Egyptian Miners Seek Gold Under Desert Sands

Mining companies awarded blocks in Egypt’s Eastern Desert are set to start exploring for gold under a legislative overhaul that seeks eventually to unlock vast untapped mineral resources.

Despite plentiful reserves and a rich mining history that gave rise to elaborate Pharaonic gold jewelry, Egypt has just one commercial gold mine in operation. Foreign investment in oil and gas has grown, but mining has languished.

Now, the country is banking on high gold prices and amended mining laws that scrap red tape and a profit-sharing rule, unpopular in the industry, to lure interest.

One year after launching its first bid round under the new rules, it has so far clinched five gold exploration contracts in a first bidding round and kept the tendering system rolling as it tries to build momentum.

The government is looking to attract $1 billion in annual investments in mining, a target industry sources say could be within reach.

“Success is ultimately going to be measured by how many mines are going to be discovered and advanced to production,” said Patrick Barnes, Head of Metals & Mining Consulting EMEARC at Wood Mackenzie, which advised Egypt’s government on its mining law reforms.

“Early indicators show us that this bid round was much better than the ones held previously.”

In its initial tender, Egypt in November awarded 82 exploration blocks to what metals analysts say is a healthy mix of 11 companies, ranging from junior explorers to industry giants such as Barrick Gold (ABX.TO).

The blocks on offer are in the Arabian-Nubian shield geological formation, which flanks the Red Sea and is believed to be one of the most mineral rich areas in the world.