CAIRO // Egypt may be sitting on mineral deposits worth hundreds of billions of dollars which, once developed, could surpass oil as a source of income, says the head of a company prospecting for gold and other minerals in the country’s Eastern Desert.
Minerals have been largely neglected since the president Gamal Abdel Nasser nationalised much of the country’s industry in 1961 and 1962, which prompted the bulk of geological talent in Egypt, whether Egyptian or foreign, to flee abroad.
Since then, Abdel Nasser’s and subsequent governments have focused on oil and gas at the expense of minerals.
The result is that a country known to be rich in minerals has yet to be developed. The Eastern Desert and Sinai are scattered with more than a thousand ancient mining sites, mainly gold, silver and copper, some of which extend back more than 5,000 years to pre-pharaonic times.
The ancient miners, lacking modern mining equipment, rarely dug down more than 20 or 30 metres, following veins visible from the surface. They also lacked modern exploration technology, meaning that vast quantities of gold, silver and other valuable minerals almost certainly still lie beneath the surface, including other minerals unknown to the ancients such as platinum and palladium.
Since the 1960s, technology has transformed the mining industry, at a time when Egypt was largely closed off.
“It’s effectively virgin territory, but with a map,” said Mark Campbell, the president of Alexander Nubia, one of two publicly traded gold mining companies working in Egypt. “In exploration you go to areas where people have mined before.”
The Egyptian mineral resources authority, under the oil ministry, has been compiling geographic data and putting together commercial terms for a new bid round for concession areas for mining gold and associated minerals, although few details have been released. It is believed eight areas will be on the auction block, including Baramaya along the highway between Luxor and Marsa Alam.
Among Egypt’s advantages is that infrastructure lacking in other prospective countries, such as power lines, roads and ports, is already in place not far from the concession areas. The desert areas have almost no topsoil to remove to get to the ore, and a lack of underground water lessens the danger that chemicals will leach into the water table. Cyanide, a major component of gold extraction, breaks down almost immediately in the hot, dry desert environment, Mr Campbell said.
Egypt’s first and only large-scale gold mine is the highly profitable Sukari mine near Marsa Alam, run by Centamin, which is listed on the London Stock Exchange. Centamin received its concession in 1998, at a time when few people viewed Egypt as a mineral-rich country. It declared a commercial discovery in about 2003 and began producing in 2009.
Centamin earned revenue of $508.4 million last year while continuing to ramp up production, boosting revenue to $148.1m in the first quarter of 2016. It expects its Sukari mine to produce for more than 20 years.
The second listed gold company operating in Egypt, Alexander Nubia, which is listed in Canada, acquired its two concessions in 2006. Since 2011 it has been focusing on a prospect at Hamama in the desert north- east of Luxor. So far it has drilled 72 core samples, each about 200 metres deep, samples of which it has been sending abroad to be assayed.
It has found economic quantities of gold, silver and zinc, said the company geologist Leonard Karr.
It aims to drill about 100 cores to establish commercial viability in a process that should be completed in one or two years. Each core takes three to five days to drill. The Hamama prospect, which was also mined in antiquity, has geological chemistry along a strike line of 3 kilometres, Mr Karr said.
Alexander Nubia will probably drill a couple of hundred more cores as it prepares to build a mine, a project that could cost $500m or more.
Mr Karr said there was every possibility that Hamama could be as big or even bigger than Sukari.
“There is a good possibility we have a tiger by the tail.”
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