Egypt issued its first gold licensing bids for miners in seven years, but recent developments indicate gold miners might not take up the challenge of mining for gold in Egypt but would rather look elsewhere to mine for the gold ingots this time, Oilprice reveals.
Several top mining companies including Centamin, Thani Stratex Resources and Aton Resources among others have revealed that they won’t place any mining bids for gold this time around due to the constricting policies put up by the government through the Egyptian Mineral Resources Authority (EMRA).
EMRA handles the gold mining exercise for the government and it has outlined out some strict conditions that must be met before bids are considered and mining licenses awarded to winning bids.
For instance, a six-month bond of $50,000 is required to post a bid for gold mining and bidders are also allegedly required to make an upfront $1 million as “assignment bonus”. Meanwhile, the Egyptian government also demands for production sharing with the mining companies, a requirement that is not practicable anywhere in the world except in the oil and gas industry.
These fiscal conditions laid out in the contracts for gold mining in Egypt is making mining companies to decline making any bids for gold mining – and it appears the government of Egypt may be the worse for it over this development unless urgent steps are taken to remedy the situation.
Where miners fail to submit bids for mining during this current licensing round, they may consider doing so during the next licensing round – after this current seven years – if the government modifies the terms of contracts to favor the mining community within and outside Egypt.
Considering the fact that several mining companies may not recoup their full investments up to the third or fourth year of their seven-year mining contracts, miners are of the opinion that further on-ground expenditures may not enable them to go ahead with this current licensing round – since their budget for the whole exercise is now increased by 25-50%.
The submission deadline for all bids is April 20 and it is not yet clear from the foregoing whether any miner would offer any bids where the Egyptian government fails to rework the terms of the agreement for mutual benefits.