Egypt discovered in the southeast a gold deposit with more than a million ounces. Exploring it may require an investment of more than $1 billion over the next 10 years, the country’s Ministry of Petroleum said. And this is where the main problem arises: where can Egypt find the necessary financial resources?
The deposit is located in the area operated by the Shalateen Mining Company. The recovery rate is 95%, that is, one of the highest, they assured from the company. The Egyptian Ministry of Petroleum and Mineral Resources stressed that to start operating the area, Shalateen and the Egyptian Natural Resources Authority will found a new company. It could become the third-largest specialized in the extraction of this metal and other minerals in the country.
Egypt is currently the seventh Arab country with the largest gold reserves. It is believed to have about 79.4 tonnes. This is because it is located in the region of the so-called Arab-Nubian Plate, known for its immense deposits.
For Egypt, gold is important, as it is part of the Central Bank’s foreign exchange reserves along with internationally recognized foreign currencies. These assets provide basic financial resources, with which the country can pay external debt and interest and face exceptional economic crises.
So far, gold production in Egypt has been concentrated in the three main mines, located in the eastern desert: Sukari, Hamish and Wadi al-Alaqi. However, the Mineral Resources Authority ensures that this precious metal is extracted in at least 120 other deposits.
Much gold, but not enough capabilities to extract it
Despite these riches, Egypt records few activities related to gold mining. Extracting this precious metal from traditional mines was an operation that required many expenses beyond the reach of the Egyptian government, according to Egypt Today magazine.
In these circumstances, attracting foreign investors to the sector would be a logical enough step. However, companies from other states were not quick to get involved due to Egyptian law.
While Egypt replaced an outdated mining law passed 60 years ago in 2014 with a new one, it failed to satisfy foreign investors because it included restrictive trade provisions.
In particular, the current law has been repeatedly criticized for prescribing the conclusion of exploration agreements based on the concept of shared participation between investors and the State in extraction and profits. Meanwhile, in many other countries of the world so-called royalty rates are used, a sum that must be paid to the State for the use or extraction of certain natural resources.
“Mining companies go through several phases and spend a lot of time mining the metal that is economically viable. They spend a lot of money without a guaranteed income, not to mention the high cost of their mining equipment and drills. We cannot apply similar gold mining standards to the ones we apply to oil exploration, ” Yusef Ragui, president of the Centamin company that operates the Sukari mine , said.
As a result, to date, foreign investors have been more interested in investing their resources in other markets located in Europe and Africa. Thus, Egypt is unlikely to succeed in involving foreign companies in the development of this project.