Promoting Industrial Growth and Encouraging Foreign Direct Investment in Egypt
Petroleum and Mining Industry
Responsible Entities
- Expedite the formation of the advisory committee referenced in the Law on Mineral Wealth No. 198 of 2014 and its Executive Regulations, and their relevant amendments. The committee should be granted greater authority, such that implementing bodies abide by its resolutions regarding the setting of rental payments and royalty rates, according to the circumstances of each case, in other words, the opinions of the committee should be binding and not only of an advisory character. The Prime Minister should issue a decree requiring the committee to include individuals with professional knowledge and expertise and to meet at least four times a year, as mandated by the law, to carry out its responsibility of refining and further developing procedures, in light of what transpires from implementing the law and its regulations (Ministry of Petroleum and Mining). For example, some issues that need addressing include: Setting the royalty for copper at 8% (compared to a 4% globally) is considered high, and works against attracting any investor; the unclear and confused treatment of white sand—whether it falls under the purview of mines or quarries; and the shale oil royalty rate.
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Date 6/30/2020
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- The committe that is headed by the Minister of Planning and Economic Development and includes the Minister of Local Development should continue operating to develop a clear and well thought out
- strategy that is centered on the national needs and priorities, promotes vertical integration in the mining sector and value-added production of minerals, and takes into account the resource abundance and scarcity. In this regard, it should be recognized that the responsibility for and interest in these resources go beyond the purview of the Ministry of Petroleum or the Mineral Resources Authority), management of mineral resources is a state-wide matter, and all efforts have to be directed towards maximizing the state’s resources
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Date 6/30/2020
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- In March 2020, Egypt launched an international gold exploration auction, which is viewed as a serious step towards placing Egypt on the global mining map. However, after the launch of the auction, the Egyptian Mineral Resources Authority issued instructions, banning operations in 7 locations on account that they are of importance for military operations; these restricted areas are known for being rich in geological formations and have proven gold reserves and gold mines. It was further requested that exploration in these areas be directly awarded to a state-owned mining company, Shalateen, which is in the process of selling 51% of its share to a large investor. No doubt, such an action harms the reputation and credibility of Egypt and undermines trust in its ability to uphold commitments.
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Date 6/30/2020
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- Governorates, local units and the General Authority for Roads & Bridges and Land Transport should not request donations or impose any additional fees on the production and transportation of minerals extracted from mines, quarries, and salterns, beyond what is mandated in the Mines and Quarries Law No. 198 of 2014 and Law 145 of 2019 and their executive regulations.
Responsible Entities
Date 6/30/2020
- Exempt buildings belonging to mines, quarries, and salterns from the real estate tax, in accordance with Article 18 bis of Law No. 23 of 2020.
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Date 6/30/2020
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- Simplify the procedures for mines, quarries, and salterns mineral to export their products; ensure that timeliness of shipping so that exporters do not have to pay delay penalties, which undermines their productive capacity and competitiveness; set a time limit for issuing export approvals, provided that all documents are complete, and in general, review all the conditions and requirements for obtaining export approvals in light of the obstacles faced by exporters.
Responsible Entities
Date 6/30/2020
- Ensure that the Egyptian Environmental Affairs Agency provides adequate information (maps) on the areas where mining is prohibited; additionally, it should expedite the issuance of environmental approvals for licensed companies and oblige operating companies to adhere to all the controls and procedures, as gold ores are subject to theft by random explorers of gold “Dahaba”.
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Date 6/30/2020
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- Facilitate the issuance of the security approvals that are required for obtaining exploration and extraction licenses; specify the required documents in advance, and set a time limit for when the entity must notify the applicant of its decision after all required documents have been submitted. The life of the approval/license should be extended to three years (it is currently one year), as long as the licensee did not commit any technical or security violation that would require otherwise. Delays in providing security clearances, even for state-owned enterprises, discourage foreign investment, which is critical for exploration activities that are high-risk investments, and thus, result in losing investment opportunities.
- The participation of military-owned companies and other state institutions in the competition for research and exploitation licenses (despite being of high risk and long term investments), without having adequate technical knowledge and expertise, creates a conflict of interest and even competition among them (e.g., Shalateen and IMEX). This practice raises the concerns of local investors, and by turn, international investors, which are mostly public companies.
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Date 6/30/2020
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