Revamped legislation helps Egypt strike gold

The gold discovery was announced in the mineral-rich southeastern desert with an estimated deposit of 1 million ounces.

Thursday 02/07/2020
A sign marking the turn-off leading to the Hamama gold exploration site, deep in the desert east of Luxor, Egypt. (AP)
A sign marking the turn-off leading to the Hamama gold exploration site, deep in the desert east of Luxor, Egypt. (AP)

CAIRO – Revamped mineral extraction legislation helped put Egypt on the path towards a major discovery of a gold deposit.

The discovery was announced Tuesday in Iqat region in the mineral-rich southeastern desert with an estimated deposit of 1 million ounces.

The Ministry of Petroleum and Mineral Resources estimated that the discovery, run by the state-owned Shalateen Mining Company, is worth more than $1 billion in investments over the next 10 years.

This discovery came at a time when the Ministry of Petroleum and Mineral Resources is looking for reforms to help modernise and develop the Egyptian mining sector, said Minister of Petroleum and Mineral Resources Tarek El Molla.

A few months ago, Egypt issued new mining regulations that aim to attract foreign companies and encourage the exploitation of opportunities available to raise economic returns and increase the added value from the exploitation of mineral resources.

Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources. (Reuters)
Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources. (Reuters)

“In light of the ongoing reforms, it is intended to attract foreign direct investment within two years by about 375 million dollars, and to increase the expected direct investments in 2030 from 700 million dollars to one billion dollars,” Molla told The Arab weekly.

To achieve these goals, the Egyptian Ministry of Petroleum restructured mineral wealth legislation and issued a new law permitting the issuance of new models for contracts for research agreements in line with international regulations to attract investment to mining activity.

Egyptian businessman Naguib Sawiris, chairman of La Mancha Holding Company, confirmed that discussions are underway with the government to participate in the bid for gold mining.

Canadian firm Aton Resources also announced that it is going to secure a mining license, the first issued in 15 years, after the Egyptian General Mineral Resources Authority agreed to its request.

Once obtaining the license, Aton will be able to prospect for gold in the Hamama region of the Eastern Desert for 20 years, with an option to extend the period an additional 10 years. The Canadian company will also keep drilling rights in the Abu Marwat concession in the Nubian Arabian Shield region.

Gold represents about 10% of the total foreign currency reserves at the Egyptian Central Bank, reaching $3.7 billion last May out of total reserves of $37 billion.

The last bid put in by Cairo 3 years ago did not win the approval of investors due to perceived unfavourable conditions, until Cairo amended the Mineral Resources Law and presented the first international bid.

The first steps to promote the first gold bid in international investment destinations were made during the International Mining Conference in Toronto, Canada, the largest global forum on mining industry affairs.

The Chamber of Petroleum and Mining at the Federation of Egyptian Industries (FEI) showed investment opportunities through new bids for gold, which are the largest in Egyptian history.

“The desert is full of mineral resources that will motivate foreign investors to pump new investments,” said Osama Farouk, president of the Egyptian Mineral Resources Authority.

“The first bid offered by Egypt provides research and prospecting for gold to international companies in 320 sectors on an area of about 56 thousand square kilometers in the Eastern Desert and the Red Sea,” Farouk told The Arab weekly.

Cairo led an initiative to amend the Mineral Resources Law 6 years ago, but it failed to to attract investments, which required the law to again be put under review.