources alone do not support the economy of countries, because investing in resources needs an investment climate, integrity, and transparency. Otherwise, theft and corruption will negatively affect these resources. “It is not only about the availability of resources, but rather how these resources will be invested and their returns will be distributed.”

He pointed out that some countries have very poor natural resources, but they have achieved prominent economic growth, such as Japan and South Korea.

On the other hand, other countries are rich in natural resources, but they still rank among the world’s poorest countries, such as Sudan. Sudan is considered one of the wealthiest countries in resources, but because of “corruption, the absence of an investment climate, and other resources,” poverty in this country is the greatest. 

Russia dominating Syria’s phosphate 

As some natural resources such as phosphate are in the hands of the Syrian regime’s main allies Russia and Iran, the overriding question remains: will Russia and Iran take over these two resources, oil shale, and magnesium, and deprive Syrians of their returns in the future?

 In April 2018, the head of the Syrian regime, Bashar al-Assad, approved the phosphate mines investment contract in the city of Palmyra, east of Homs, mainly al-Sharqiya and Khunayfis mines, for the benefit of the Stroy Trans Gas company.

The contract allows the Russian Company to produce and invest in Syrian phosphate in exchange for giving a 30 percent share to the Syrian General Establishment of Geology and Mineral Resources. 

The Russian company, which is considered one of the international companies in oil and gas investment, also took control of the General Fertilizers Company and its three plants in Homs under an investment contract in November 2018. The contract stipulates that the company and its three plants will be invested for 40 renewable years. 

Syria mired in crises

Syria tops the list of the poorest countries in the world at a rate of 82.5 percent, according to data on the global World By Map website. 

Syrians are crumbling under the weight of several economic crises, which further worsened their living conditions amid the Syrian government’s failed economic and financial policies. Additionally, the Syrian economy is suffocating due to the years-long Western sanctions and the COVID-19 pandemic and their repercussions. 

The economic crisis has caused a steep decline in the living standards of Syrians. The Syrian pound is falling sharply against foreign currencies, causing a sharp drop in salaries and wages and a dramatic rise in prices of most goods and services. Some consumer staples are becoming hard to find. 

Furthermore, in scenes, which have become usual in Syria, numerous people stand in the streets or the long queues at the bakeries or the fuel stations, amid the regime’s inability to secure the minimum amount of fuel needed for the service sectors and the daily consumption of the population.

The Syrian economy has spiraled out of control, and the security measures taken by the monetary and financial authorities, and the economic decisions, cannot improve the value of the Syrian pound anymore.

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