Businesses engaged in mining of any type in Egypt have got new regulations from the Egyptian government to follow. Under the new regulations, there would be no need for mining companies to form joint ventures with the Egyptian government. Also, state royalties in mining activities are now limited to a maximum of 20%.
Here Is All You Need To Know
- The cabinet released a summary of the executive regulations to the mining law after its weekly meeting on Wednesday. The law itself was issued in August.
- Mining companies have long complained that Egypt’s system of mandatory joint ventures, stiff royalties and profit sharing agreements have made it unprofitable to explore for and exploit minerals.
- Egypt is hoping a change in rules might lead to a bonanza in gold production. Neighboring Sudan produced an estimated 93 tons of gold in 2018, which according to the U.S. Geological Survey made it Africa’s third biggest producer.
- The cabinet statement indicated that although the Egyptian Mineral Resources Authority had the right to form joint ventures with a minimum state ownership of 25%, private mining companies would not necessarily have to do this if their mining agreements were ratified by law.
- The statement also said mining companies would have to pay a rental value for their mines and quarries as well as royalties at a separate rate determined for each type of ore extracted.
“The royalty will not be less than 5% or exceed 20% of ore produced each year by the licensee,” the cabinet statement said.
Private mining executives said they were waiting for a copy of the actual regulations, but if the requirement for joint ventures had indeed been eliminated Egypt could well see huge interest by exploration companies.
“That is the highlight of the new regulations, something we have been chasing for a decade,” one executive said, asking not to be named.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
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