Egypt's Mineral Resources Authority (EMRA) has submitted a draft law to the petroleum ministry which, if approved, will raise the rental value for mines by nearly a whopping 20,000 percent.
Once the draft law gets the green light from the Egyptian cabinet, the lease value for Egypt's mines will be raised from LE25 ($3.50) to LE5,000 ($700) per square kilometre annually, according to Al-Ahram's Arabic news website, quoting EMRA head Omar Teama.
A source familiar with the matter told Ahram Online that EMRA's current revenues per annum are less than LE500,000 ($70,000), but are projected to exceed LE3 billion ($420 million) after the law gets passed.
The draft law charges LE5,000 ($7,000) per square kilometre annually in the exploration phase and LE10,000 ($1,400) in the extraction phase.
Also under the new law, the government will receive a royalty fee set at 10 percent of the miner's annual production.
Teama added that the proposed law aims to regulate mining in order to make more efficient use of the country's resources.
Mining contracts signed less than three months before the law is ratified will be adjusted to comply with the new law, but older contracts will remain unchanged until their end date, explained Teama.
The draft law also specifies punishment for unlicensed extraction of resources, starting with three months in prison and a fine between LE20,000 ($2,800) and LE2 million ($280,000).
"The new specified fee is low for gold mining; the government can raise the fee to LE10,000 as it wishes," Ismail Abdel-Khalek, head of exploration at the Sukari gold mine, told Ahram Online.
But Abdel-Khalek, who works at Egypt's only gold producer, objected to sharing profits with the government and proposed raising taxes instead, citing mineral resources laws in Australia, Tanzania and Ethiopia as examples.
The Sukari gold mine is jointly owned by the (EMRA) and Centamin's subsidiary in Egypt, Pharoah Gold Mines (PGM), on an equal 50 percent basis.
The concession agreement entitles the government to a 3 percent royalty fee from the gold sales as well as a 50 percent share in net profits after PGM recovers all its operational expenses and exploration and exploitation capital costs.
The proposed executive regulations of the draft law left quarries' valuation to local councils.