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Thursday, 1 November 2018

Top miners say forthcoming changes to mineral resources act are “extremely encouraging,” could unlock tidal wave of investment

** #2 GUEST COLUMN: Upcoming amendments to Mineral Resources Act are “extremely encouraging,” could unlock tidal wave of investment, say top mining companies in Egypt: Changes to the Mineral Resources Act now in the legislative pipeline to the will bring “immense benefits” to the mining industry, say senior execs and directors at three top players in Egypt’s burgeoning natural resources industry in an opinion column written exclusively for Enterprise. The signatories: Aton Resources President and CEO Mark Campbell, Thani Stratex Resources CEO David J. Hall and Resolute Egypt Director Ossama El Maghraby. The column:

The remarks about mining policy reform made last week by Minister of Petroleum and Mineral Wealth Tarek El Molla at an event hosted by the American Chamber of Commerce, were extremely encouraging to us in the industry.

The minister was very candid in stating that for too long, the fiscal terms used to commercially regulate mineral exploration and mining have been wrong, but that the government is going to fix this. He said they were going to create an investment-friendly environment to attract much needed capital into Egypt’s nascent mining sector so as to develop Egypt’s potentially vast mineral wealth in precious and base metals.

We in the mining sector were also extremely encouraged by the minister’s public recognition that oil & gas and mining have fundamentally different business models, and that their economics do not correlate in any way. The only relationship to be found between the two sectors is that they are extractive industries. To compare the two industries would be like comparing an airline to Uber just because they both get you from point A to point B.

The global mineral exploration and mining industry has its own set of industry standards and norms, and as such, mining companies go to countries where they are welcome. These are countries with well-developed terms and conditions designed to attract international capital. Investors make very high-risk and long-term investments and are inevitably drawn to countries whose governments firmly understand the sector and its needs, and that seek to engage into meaningful and long-term partnerships. These are businesses and though the geology may be great in country, if companies can’t ultimately bring a return to their stakeholders, they won’t come.

Egypt has taken some bold first steps to make investing in the sector more attractive. The government hired a globally recognized, resource consulting firm at the beginning of the year to identify the problems with its mining terms and conditions and to critically answer the questions: Why has only one new gold mine been developed in the last 90 years? Why are there only three international exploration and mining companies working here (despite having held multiple bid rounds)? As we understand it, the last time this consulting firm assisted a government (Ecuador) in unlocking its mineral wealth potential, which like Egypt had an oil and gas focused framework, it almost immediately attracted 400 companies to invest. This too could be Egypt.

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