Libya — a country marked by years of political instability and economic chaos — has the opportunity to transform its economy through its vast reserves of critical minerals. While its oil and gas sector has long dominated the economy, mining resources such as iron ore, phosphate, sulphur, gold, magnesium, marble, copper and gypsum offers potential for diversification and robust long-term growth.

The country's geology — shaped by a complex history — has endowed it with significant mineral resources. Libya's geological foundation comprises deep Precambrian igneous and metamorphic rocks overlaid by sedimentary basins formed during the Palaeozoic era through prolonged subsidence and sedimentation. Later phases of volcanism and marine transgressions in the Mesozoic and Cenozoic periods contributed to the formation of mineral-rich deposits.

Its diverse geology supports a wide range of mineral wealth, with significant reserves concentrated across the country. Gypsum mining is centred in the Gulf of Sirte region — particularly near Benghazi, Al Jabr, and Al Gharbi — where it supports construction and industrial uses. Salt production thrives along the Mediterranean coast, notably near Benghazi and Misrata, where favourable natural conditions support the extraction of high-purity salts.

Iron ore deposits in the Wadi ash-Shati area of west-central Libya rank among the world's largest. Discovered in 1943, these reserves are estimated at 795mn metric tonnes (mt) with an average iron content of 52%, according to the US Geological Survey. The ore consists of oolitic haematite, limonite, chamosite, and siderite, while significant quantities of magnetite, a magnetic iron oxide mineral, are also present. 

Despite its scale and suitability for strip mining, these deposits remain largely untapped due to logistical challenges, including their remote location around 900 km from the nearest port of Misrata.

In addition to gypsum, iron ore, and salt, Libya possesses substantial reserves of other valuable minerals. The Melaz Suqran formation at Tikumit, located in the western Murzuq Basin, contains phosphate deposits estimated at 109,000 mt, according to World Atlas. Substantial potash deposits also exist in the Sirte Basin. Sulphur — primarily extracted as a by-product of oil refining in the Sirte Basin — further diversifies Libya's mineral portfolio.

Efforts to develop the mining sector are underway. The National Mining Corporation (NMC), a state-owned enterprise, oversees gypsum extraction near Benghazi, Al Jabr, and Al Gharbi, which supports the country's construction industry. Reefal for Salt, Libya's first company dedicated to salt extraction and processing, operates facilities near Benghazi and Misrata, producing high-purity iodised table salt and industrial salts. A Sudanese-Libyan joint venture has also been exploring the Uweinat Mountain region, which straddles the border between the two countries, for potential mining projects.

The country has no significant operations for refining minerals such as iron ore, phosphate, or gypsum, but there is vast potential. 

However, political divisions continue to hinder the sector’s full potential. The Libyan Civil War occurred in two main phases. From February to October 2011, the first began with protests against Muammar Gaddafi's 42-year rule as part of the Arab Spring. This led to a conflict between Gaddafi's government forces and rebel groups, including military defectors, local militias, and anti-Gaddafi protesters. The war ended with Gaddafi's capture by rebel forces and death on October 20, 2011, in his hometown of Sirte.

The second phase began in 2014, after the fall of Gaddafi's government, as Libya descended into political instability. It saw a conflict between the internationally recognised Government of National Unity (GNU) in Tripoli and the Libyan National Army (LNA), led by General Khalifa Haftar from the east. This phase has been marked by foreign interventions and the involvement of numerous armed groups, resulting in a prolonged and fragmented civil war.

As of November 2024, Libya remains divided between Abdul Hamid Dbeibah’s GNU in the west and Haftar’s LNA in the east. Although active warfare has subsided, intermittent clashes driven by power struggles and territorial disputes persist, especially around Tripoli. International efforts to foster reconciliation continue, with calls for unified governance and national elections.

Moreover, Libya’s economy is gradually recovering amid these challenges. The International Monetary Fund forecasts GDP growth of 13.7% in 2025, the fastest in the Arab world, supported by anticipated political stabilisation, increased foreign direct investment, and economic reforms aimed at diversification. This follows a modest GDP growth of 2.44% in 2024. 

The country's economy is expected to expand from $44.8bn in 2024 to $48bn in 2025, while GDP per capita is forecast to increase from $6,482 to $6,874. Inflation is expected to remain low, averaging 2.01% in 2024 and 2.27% in 2025, while the population is projected to grow from 6.9mn to 6.98mn people. 

Diversification drive

Libya has some of Africa's largest proven oil reserves, estimated at around 48bn barrels. Oil exploration began in the 1950s, with commercial production starting in 1961. The oil sector is central to the economy, contributing around 40% of GDP and 95% of export revenues. Major international companies investing in Libya's oil and gas industry include Eni (Italy), TotalEnergies (France), BP (UK), and Chevron (US). It primarily exports crude oil to Europe and Asia. 

Tripoli, Libya's capital and largest city, is located on the Mediterranean coast in the northwest and is home to around 1.192mn people. Benghazi, the second-largest city with a population of 870,000, serves as a key economic and cultural hub in the east and is the centre of the administration aligned with General Haftar's LNA.

Yet, the Libyan government is focused on transforming its mining sector into a significant economic driver, aiming to raise its contribution of less than 1% of GDP to a more substantial share. In 2020, the then Minister of Economy and Industry, Faraj Bumtari, highlighted the potential for mining to surpass oil as a critical revenue driver.

The NMC has outlined plans to make mining a vital pillar of the economy by 2033, prioritising minerals like iron ore, gypsum, phosphate, and salt. Plans include modernising infrastructure, reforming regulations to attract investment, and exploring international partnerships, such as recent discussions with Chad for joint mining ventures. 

The strategy includes establishing a holding company to manage and invest in mineral resources, making the most of Libya's mineral wealth for national economic growth. It also focuses on forming strategic partnerships with international companies to boost production and processing capabilities. Additionally, the NMC plans to expand scientific research and exploration to increase the sector's productivity through technology and innovation. 

Furthermore, Libya plans to modernise infrastructure connecting key mining areas to ports to improve the mining sector's efficiency. A proposed 800 km railway from the iron ore deposits near Sabha in the country's south to the port at Misrata is a central component of this strategy. However, this railway remains a proposal; no concrete plans or active construction efforts are underway. Other segments of the railway network, such as the coastal line from Tripoli to Ras Ajdir, are being prioritised. 

The development of a 1,800 km east-west coastal motorway extending from the Tunisian border to the Egyptian border is underway. This motorway, estimated to cost around €5bn ($5.29bn), is part of a 2008 Treaty of Friendship, Partnership, and Cooperation between Italy and Libya. Italian companies, led by the Salini Impregilo Group, are constructing the first section. 

Once completed, the motorway will improve connectivity between the mining regions in the south, such as the iron ore deposits near Sabha, and the ports in the north, including Misrata and Tripoli, supporting economic growth and trade.

Moreover, Libya's mining sector is primarily governed by Law No. 2 of 1971 concerning Mines and Quarries, which regulates all mining activities. This law is supplemented by Decision No. 233 of 2008, providing detailed implementation guidelines. In 2024, Decision No. 245 established regulations for exporting mined materials, setting conditions for compliance with national standards.

Although the core legal framework remains the same, enforcement and interpretation can vary between the two Libyan administrations. The GNU in Tripoli has issued additional regulations like Decision No. 190 of 2024, which prohibits the export of certain minerals. While the interim government in Benghazi has not introduced specific alternative regulations, political fragmentation can lead to inconsistencies in enforcement.

Mining operations are subject to a corporate income tax of 20% on profits, as per Law No. 7 of 2010, with an additional 4% 'Jihad Tax' on taxable profits. The Jihad Tax was a levy introduced during Gaddafi's regime, applied to taxable profits, reflecting his political ideology. There are no specific mining royalties; taxes are levied on profits.

The GNU in Tripoli and the interim government in Benghazi follow these tax rates, though political fragmentation may cause enforcement inconsistencies.

Wave of multinational investment

Furthermore, Libya's mining sector is attracting international investors seeking new economic growth opportunities beyond oil. China, in particular, is actively exploring the revival of its economic ties with the country, including potential investments in mining. 

Before the 2011 revolution, Chinese companies had substantial investments in Libya, spanning oil, construction, railways, and telecommunications. In June 2024, the Libyan Minister of Economy and Trade, Mohamed al Hwej, issued a directive to activate the Libyan-Chinese Joint Economic Chamber to improve investment communication between the two nations. Discussions have focused on restoring political and economic cooperation, mainly through infrastructure development and support for the nation's broader growth.

European and Australian companies have also shown interest in the country's mining potential. The Libyan government’s efforts to attract foreign investment — through establishing special economic zones and new investment laws — have created a more favourable environment. 

Although the United States does not have a Bilateral Investment Treaty (BIT) or a Free Trade Agreement (FTA) with Libya, it has expressed interest in fostering broader economic ties. In 2013, the two countries signed a Trade and Investment Framework Agreement (TIFA), which the Libyan government ratified in 2019. 

The United Kingdom has demonstrated a keen interest in revitalising Libya's industrial sector, including mining. In November 2024, Libya's Minister of Industry and Minerals, Ahmed Abu Hisa, met with British Ambassador Martin Longden to discuss strengthening technological and economic ties. 

Furthermore, Canada has a history of involvement in the country's energy sector, mainly through companies like SNC-Lavalin (now called AtkinsRéalis), which held significant construction contracts. 

However, Libya's mining sector faces myriad challenges that limit foreign investment. Political instability and security concerns, including armed conflicts and factional disputes, have created an unpredictable environment for investors. The absence of a unified government and the influence of multiple militias complicate efforts to establish a stable investment climate. These security issues and power struggles hinder the government's ability to implement and enforce mining policies.

Divergent mining regulations between the GNU in Tripoli and the LNA in the east create inconsistent policies, complicating licence and permit approvals for international companies. The split also hampers infrastructure development, reducing the cost-effectiveness of mining operations. Legal uncertainty, security risks, and difficulties in financial transactions are further obstacles.

Red tape, insufficient infrastructure...   

Despite efforts by international stakeholders to mediate a unified government, progress remains slow. Bureaucratic inefficiencies also create significant hurdles. Complex regulatory procedures, inconsistent law enforcement, and a lack of transparency slow down project approvals and increase operational costs, deterring investors. The lack of transparent governance further discourages long-term investment, leading to delays or cancellations.

Environmental risks are another concern, particularly in Libya's desert regions. Mining in these areas can lead to land degradation, water scarcity, and biodiversity loss — desert ecosystems, already vulnerable to climate change, risk further disruption. If not managed responsibly, mining could exacerbate challenges like desertification, soil erosion, and water depletion.

The country's underdeveloped infrastructure further complicates mining operations. Poor transport and energy networks, especially outside urban centres, increase costs and delays, making Libya less attractive compared to countries with more established infrastructures.

Legal and regulatory uncertainty also deters investment. Although reforms have been introduced to attract foreign investment, the legal framework remains inconsistent. Frequent regulation changes, weak intellectual property protections, and unclear land tenure laws create an unpredictable environment for mining ventures.

The country’s small labour force and lack of skilled workers in the mining sector present another obstacle. Efforts to develop training programmes are ongoing, but the expertise needed for modern mining operations is still limited. This reliance on foreign workers adds costs and logistical challenges.

... and enduring sancions

Moreover, international sanctions — imposed in 2011 in response to the Gaddafi regime's violent crackdown on civilians — restrict Libya's ability to attract investment. These sanctions, including an arms embargo, asset freezes, and travel bans, aim to promote human rights, peace, and stability while preventing weapons proliferation. 

The sanctions significantly impact foreign investment, particularly in the mining sector. They hinder access to financial markets, making it difficult to secure funding and slowing mining projects due to restrictions on essential equipment and technology imports. Travel bans also complicate the establishment of relationships and operations in Libya. 

While some investors could be discouraged by these risks and the legal uncertainties, others could still view the country's untapped mineral resources as an opportunity, especially if sanctions are eased.

Sanctions could be lifted if the country achieves political stability, with unified administrations and a functioning government. Progress in human rights, security, and governance would demonstrate its commitment to a stable environment.

Libya possesses vast untapped mineral resources that could significantly diversify its economy beyond oil and gas. However, achieving this potential hinges on overcoming significant challenges, including political instability, inadequate infrastructure, and lifting international sanctions. If the country can achieve political stability and secure a unified government, it has the opportunity to emerge as a leading mining hub in Africa, stimulating long-term economic growth and reducing its dependence on oil revenues. The path to transformation requires decisive action on governance, infrastructure development, and international cooperation to unlock the full economic potential.