London-listed goldminer Centamin will not be participating in Egypts first round of international gold and associated minerals tender for explorations in Sinai and the eastern desert, said the company in an emailed statement to MEED.
The company, which runs the only commercial mine in Egypt, believes that the current terms of the latest tender are far more onerous than the previous two bid rounds and as such are unattractive to the investor, said Centamins chairman Josef el-Raghy.
Earlier this month MEED reported that the Egyptian Mineral Resources Authority (EMRA) had invited companies interested in competing in the tender and that they would be able to contact the authority to purchase all relevant documents by 15 January.
The bidding round, which experienced several delays in 2016, is expected to be completed by April 2017, said the EMRA.
El-Reghy also said that the proposed 6 per cent royalty rate (including community development contribution) is one of the highest globally, and is double the rate for the Sukari mine [being run by Centamin]. Furthermore, the onerous production sharing terms, the partial cost recovery and the various bonuses due to the EMRA create a non-commercial operating environment for any mining investor. Combined, the proposed terms result in an effective tax rate that is by far one of the highest for mining globally.
The Centamin chairman believes that Egypt needs to move towards a tax, royalty and rent mining law, which would transparent, fair and encourage investment and create employment. And that Egypts mineral wealth remains under-explored and un-developed and this will continue to be an unfortunate lost opportunity for the people of Egypt until there is reform to the mining law.
If a modern mining law is introduced Centamin stands ready to reinvest in Egypt. This bid round we will not invest in and the bid round should be cancelled otherwise ground will be held by small companies for many years with no significant investment was the case with all areas offered in 2006 and 2008, said El-Raghy his statement.
Egypt has been keen on developing its minerals and mining sector. In addition to the latest tender for gold exploration, in late 2016 Egypts Ministry of Trade and Industry submitted a 30-year masterplan for the Golden Triangle Project to the cabinet.
The masterplan was carried out by DAppolonia, the Italian engineering services company that is responsible for the project that requires approximately $2.3bn-worth of infrastructure works, according to government estimates.
The Golden Triangle project aims to take advantage of the countrys under-tapped mineral resources and develop the Upper Egypt area.
The Golden Triangle scheme is slated to include several interrelated projects including fertiliser factories, phosphate ore processing facilities and facilities to process shale and limestone as a precursor to cement.
The Golden Triangle project focuses on a triangular-shaped area of Egypt that covers 6,000 square kilometres between the towns of Edfu, south of Quena, to Marsa Alam, on the Red Sea coast, to Safaga, which is located to the north of Marsa Alam.