Cairo is making a fresh attempt to attract international mining companies, with an updated regulatory framework set to go before parliament within weeks.

International companies have shown increasing interest in Egypt’s largely untapped mineral resources, particularly its gold.

If passed by parliament, Cairo could implement the updated legislation by the end of the year, paving the way for a fresh bidding round. The code will replace the current need for joint venture deals with the government and production sharing agreements, with a system based on royalty payments.

“A bidding round could happen this year,” says Josef el-Raghy, chief executive officer of Australia’s Centamin, which is developing the Sukari Hill gold project in the eastern desert.

The move is a major step by Cairo towards encouraging foreign involvement in the country’s mineral resources. There are about 6.7 million ounces of gold deposited in the eastern desert alone.

“There is a lot of interest in Egypt among major internationals and smaller mining companies,” says El-Raghy. “Of the world’s 10 largest gold producers, five have visited Egypt in the past two years. There are definitely lots of mining opportunities here. The key to unlocking them is in applying the new framework. Reform is long overdue.”

Egypt’s new regulatory framework, part of a wider reform of mining policy by the Petroleum & Mining Ministry, is due to be presented to parliament for approval by the end of April.

The Egyptian Mineral Resource Authority, part of the Petroleum & Mining Ministry, is working with the Inter-national Finance Corp-oration (IFC), the private sector arm of the World Bank, to develop the regulations.

“Egypt is leading the way in North Africa in terms of developing new regulations,” says Frank Sader, senior operations manager of the IFC in Cairo. “There is more reform momentum here. The focus now is gold.”

Foreign investors in Egypt’s mining sector have, until now, had to form joint venture partnerships with government entities and enter into production-sharing agreements. This is typically used in the oil and gas industry, but is not always suited to mining.

“There is the assumption across the region that mining is another extractive industry that can be dev-eloped in the same way as the oil and gas industry,” says Sader. “But practice shows this is not the case.”

In addition, many smaller exploration companies have been deterred from entering the Egyptian market by a lack of clarity over the transferability of mineral deposits once exploration is complete. This has made it difficult for them to secure project finance.

“No commercial lender feels comfortable financing a deal, and mining companies are shying away in recognition of the risk of exploration and the associated risk of getting financing at a later stage,” says Sader.

Cairo is now moving towards a framework based on taxes and royalties paid to the government by mining companies. This more closely reflects the mining laws in other countries with high levels of activity in the sector, and will allow Cairo to continue to benefit from the revenue generated by mining activities.

“It is a huge challenge for the IFC to implement what they are working on, but we are confident that the groundswell of support is there in the government,” says El-Raghy.

In addition to gold, Egypt’s mineral resources include 50 million tonnes of coal and 48 million tonnes of tantalite, the ore from which tantalum is extracted for use in the manufacture of electronic components. Its tantalite reserves are among the largest in the world, according to the IFC.

Other mineral deposits include manganite, the ore from which manganese is extracted, and phosphates, used in fertilisers.