Buried in paperwork, Egypt’s gold incentives fail to glitter

Egypt’s government has unveiled new package of incentives aimed at reviving investment in mineral exploration, a sector that has long underperformed despite the country’s geological promise. The announcement came in late November, when the petroleum and mineral resources minister Karim Badawi visited Australia, one of the world’s largest gold producers.

Speaking to mining companies in a country whose stock exchange lists a number of the world’s leading explorers, Badawi pitched Egypt as an underdeveloped frontier with significant potential. Yet his case rested largely on a single example: the Sukari mine, Egypt’s only major private-sector success in the field.

More than a decade of legal revisions, institutional reshuffles and investor roadshows have failed to translate potential into production. Critics say the latest incentives, while well intentioned, do little to address the deeper obstacles that have kept investors away.

Sami El-Raghy, the discoverer of the Sukari mine, was blunt. In an email to Al Manassa, he dismissed the new measures as “cosmetic touch-ups that won’t move the needle.” Others echoed the sentiment, arguing that exploration capital will only arrive when risk is clearly defined—and capped—rather than left open-ended.

Concerns extend beyond mining into quarrying, a sector increasingly dominated by the armed forces. Analysts and former officials say the lack of transparent rules governing dealings with the military-affiliated Egyptian Company for Mining and Quarries has further eroded investor confidence.

Wasted years

Mining and quarrying contribute only about 1% of Egypt’s gross domestic product, according to official figures. That share has barely budged despite repeated attempts to overhaul the legal framework.

The overhaul began in 2014, when a new law replaced legislation dating back to the 1950s. The aim was to attract investment and increase state revenues. Instead, investors complained that authority over mineral resources was fragmented among the Mineral Resources Authority, local administrations, and the military, raising costs of operating quarries.

President Abdel Fattah El-Sisi also criticised the law, though from a different angle. He argued that quarrying, in particular, was still failing to generate adequate revenue for the state because prices for natural resources were set too low.

Two further amendments followed. The first, in 2019, responded to investor complaints by ending the requirement that mining companies share production with the state. Instead, the state would collect its share through fees and taxes set by law. The change was greeted with optimism when Egypt launched its first gold exploration tender under the new system.

The second amendment, in 2020, moved in the opposite direction for quarrying. Responsibility was shifted from local administrations to the military, through the Egyptian Company for Mining and the Management and Exploitation of Quarries and Salines, a newly established armed forces-affiliated company granted control over vast quarry areas. Private operators were required to contract with it.

The results have disappointed all sides. State revenues from mining and quarrying remain modest, far below official expectations, while private investment has failed to gain momentum.

What the new incentives offer

In Australia, Badawi avoided the contentious quarrying file and focused instead on mining. He outlined a fresh package of incentives—without disclosing details—aimed at lowering the upfront costs of exploration, a high-risk activity that often yields no commercial discovery.

His pledges, presented to 30 Australian companies, included reducing licensing fees, consolidating approval authorities, and easing administrative hurdles. Earlier in the year, the government also converted the Mineral Resources Authority from a service body into an economic entity, signaling a shift toward an investment-led mandate.

Yet key questions remain unanswered. For El-Raghy, the central issue is not exploration but what comes after it.

“Do these measures reassure a serious investor that, if they make a discovery, they will be able to build a mine and a processing plant on economically viable terms?” he asked. “Or is the implicit message: explore first, negotiate later?”

The lack of clarity extends to whether exploitation terms are standardized or subject to negotiation on a case-by-case basis “depending on things other than competence, track record, and experience”—an uncertainty that investors tend to price in as risk.

“There is no solution except a transparent and attractive law that applies equally to everyone,” El-Raghy said, one that protects both the state’s interests and the investor’s and clearly defines obligations at every stage of a project.

Mohamed Emam, a geology expert, argued that incentives will matter little unless they eliminate the risk of projects being trapped in bureaucratic limbo. He called for a legal framework that obliges all relevant state bodies to issue their approvals alongside the license itself—and for those approvals to remain valid for its duration.

Egypt’s limited track record, he said, is telling. “We have only the Sukari mine in a country where there could be more than 50 gold mines.”

Potential, unrealized

Hassan Bakhit, a former deputy minister of petroleum, also pointed to the gap between geological promise and investment reality. “Thirty years ago they spoke of 120 sites with gold potential,” he told Al Manassa. “Now estimates exceed 600.”

He highlighted persistent difficulties investors face when dealing with the armed forces-affiliated Egyptian Mineral Resources Company, whose operative bylaws have not been made public. The absence of clear rules, he warned, leaves investors exposed to unexpected penalties and fines.

Mining’s unrealized promise extends beyond gold. Egypt holds deposits of iron, copper and potassium—materials it continues to import at significant cost.

Potassium, used in agriculture, is a case in point. Studies in the Gulf of Suez, near Ras Ghareb, suggest the area could host one of the world’s largest potassium mines. Yet no project has reached production.

Quarried materials present the opposite problem: abundance without pricing discipline. Limestone from Samalut, prized for its purity and industrial uses, is often sold cheaply and diverted to low-value applications such as brickmaking.

“I hope licensing is regulated so the price reflects the quality,” Bakhit said. “Otherwise, we are simply wasting it.”

Not all efforts have failed. In 2025, Canada’s Aton Resources said it would begin commercial gold production at Abu Marawat in the Eastern Desert in 2026. But the scale remains modest: confirmed reserves stand at about 300,000 ounces, compared with an estimated 6.2 million ounces at Sukari.

For now, Egypt’s mining incentives remain long on promise and short on proof.