Dubai: The Middle East's mining industry is overhauling its laws, incentives and projects to attract foreign investment to this largely untapped sector, speakers at the Middle East and North African (MENA) Mining Congress said yesterday.
Post-revolution Egypt will release a new mining code within a year designed to attract investors to its vast gold reserves in the Western Desert, previously neglected by the previous regime for political reasons, said Fekry Yousuf, Chairman of the Egyptian Mineral Resources Authority (EMRA).
"Investors prefer coming to Egypt because they can work year-round in the mines. There are no tribal issues as in other African countries, where the tribes living near the mines tell companies they cannot work there."
Egypt expects its gold reserves to be 25 million ounces and it has 14.5 million ounces of proven reserves, he noted.
Mining contributes just one per cent of Egypt's gross domestic product, but EMRA plans to increase it by eight to nine per cent in the next two years, he said. Of the $8.7 billion (Dh31.9 billion) of direct investment that Egypt received last year, only 4.5 per cent went into mining.
Clear message
Investors pumped $450 million into the Al Sukari gold mine in Sinai to complete Phase 4 of a project that will double production to 500,000 ounces a year, he said.
"Why would they invest so much if there is no stability? It's a clear message," said Yousuf, assuring that there are no reasons for security fears in the Sinai.
Investors can get a lic-ence valid for 30 years and an exploration period of four years through an application process that starts at Emra.
Egypt will honour all agreements made under the previous regime, Yousuf assured.
Political turbulence
Morocco, the world's third biggest phosphate producer, is marketing itself as a politically stable haven amid the political turbulence in North Africa.
Rich with mines of gold, barite, lead and zinc, Morocco is offering incentives to investors in hopes of at least doubling its gold production from a mere 700 kilos in 2010, said Addi Azza, general engineer at the Minister of Energy, Mines, Water and Environment.
The government is offering tax exemptions on geological equipment imported by Morocco for mining projects, payments of up to 50 per cent of infrastructure costs such as electricity, water and roads for mining companies and geological mapping studies, he said.
However, phosphate mining in Morocco, home to 50 per cent of the world's phosphate deposits, is still a state monopoly.
The biggest challenge to prospective investors in the Middle East's mining industry is a lack of credible information that is hindering investments, said Vladimir Kuznetsov, member of the Board of Directors of Earthstone Group, a minerals and mining corporation currently working on an iron-ore project in Morocco.
Major challenges
"What is really needed is a Mena Mining Information Agency, it would be a smashing success," he said, adding the oil-rich nations should take the initiative.
The mining industry is also facing major challenges such as social and environmental pressure from communities living near the mines, the disappearance of shallow mine reserves, water scarcity and market volatility that makes it hard to plan ahead.
It is also difficult to attract talent and keep up with technological innovation, said Patrick Lowery, Group head of business improvement at Anglo American, a mining company with an operating profit of $9.8 billion and global operations.
"The region is under-explored, to say which minerals it is rich in would be a bold and premature statement," said Elena Clarici, Chairman of the Association of Mining Analysts.
Investors are in ‘sit and wait' mode because of the regional turmoil and the European debt crisis, but Chinese investors are taking the lead, she said.
"People going into mining would think of Egypt first... Morocco seems to be the new Peru and Mexico is the Middle East because of its political stability," she added.