Looking for gold under the desert as soon as Egypt loosens regulations
Areas in the easternmost part of the Sahara Desert will soon be developed by mining companies looking for gold deposits. This became possible after the Egyptian government eased the requirements for foreign investors to conclude concessions for the extraction of valuable minerals.
Although Egypt is the world’s fourth largest gold reserve and has a rich history in the extraction of the precious metal since the time of the glorious pharaohs, to date only one gold mine has officially operated in the country.
Now, however, the country wants to take advantage of high gold prices, trying to create an entire mining industry. The changes in the law, including the reduction in the share of profits that private mining companies have to transfer to the government, have made the country an appetizing bite for the big players in the sector, writes Reuters.
Thus, a year after the tenders for the selection of a concessionaire for various blocks in the desert were announced, the country has already signed five exploration contracts.
The government is trying to attract at least $ 1 billion a year in investment in the mining sector, a goal that industry sources say is achievable.
“Success will be measured by how many mines will be discovered and how many will move on to production,” said Patrick Barnes, head of metals and mining at Wood Mackenzie, a consulting firm that advises the Egyptian government on legislative reform.
“Early indicators show that this tender was much more successful than the previous one,” he added. industrial giants such as Barrick Gold.The blocks are located in the geological formation of the Arabian-Nubian Shield off the coast of the Red Sea.It is believed that there are some of the richest mineral deposits in the world.
The UK-based Altus Strategies said it was looking to build its own technical team and carry out remote monitoring and mapping operations on 1,500 square kilometers of land before starting the study.
The company expects to invest several million dollars in the short term, but the amount could jump to 100-200 million dollars if gold deposits are found. A spokesman for Canada-based B2Gold, which also won a concession agreement in Egypt, said the exploration would begin soon.
Mining companies welcome changes to Egyptian laws that previously required investors to set up a joint venture with the government. In addition, the revenues owed to the government as a result of the extraction were limited to 20%.
However, maintaining the requirement for exploration blocks to be auctioned reduces the chances of a gold mining boom, according to Sami El Ragi, chairman of Australia-based Nordana Pty Ltd.
“No successful mining country applies this process. They all have transparent laws that set out the qualifications, obligations and rights of investors. They work there on a first-come, first-served basis,” El Ragi said. , founder of the first and so far only gold mine in Egypt.
It takes an average of 10-15 years for a mining project to go from discovering valuable minerals to starting production. Despite the fact that the price of gold fell after the records it hit in 2020, economists expect that the appreciation will return in the coming years.
“If we reach a point where there are several deposits, Egypt could become one of the largest gold producers in Africa … It has excellent potential,” said Stephen Polton, CEO of Altus Strategies.
However, environmental activists say gold mining cannot be justified in any way. It generates harmful emissions, can harm water resources and, unlike copper and minerals used to make batteries, is not widely used in technologies that provoke a transition to a carbon-neutral economy.
The government has said it is open to mining other minerals, but gold remains the focus for now. “Gold is absolutely the best thing to start with, as there are quantities that are known,” says Barnes of Wood Mackenzie.
“Egypt has unlimited potential for extracting copper, gold and other commodities. The biggest concern for the industry is the lack of sufficient supplies of copper. Places like Egypt, which are considered unexplored but have high potential, will attract attention if they succeed. to keep the investment conditions” he added.