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Thursday, 24 September 2020

Bidding for Egyptian gold

International gold miners have been invited to bid for concessions in Egypt this month for the first time since the new investor-friendly mining law was passed last year, reports Safeya Mounir

Safeya Mounir , Tuesday 3 Mar 2020
Bidding for Egyptian gold
Bidding for Egyptian gold
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The Egyptian Mineral Resources Authority (EMRA) will launch an international bid for gold exploration in a few days, marking the first tender since new amendments to the country’s mineral resources law were passed to encourage investors to venture into the exploration business.

Interested investors will be able to offer bids to explore for gold in a total area of 56,000 square km in the Eastern Desert. The bidding will be according to a block-basis concession system, with the areas of each of the offered blocks being 170 square km.

Bidding procedures will take place between mid-March and mid-July.

The gold exploration bid round was announced by Tarek Al-Molla, minister of petroleum and mineral resources, on 25 February, and it adopts the international system of royalties, taxes and leases, instead of the old production-sharing agreement system.

Companies applying for the bid are free for the first time to choose the zone and size of the area where they want to conduct their operations, Al-Molla said.

The new Law 145/2019 was passed after gaining the approval of President Abdel-Fattah Al-Sisi on 13 August 2019. It is the amended version of mineral resources regulations issued under Law 198/2014.

According to the new law, gold mine operators will pay a minimum of five per cent in royalties and an income tax of 22.5 per cent, Al-Molla said. The old law on gold exploration was not encouraging for investors due to the high royalties they were required to pay and the production-sharing agreement with the government, said Abdel-Aal Hassan Attiya, former vice-chairman of the EMRA.

Article 10 of the new law states that the EMRA board has the right to suggest changes to the leasing cost of mines every three years. If approved by the prime minister, the amended royalties should range between five per cent and 15 per cent of the value of annual production, in accordance with the regulations on each mineral law.

The new law also dictates that the operator shall pay one per cent of the value of annual production, to be used in social development in the governorate where the mine in which the exploration operations are conducted is located.

The Ministry of Petroleum has embarked on procedures to attract more investment to the field of mineral resources exploration and encourage the setting-up of projects that transform raw minerals into final products to increase their added value and maximise the use of mineral resources for the benefit of the economy.

Youssef Al-Raghi, manager of Centamin Egypt, the country’s sole gold producer, told Al-Ahram Weekly that the new form of the bids was encouraging to gold investors and that the old law, based on production-sharing, had been full of complexities that had hindered mining operations for years.

Centamin has not yet confirmed if it will submit a bit in the upcoming tender. When compared to the other African countries, Egypt is one of the best regions for gold mining in the world, Al-Raghi said.

According to the new law, mining and exploration zones for gold exploration and exploitation are selected by the EMRA, which provides the conditions for bidding and the procedures to choose the operators after consulting with the Ministry of Defence on security requirements.

The new law gives the EMRA the right to negotiate with operators on royalties and leases concerning exploration and exploitation in order to reach a fair value.

The EMRA also has the right to issue licences for minerals in mining exploration and exploitation provided that they are approved by the petroleum minister, the local governor, or the chairman of the New Urban Communities Authority, depending on the exploration site.

 

*A version of this article appears in print in the 5 March, 2020 edition of Al-Ahram Weekly

 

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