We often read news like this in the newspapers: "The cargo village authorities at Cairo International Airport have taken strict measures for the shipment of several gold parcels from the Sukari mine on their way to Canada for refining and sale on the London gold markets." The latest news was just six days ago, with the total weight of the parcels reaching 322 kilograms. Hundreds of millions of dollars are regularly heading to Canada and London.
But where do these riches go? And why don't we see them? Let's understand the story together.
Background on Gold in Egypt:
Egypt has 130 gold-rich areas, according to the oldest Pharaonic geological map in history, the "Fawakhir Map. " This map, now called the "Turin Gold Papyrus," is displayed at the Ancient Egypt Museum in Turin, Italy. It was drawn on papyrus in 1200 BC during the reign of King Seti I. Later, 270 gold sites were discovered across Egypt.
Modern gold mining in Egypt began in 1903 when the first mining contract was signed with the "Egyptian Exploration Company." This was followed by contracts with the "United Nile Company" in 1905 and the "Egypt-Sudan Company" in 1906. Despite their Egyptian names, these companies were controlled mainly by the British.
The "Sukari Mountain" emerged as the largest gold reserve known to the Egyptians in history. The Egyptian government started working on it intensely in 1938, naming it the "Government Gold Mine." Gold extraction continued until 1950, when King Farouk stopped the work.
Reasons for Stopping Work at the Sukari Mine:
Two reasons were given for halting work at the mine, both of which seem laughable given our current situation:
According to Dr. Ahmed Dardir, former head of the Geological Survey, the extraction costs at that time exceeded the value of the gold extracted because the Egyptian pound was more potent than the gold pound itself. The value of a gold pound was 97.5 Egyptian piasters. The gold pound is worth $264, or about 4,752 Egyptian pounds.
According to three documents from King Farouk's era, Egypt had the largest gold reserve in the world. King Farouk said about the mine, "Close it; this is for future generations!" The news was published in Egypt's first illustrated newspaper, "Al-Lata'if Al-Musawara."
Modern Gold Mining History in Egypt:
During Gamal Abdel Nasser's reign, foreign gold mining companies were expelled, and any Egyptian companies working in this field were nationalized. As a result, gold extraction stopped entirely in 1954 and continued until 1977 under Sadat's rule. With the open-door policy and the attraction of foreign investments, gold extraction was offered to several companies, but they have yet to start.
In 1984, the "Geological Survey Authority" supervising mines and natural resources was merged with the "Ministry of Petroleum." The ministry's first decision was to sign profit-sharing contracts with mining companies, whether Egyptian or foreign, provided that the company was financially capable and experienced.
The Story of Australia's "Centamin Ltd":
Amid events, a new contract appeared with a foreign company named Centamin Ltd, owned by Sami El-Raghy, an Australian of Egyptian origin. This company's story is significant and ongoing, but we will summarize it as much as possible.
Sami El-Raghy, a young Egyptian who graduated from the Faculty of Science, Geology Department, in 1968, traveled to Australia and worked in mining there. He climbed the ranks until he founded his company, "Centamin Ltd." After about 30 years, he returned to his homeland, Egypt, as a powerful Australian businessman and billionaire.
He offered the Egyptian government a partnership to extract minerals, with his first offer being for "uranium." However, due to technical, routine, and security issues with the "Atomic Energy Authority," the project was shifted to establishing a massive mine in "Sukari Mountain," 30 kilometers under Marsa Alam.
Partnership Agreement Between the Egyptian Government and Centamin:
In 1994, a partnership agreement was signed between the Egyptian government and "Centamin Ltd," where the Australian company would share only "profits" with the government at a 50% rate. However, this "profit" is a flexible term because it comes after deducting all expenses, including research, operation, transportation, and marketing, with prices set by the company itself. The company started research and equipment preparation from 1994 until 2010 when the first gold bar was produced.
Controversy and Crises:
Many crises arose during this period due to the unfairness of the agreement regarding Egypt's right to its gold. In addition, the vast land area the Australian company took as a usufruct right reached 3000 meters in length and 500 meters in width. Gold in this area is extracted from surface soil, so imagine the underground reserves!
Resorts to arbitration and courts happened several times. Still, when Sameh Fahmy became Minister of Petroleum, he eased things in favor of the Australian company, similar to what happened with gas export contracts to Israel at low prices. Not only that, but the Australian company also took over the largest gold extraction company in Egypt, "Pharaonic Mining Company," and became responsible for auxiliary services such as labor supply, materials, and others.
Egypt's actual share in this agreement is at most 3% to 8% of the total gold extracted because the Australian company's share of profit, operation, extraction, and shipping abroad consumes the remaining 97%, according to a previous report by Al-Gomhuria newspaper.
Public Reaction:
Did Egyptians remain silent? Yes, but after the January 2011 revolution, they did not. Like most of the population then, the mine workers made sectoral demands, and hidden scandals were revealed.
Accusations of smuggling gold abroad, buying gold from Bedouins who mine around the area, and selling it to the Australian company surfaced. A long message circulated on Facebook from the workers discussing these matters and some recorded videos, which turned social media upside down. Dozens of pages were created demanding the Egyptians' right to their stolen gold.
In response, engineer Hamdi El-Fakharany, a Member of Parliament, filed a lawsuit against the Australian company, demanding the cancellation of the contract. Indeed, after two years, the court ruled in favor of cancellation. Egyptian investors had great hope of starting to invest in gold mining.
Case Developments:
Sami El-Raghy and his brother Brigadier Ismat El-Raghy, the General Manager of Security and Public Relations at the mine, appealed the ruling because the company's shares dropped by 57% due to these disputes.
In the current situation in Egypt, the Australian company obtained a ruling last June to suspend the contract cancellation. Of course, only a few national or independent newspapers published this ruling, and the matter was primarily covered up. Ironically, engineer Hamdi El-Fakharany, who filed the case, is imprisoned on other charges related to opposing the regime. But the news was published as a great joy for Egyptians on October 22, 2016, when it was announced that the first profit-sharing of the mine's gold had been made in 20 years!
Does the Story Deserve All This Controversy?
Yes, it definitely does. According to a government report published by Youm7, the Sukari mine is preparing to be one of the top 25 mines in the world. It contains gold reserves estimated at 15.7 million ounces, and 1300 tons of gold will be mined, with a value exceeding $50 billion. Egypt will receive $200 million from the company annually for 20 years, which is the mining duration. This means Egypt will receive $4 billion out of $50 billion.
Possible Solutions:
The solution is for Egypt to start extracting its gold through Egyptian companies. Now, we have a more trained workforce than before, especially the workers currently at the Sukari mine, whose salaries do not exceed 3000 Egyptian pounds, with the lowest being 1500 pounds, while foreign experts earn $20,000 per month, according to an Egyptian economic researcher who visited the mine. A substitute for Egyptian refineries that can purify gold from impurities is needed, as the Canadian refineries are costly, according to the Sukari mine agreement, after which the gold can be exported to the London stock exchange.
Conclusion:
The story of the Sukari mine is just one of hundreds of stories of poor management and government corruption in Egypt. The truth is that Egypt is not poor; it is rich in enormous natural resources, foremost among them mineral wealth, especially gold. However, the battle of interests, bureaucracy, and lack of future vision prevent us from benefiting from them. For example, the Gulf countries have one resource, oil, and have become among the wealthiest countries in the world. Meanwhile, we have yet to benefit from the wealth above or below the ground, whether natural or human!