Throughout the pharaonic era, gold and other minerals were used in everything from utensils to crowns and even plating the Giza Pyramids, as evidenced by surviving artifacts. Research published in 2020 by Egypt Oil & Gas, a government-owned portal, said the nation’s oldest mining activities date to about 3,100 B.C.
However, mining for precious metals and minerals faded over time as searching for oil and gas took over. In 2018, then Minister of Petroleum and Mineral Resources Tarek El Molla launched the country’s first national strategy to revive the mineral mining sector.
In the Egypt Mining Forum (EMF) conference in July, new Minister of Petroleum and Mineral Resources Karim Badawy highlighted government plans to increase mineral mining from 1% of Egypt’s GDP in 2023 to 5% by 2030. “Our strategy to develop the local mining sector is to free it from bureaucracy, which will result in more transparency, and therefore attract new investments to the sector,” said Badawy. “The private sector will play an essential role in achieving our targets.”
Mining hub
In his keynote address, Badawy stressed stabilizing Egypt’s macro economy as the first step in attracting fresh investments in the mining sector. The second is to reform policies and laws to become more investor-friendly. “The return of the Ministry of Investment stands as a testament to the government’s commitment to making Egypt a major investment destination,” he said. “We already have inter-ministerial committees working on the necessary modifications to develop the sector.”
Among Badawy’s first decisions was to make the Egyptian Mineral Resources Authority (EMRA) an autonomous economic government agency similar to the Egyptian General Petroleum Co. “We expect that to happen in the fourth quarter of this year,” he said. That change would concentrate regulatory and decision-making powers within EMRA.
Badawy said the new EMRA would implement the ministry’s strategy, develop and announce international mineral mining bids more frequently, and promote renewable energy usage in mining sites to reduce the sector’s carbon footprint.
He also said the ministry is working more closely with international finance institutions to secure innovative, low-interest loans with relaxed terms and conditions for eco-friendly miners.
The minister also said more technical training courses would be offered to private-sector mining workers to meet local market demands.
A vibrant mining sector should benefit other existing industries and introduce “new value-added industries, where mined minerals are processed locally before being sold,” Badawy said. “We also are looking at increasing mining equipment manufacturing locally.”
Sherif El Shahawy, chairman of state-owned Shalateen Mineral Resources, announced the first value-added project during the EMF conference: an “industrial mining complex in Aswan … It should be ready for operation next May.” Badawy said. The long-term plan is to make “the eastern desert a regional gold hub.”
Lastly, the minister announced the development of a digital platform to show potential investors the locations and sizes of mineral mining opportunities nationwide. “We are starting with a trial now,” he said. “We should go live by the end of the year.”
Attracting investors
Supporting the growth of mining activity in Egypt requires significant funding for new projects. “It is not surprising to find financing mining projects challenging,” international law firm Watson Farley & Williams said in a February investor note.
“Over the past few years, metal and mineral prices have not generally had the positive run that might have been expected,” the law firm said. “The causes are varied – the global economy, uncertainty over China’s economic outlook, wars in various parts of the world and a lack of clarity as to whether governments will … back one type of transition ‘solution,’ over another.”
Despite those challenges and diverging approaches to reaching net-zero emissions, the Watson Farley & Williams note said demand for minerals used in clean energy products will only accelerate. “This includes nickel, classed as strategic or critical, as well as others, such as iron ore, that are less relevant to [climate] ambitions but nevertheless a necessity in a continually developing world economy.”
However, governments need to ensure mining activities don’t damage the environment or deplete resources. “We have been working with the mining sector for three years to decarbonize it,” Environment Minister Yasmine Fouad stressed at the conference. “We plan to continue this work … creating a clearer and concise roadmap for the sector that takes the environment into account.”
Fouad said that would fuel the government’s ambitions to build eco-friendly products like electric cars and solar panels. “We are also ensuring that the communities surrounding those mines are eco-friendly and can thrive … after a mine is depleted and shut down.”
A June report by Pan Africa Resources, an African gold producer, said, “Optimizing environmental performance and social impact isn’t just about ethics or regulatory compliance; it is also good business practice.”
The report noted that mining companies have to invest in onsite facilities to “reduce, reuse and rethink [how to benefit from] mining waste.” They also need to modify processes and procedures to conserve freshwater and build treatment plants to purify the water they use. Pan Africa Resources said using renewable energy onsite would reduce a mine’s carbon footprint. Lastly, once done, mining companies have to invest to “restore the land to its natural state.”
Investor-friendly regulations are vital to attract FDI. New Finance Minister Ahmed Kouchouk said at the EMF conference his ministry is adopting a “strategic approach aimed at establishing a robust and sustainable economic climate.” Its underlying premise is “risk-sharing and reward-sharing partnerships, a mutually beneficial approach that prioritizes … investor profitability and national economic gain.”
He plans to build on his predecessor’s achievements. “We also are adopting an inclusive approach to receiving suggestions and ideas that would promote FDI.”
Kouchouk said the priority is to stabilize laws and regulations, especially taxation. “We will also be looking at incentives for mining investors and ways to increase the investment space for the private sector.”
Where miners go
The government’s priority is to attract miners to the Golden Triangle, a 2.7 million-acre plot shared by Qena, Safaga and Al-Qusayr governorates. The 2016 project announcement said the region contains “75% of Egypt’s mining minerals.”
It noted the most abundant minerals in the zone are iron, copper, gold, silver, granite and phosphate. Ismail Gaber, then head of the Industrial Development Authority, told local media at the time, “The Golden Triangle development project is considered the second-largest project that will aid in developing Egypt’s economy due to the high income expected from the area once it is developed.”
The plan is to convert this plot into a “new industrial capital by building industrial, commercial, mineral, and touristic [facilities] to serve not only Egypt but Africa,” reported local media. The government’s 2016 announcement said the Golden Triangle opens the door to establishing new industries in Egypt and promoting existing ones.
Despite its potential, the Triangle has attracted few investments. In 2023, the State Information Service reported that “Prime Minister Mostafa Madbouly issued directives to officials to accelerate the development of the Golden Triangle’s Economic Zone.” He also ordered the Ministry of Petroleum and Minerals to draw up a road map for development.”
According to then Minister of Planning and Economic Development Hala el-Said, as of November, the Golden Triangle has a phosphate fertilizer complex built over 100 feddans in El Quseir city. Another project is a logistics zone under construction on 61 61.7 feddans in Safaga. Since then, the government has not announced any new projects in the zone.
Lessons from Africa
With its committed pursuit of FDI, Egypt needs to be aware of potential risks arising from relying heavily on foreign miners. In December, Ben Radley, a lecturer in international development at the University of Bath in the U.K., chronicled how decisions by African governments led them to “lose control [of their mines] to foreign mining companies.”
Radley said the “first stage” was when African governments and presidents “took steps early to place resources under state control,” he said in December on the Conversation, a digital platform. That included nationalizing foreign miners in the country. Meanwhile, state-owned enterprises dominated most mining value-added activities.
Over time, Radley said, the state dominance caused mining production to “stagnate or drop” as the search for oil and gas became more financially feasible, fueling local economic activity and becoming a significant source of foreign currency if exported.
The “second stage,” he said, started when African governments realized the extent of their respective untapped mining opportunities. To capitalize on them, those nations sought international institutions like the World Bank and global superpowers such as China to fund and operate mining projects. “With the regulatory framework overhauled [to appease the international investment community], foreign investment was unleashed to seek out fresh opportunities,” said Radley. “From 2002 to 2012 … mineral exploration spending in Africa rose by more than 700%.”
Not everyone benefited from that boom. That was because “some prized deposits were already occupied by [informal local] miners [extracting] silver, copper, cobalt, tin, tantalum, iron ore, aluminum, tungsten, wolframite, phosphates, precious and semi-precious stones, and rare earth minerals,” Radley said.
To allow mining FDI into those lucrative areas, African governments issued laws that “forcibly displaced and removed” African miners from the best deposits and restricted them to working in less productive areas.
To avoid such a situation without compromising mining FDI, African governments “must [offer] incentives for local companies to mine and process [minerals] before exporting,” James Boafo, a lecturer in sustainable development at Murdoch University, said in a May blog on the Conversation. That “would increase local returns, create jobs, and drive the growth of other sectors.”
For Africa to become a mining and processing hub, nations can’t work separately, especially when mining for high-demand minerals used in eco-friendly products, like electric vehicle batteries. “There is a need for coordinated efforts in Africa to build local capacity along the mining chain, from exploration to the market,” said Boafo. “In this way, Africa would not only be a source of raw materials, but a competitive source of low carbon products.”
This article first appeared in August’s print edition of Business Monthly.
