Egypt looks to step on to global mining stage

While the recent trend in some developing countries has been to decry foreign direct investment and increase state control over mineral assets, Egypt is moving the other way.

The country is showing its faith in the ability of foreign capital to promote its mining industry — and thereby fill its coffers — by making a deal with a branch of the World Bank to help usher in new flows of capital.

Its Oil Minister, Sameh Fahmy, signed a memorandum of understanding with the International Finance Corporation (IFC) — the private arm of the World Bank group for assistance in establishing a framework for private sector mining investments.

“Egypt’s mining sector has outstanding potential. An improved policy framework, which clearly defines procedures for private investors, will help attract new investments and improve the country’s economy,” Gulrez Hoda, IFC’s senior regional manager told Egyptian new agencies.

The joint project will reform Egypt’s mining laws, regulations, and taxation and is expected to be finished in one year.

The country’s current mining laws — which are based on profit-sharing — have made it notoriously difficult for foreign companies to set up shop.

Egypt is a country of 80 million people with a gross domestic product of US$80 billion. A figure far below where experts believe it could be if it encouraged more foreign investment across its resource sector.

While the government touts its gold mining potential, project development has been largely stagnate due to a lack of capital and local expertise.

With a number of ancient gold workings existing in banded iron formations and metavolcanics, the southeast region is considered the most prospective for gold.

There are currently just two foreign miners in the country, both are Australian. The most significant is Centamin Egypt (CEY-L, CNT-A). It’s mine at Sukari in the southeast’s Red Sea hills area, is one of the largest in Africa with a Joint Ore Reserve Committee (JORC) compliant resource of 7.7 million oz (JORC is the standard used by the Australian Stock Exchange).

The project has the distinction of being the first noteworthy gold mine in Egypt in roughly 2,000 years.