Egypt attaches great hope on outbidding gold in the support and development of the economy, and raising the participation of the mineral resources sector in the national output; especially in light of the current opportunities in many areas.
In spite of this optimism, there are still some challenges facing the capacity building to explore and develop the Egyptian gold mines, such as the agreement model and the arguments on the "production sharing" model. However, this is seen by some companies and investors as similar to the "Royalty and Tax" model and that it might not form any obstacle to investors in this sector. In this context, Canada Egypt business council and the Egyptian council for sustainable development organized a mining committee with Eng. Omar Taema, Chairman of the Egyptian Mineral Resources Authority, moderated by Dr. Muhammed Zaher, Chairman of the Mining Committee CEBC & ECSD.
In the opening remarks, Dr. Muhammed Zaher welcomed and greeted the guests, then he mentioned a short biography about Eng. Omar Teama thanking him for his great efforts in the development of the sector, and adding that it is obvious that now we have someone with many visions and strategies. He mentioned that he is loaded with great hopes and that the attendance this year was over 150 people including Egyptian business leaders, mine developers, exploration, and mining business companies; all of whom are welcomed to the committee of the mining sector in Canada Egypt Business Council and the Egyptian Council for Sustainable Development.
Dr. Muhammed Zaher discussed that the exploration of the mining industry is passing through a lot of changes, these changes must encourage the sector to contribute heavily to the national GDP, as well as helping the mining industry to export a reliable percentage of the Egyptian production. In addition, the government is planning to retain the mining production as well as the mineral exploration; however the responsibility for successful engagement does not rest solely with the government, everybody must do his best to retain it; entrepreneurs, civil society, business leaders, corporates, accountants, NGOs and the press. So, all of us need to design, promote, develop and publish a public mining development plan, that seeks transparency as the most important factor in sustainable economic growth.
Eng. Omar Taema began his speech by mentioning the history of the mining sector, and that we have been very successful in it since the era of the pharos, then he described the current situation of the mining sector in Egypt with its achievements, challenges, how we have overcome the bureaucratic system, developed the know-how and removed several obstacles facing the sector. He added that we have about 200 sites in Egypt, but more accurately the sites that have been used for gold and mines are about 120 sites. He stressed that Sinai area is from the safest areas for mining investment and that we will not put any investor in a risky area. Since the 15th of January and until the 20th of the following April, the Mineral Resources Authority is receiving requests for participation in global outbidding gold mining areas in the Eastern Desert, in addition to the site in Dahab in South Sinai Governorate, where that bidding system will follow a "production sharing" model with the investors.
The outbidding gold has received a sharp attack from many international mining companies, including the Australian company Centamin , whom its officials announced their non-participation in this auction because of the annexation of difficult conditions, but Eng. Taema has defended these conditions, explaining that it protects the rights of the state and maintain the rights of investors, stressing on the practice of the production-sharing in the auction system, as this model is a good guarantee of the rights for both parties, and there are no needs to fear it as long as the investor is serious, also that the participation of the production-sharing includes a number of advantages for investors, notably the increase in cost recovery for the foreign partner, which is up to 80% instead of 50%, and the sharing of the remaining part is estimated to be about 20% between the authority and the investor, after the payment of the royalty fees of 5% as specified in accordance with the law, in addition to 1% for community development.
Currently, there are two companies producing gold operating in Egypt, the Australian Centamin, and Cyprus Inc. operating in Hamesh mine, in addition to the Canadian Alexander Nubia Company and Dubai UAE, but they are still in the stage of research and exploration.
The authority began sharing profits with Centamin, after nearly seven years of the start of the production process, they obtained 40% of profits since July 2016 for two years, then this percentage increased to 45% for another two years, and after four years from July 2016, the authority and the company both became equally obtaining 50% of the profits.
The floor was then opened for questions and answers session, where several ideas, suggestions, and strategies were expressed to improve and develop the sector.