In an effort to invite investment, grow revenue and expand the country’s overall economy, Egypt has announced that is considering “offering a number of international bids for mineral exploration sites, particularly for gold,” reports local paper Al-Shorfa.
But the goal won’t be an easy one to achieve and not exactly for a lack of resources. In fact, Egypt has a long mining history, with evidence of mineral extraction activities since times of the Pharaohs, about 3100 years BC.
The North African country has substantial mineral resources, including 48 million tons of tantalite (4th largest in the world), 50 million tons of coal, and an estimated 6.7 million ounces of gold mostly located in the Eastern Sahara desert.
It also has significant amounts of quartz, zinc, tin and copper, but there are only a few of foreign companies wiling top face the still present political risks.
Ever since the fall of the Mubarak regime, foreign investor uncertainty increased since many fear that contracts signed before the transition to democracy would now not always be honoured.
Centamin PLC (LON:CEY), (TSX:CEE) learned this fact first-hand last October, after a local administrative court ruled the company’s concession on its flagship Sukari gold mine should be revoked. There was no written judgment to go with the decision and Centamin was unable to get details.
But Jamal al-Menawar, a consultant at the Ministry of Petroleum’s Mineral Resources Authority, told Al-Shorfa problems like the one Centamin faced will soon be part of the past with draft law to be presented to the new Egyptian parliament, as soon as it is elected.
“The goal of the draft law is to consolidate the monitoring bodies so that they are under the supervision of the Mineral Resources Authority,” he was quoted as saying. Al-Menawar added that work is currently under way “to reconsider the approved licenses of some companies that have not fulfilled their duties with regard to exploration, drilling and production.”
So, despite the upcoming new mining regulations, some companies are still not safe and will likely see their license revoked and redistributed at global auctions.
Centamin’s mine, considered the world’s third largest gold operation, seems to be safe. Hadi Atallah, a Ministry of Petroleum engineer who oversees the mine’s extraction operations, told Al-Shorfa the working relationship between the parties has been recently restructured, putting and end to a long-dragged dispute with the Egyptian state oil company over a $65 million payment demand for diesel fuel supplied from December 2009 until January 2012.
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