(Ecofin Agency) - Egypt aims to increase the mining sector's contribution to GDP from less than 1% in the last decade to 5% by 2030. To attract investors, the government introduced new regulations in 2020 and subsequently granted new exploration permits.

Centamin, a mining company in Egypt, revealed on July 20 that it has signed a preliminary agreement with the Ministry of Petroleum and Mineral Resources and the Egyptian Mineral Resources Authority. The agreement pertains to the legal and fiscal framework for commercial discoveries on gold exploration permits acquired in the Egyptian Eastern Desert in 2021. It will become law after ratification by the end of the year.

As per the agreement's terms, Centamin will be granted mining licenses with a 30-year tax stability clause. During this period, the mining royalty will be 5% of net smelter revenue, and the corporate tax rate will be 22.5%. The government will also receive 15% financial interest on post-tax income, while Centamin will allocate 0.5% for community development.

"Centamin has been successfully operating in Egypt for over 20 years, and we believe these conditions lay the groundwork for the development of the Egyptian mining sector. The framework agreement provides a clear regulatory and fiscal framework that fairly balances risks and rewards for all stakeholders," Martin Horgan, CEO of Centamin, commented.

The provisions of this agreement align with the new regulations introduced in Egypt's mining sector in 2020. These regulations, including the removal of the obligation for mining companies to form joint ventures with the government before operating mines in the country, have attracted new investors, including Barrick Gold, the world's second-largest gold producer.

Centamin also participated in the government's subsequent bidding rounds to award exploration permits. The company, which already owns the Sukari gold mine in the country, secured 3,000 square kilometers of highly promising gold-rich lands. A second gold mine by Centamin would help the government achieve its goal of a 5% GDP contribution from the mining industry by 2030, compared to less than 1% in recent years.

Emiliano Tossou