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AMN - Industry welcomes Egypt mining reforms – comment by Yolanda Torrisi

Yol headshot May 2011

The Cabinet of Egyptian Prime Minister Moustafa Madbouly has approved long-awaited amendments to the Mineral Resources Act which aim to attract significant foreign interest in the nation’s mining sector. The move has been welcomed by companies that operate in the sector.

These changes are likely to mean that Egypt will move away from the oil and gas-focused Production Sharing Agreement (PSA) model and move to a tax, rent and royalty model. It is also likely to abolish the requirement for a 50:50 joint venture with EMRA, the sector’s regulatory body.

The bill is also expected to allow exploration companies to acquire exploration ground without first obtaining exploration licences.

Oil Minister Tarek El Molla said recently that the amendments to the act would be presented to the House of Representatives in three months, and hopefully by the end of the year.

The Prime Minister has also ordered a survey of local officials whose regions are home to mining activity and potential activity. Business associations such as the Federation of Egyptian Industries and the Federation of Egyptian Chambers of Commerce will also be included in the public consultations.

The government’s proposed amendments have received the overwhelming support of the industry, with top execs at Aton Resources, Thani Stratex Resources and Resolute Egypt publicly signing a document praising the reforms.

Aton’s president and CEO Mark Campbell mirrored the sentiment by stating: “The recognition by the Government of Egypt that mineral exploration and mining are wholly different businesses to oil and gas has been a long time coming.

“Aton believes the effect that these changes will have on investment in exploration and mining will be significant -- the scrapping of the PSA, for a transparent tax, rent and royalty system, along with getting rid of the requirement for a 50:50 joint venture with EMRA, should be of great interest to exploration companies all around the world.

“Egypt has vast unexplored areas and is one of the last untouched mineral exploration frontiers in the world. One only has to look at what occurred in Ecuador after its government amended the mining law, to get an idea of what could transpire in Egypt.

“Aton understands that the Government plans to streamline and simplify the acquisition of exploration licences and do away with oil and gas style bid rounds.

“It is a testament to the vision of President El Sisi and the Minister of Petroleum and Mineral Resources, Tarek El Molla, that these changes are being made, and in short order too, and also in choosing Wood Mackenzie to advise the Government on amendments and to help implement them.

“Aton expects to benefit from the proposed changes - within our 738sqkm Abu Marawat licence area, we have a development project at Hamama and 17 solid exploration targets, including our major exploration project at Rodruin. I am confident that the future for Aton and the Egyptian exploration and mining business is very bright indeed.”

- Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com