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Tuesday, 28 January 2020

Optimising Egypt’s mineral resources

Investors are awaiting the executive regulations of Egypt’s new mineral resources law

Safeya Mounir , Friday 13 Sep 2019
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Making the most of Egypt’s untapped mining potential depends on the application of the country’s new mining resources law. While the new law was ratified by parliament at its last session and approved by the president last month, the executive regulations have yet to be issued.

The new regulations should be ready within a month, a source at the Egyptian Mineral Resources Authority (EMRA) who preferred to remain anonymous said. The government would then be set to start receiving applications for exploration and mining.

The new investments are meant to expand gold-mining operations in Egypt, particularly after the new law has granted more facilities to encourage investment in the sector. The government is targeting investments worth $600 million that will generate over 100,000 job opportunities.

The new law allows for separate agreements for exploration and extraction, the source said, adding that the separation between the two should increase the inflow of investments.

Ahmed Samir, head of parliament’s Economic Committee, said the government’s strategy was to develop the mining sector and encourage foreign investment by focusing on legislative reform and separating exploration and exploitation.

Furthermore, it aimed at facilitating the issuance of mining licences and developing the skills of people working in the field, he added.

In August, President Abdel-Fattah aAl-Sisi approved the amendment of articles in mining law 198/2014. The amendments had been ratified by parliament a month earlier. The new law establishes regulations for mining mineral resources that aim to ensure the optimal use of Egypt’s resources and bring in more revenues to the state.

The law grants the EMRA the right to negotiate royalties with interested parties, making it the authority to issue mining licences. The approval of the oil minister, the relevant governor, or the head of the New Urban Communities Authority will also be required.

Under the old law, licenses were left to the jurisdiction of the governorates. The areas where mining operations are to take place must also be approved by the EMRA, the concerned authorities, and the Ministry of Defence. The law also allows investors to mine in areas exceeding 16 square km, which was not previously the case.

Tadros Qaldas, a member of parliament’s Energy Committee, said that more than 90 per cent of Egypt’s area could contain unexplored mineral resources. The country could gain billions of dollars if mining was properly exploited, bringing in revenues that could exceed those from gas and oil, he said.

The Red Sea, the Delta, and the Golden Triangle development projects have gained an international reputation for the richness of their mineral resources, he said.
The new law is expected to satisfy all the parties involved. The anonymous source said that one of its advantages was that it scrapped the production-sharing agreement system implemented under the old law, which had antagonised investors.

The new law will collect royalties of between five and a maximum of 20 per cent of annual production instead, he added. Before the new law was passed, the mining sector was subject to the same law governing the petroleum and gas industries.

Under the new law, in addition to the five to 20 per cent royalty, EMRA will receive an additional one per cent from the total value of the investor’s annual production, with this going towards the development of the governorate where the mining takes place.

Another six per cent will be paid to the concerned authorities.  

The new law adopts punitive measures against illegal mining, exposing lawbreakers to jail sentences of no less than a year and a fine of between LE50,000 and LE5 million.

In a discordant note, mining expert Abdallah Hassan said the new law added more obstacles to investors. Giving the right to supervise mining operations to several authorities could be a deterrent to investment in the field, he added.

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