Egypt wants role on 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 seems to be moving in the opposite direction.

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

Egypt’s oil minister, Sameh Fahmy, recently signed a memorandum of understanding with the International Finance Corp. (IFC) — the private arm of the World Bank group — for assistance in establishing a framework for private-sector mining investments.

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

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

The country’s current mining laws — which are based on profit sharing — have made it 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 that experts believe could get a huge boost if the government encouraged more foreign investment across the country’s resource sector.

While the government touts its gold-mining potential, project development has been largely stagnant 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 Australian. The most significant is Centamin Egypt (CEYEF-O, CEY-L, CNT-A) Its 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. gold.

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