Chairman of La Mancha in talks with government over new tender
One of Egypt’s richest men has long coveted a role in his nation’s gold-mining industry. Now, a shakeup in regulations and a potential auction of new licenses could give Naguib Sawiris a shining opportunity.
The Egyptian government “already started talks with us as well as other companies to promote the new tender,” Sawiris, the chairman of La Mancha Holding S.a.r.l., said in a phone interview. “We are willing to participate in any area that could be promising.” He didn’t specify which of the firms he’s involved with would submit bids.
The North African country, where the mineral wealth remains largely under-explored and undeveloped, will announce its first exploration tender in about three years by March, according to a person with direct knowledge of the plans.
It’s Egypt’s latest drive to spur investment in the sector, after enacting rules last month that limit royalty payments and drop the requirement that miners form joint ventures with the government — steps foreign companies have long complained about. Ramping up gold output would be a future source of growth for the economy, which is emerging from a sweeping International Monetary Fund-backed reform program.
Photographer: Sima Diab/Bloomberg
Sawiris, who hails from an industrialist family, made his name investing in telecommunications in Egypt as well as frontier markets such as Iraq, Pakistan and North Korea. Egypt’s second-richest person, with a net worth of $5.1 billion according to the Bloomberg Billionaires Index, Sawiris’ closely held gold-miner La Mancha is the biggest shareholder of Toronto-listed Endeavour Mining Corp., which operates in Ivory Coast, Burkina Faso and Mali.
Egypt’s last exploration tender in 2017 attracted little appetite from international companies and was shunned by gold producer Centamin Plc, operator of the country’s only active gold mine, Sukari. The mine opened in 2009 and produced 480,529 ounces (15 tons) last year.
Sawiris, who has said he’s put as much as half of his wealth into gold, has seen his dreams of gold-mining in Egypt hit obstacles before. Endeavour’s recent $1.9 billion offer to take over Centamin was rejected by the company, which said the amount fundamentally undervalued its assets.
“The new regulations are more favorable and more realistic and would attract foreign investments to the sector,” said Sawiris. The government is planning a roadshow in Canada next month and will promote the new opportunities at a global mining conference, according to the 64-year-old, whose brother Nassef is the chief executive officer of OCI NV and the country’s richest man.
Vancouver-based miner Aton Resources Inc. secured mining rights last week, the first such award since Centamin’s more than a decade ago. Aton has identified gold and base metal exploration targets in the Abu Marawat concession of the Arabian-Nubian Shield region.
LEGISLATION WATCH- Amendments to Mineral Resources Act sent to House: The government has sent long-awaited draft amendments to the Mineral Resources Act to the House of Representatives for review, Oil Minister Tarek El Molla said. El Molla reiterated that the amendments were made primarily to draw investments in the flagging mining sector, which holds world-class potential, but is hobbled by an outdated economic framework better suited to the oil and gas industry. El Molla noted that the ministry will begin immediately implementing the reforms laid out by consultancy Wood Mackenzie as soon as the House passes the amendments. Wood Mackenzie had been contracted by an affiliate of the Oil Ministry to lay out an appropriate development strategy for the sector.
El Molla expects the law’s executive regulations will be issued within six months of the bill passing in the House of Representatives and being signed into law by President Abdel Fattah El Sisi.
Background: While few details of the bill have been revealed, we expect it will see Egypt scrap its oil-and-gas-style production sharing agreement and move to a tax, rent and royalty model, eliminating the requirement that miners enter into 50:50 JVs with the sector’s regulator. It’s also expected to allow exploration companies to acquire exploration ground without first obtaining exploration licenses. The amendments, which aim to attract significant foreign interest in the nation’s mining sector, have been praised by industry leaders.
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