The Sukari Gold Mine

The Sukari Gold Mine is frequently in the news for the transport of gold shipments from Egypt to Canada for purification and sale in the London gold market. The latest report mentioned a shipment of 322 kilograms of gold1.

Egypt has 130 areas rich in gold, according to the oldest geological map known as the “Map of the Fawakhir”. Currently named the “Turin Papyrus Map”, it is displayed in the Museum of Ancient Egypt in Turin, Italy. The map was drawn on papyrus around 1200 BC during the reign of King Seti I. Later, a total of 270 locations were discovered across Egypt2.

Modern gold mining in Egypt began in 1903 with the first contract for mining exploitation by the “Egyptian Exploration Company”. Subsequent contracts were signed with “United Nile Valley” in 1905 and “Egypt and Sudan” in 1906. Despite their Egyptian names, these companies were predominantly under British control.

The Sukari Mountain emerged as the largest gold reserve known to Egyptians. In 1938, the Egyptian government took control and named it the “Government Gold Mine”. Mining continued until 1950 when King Farouk ordered the cessation of operations.

The reasons for halting operations were twofold: the cost of extraction exceeded the value of the extracted gold, as the Egyptian pound was more valuable than the gold itself at the time. The second reason was that Egypt had the world’s largest gold reserve, so King Farouk declared the mine closed for future generations.

During Gamal Abdel Nasser’s era, foreign mining companies were expelled, and Egyptian companies were nationalized, halting gold extraction completely from 1954 until 1977. Under Sadat’s open economic policy, gold extraction was offered to various companies, but none started operations.

In 1984, under Mubarak, the Geological Survey Authority, overseeing mines and natural resources, was merged with the Ministry of Petroleum. The ministry’s first decision was to create profit-sharing contracts with mining companies, regardless of their nationality, focusing on the company’s readiness, financial capacity, and expertise.

A significant event occurred when a new contract with the foreign company “Centamin Limited”, owned by Sami El-Raghy (Australian-Egyptian), came to light. Sami El-Raghy, an Egyptian who moved to Australia and worked in mining, returned to Egypt as a successful businessman and offered the government a partnership to extract minerals. Initially for uranium, the focus shifted to establishing a highly advanced mining project in the Sukari Mountain under Marsa Alam.

In 1994, a partnership contract was signed between the Egyptian government and Centamin Limited, with the Australian company sharing only profits at a 50% rate with the government. However, the term “profits” was vague, as it would be calculated after deducting the company’s expenses for research, operation, transportation, and marketing, all priced by the company itself. The company began its research and equipment setup in 1994, with the first gold production in 2010.

Controversies arose due to the unfair terms of the agreement for Egypt’s rights to its gold and the vast land area granted to the Australian company for use. Legal actions were taken, but when Sameh Fahmy became the Minister of Petroleum, the situation was eased in favor of the Australian company, similar to the gas export contracts to Israel. The Australian company also acquired the largest Egyptian gold extraction company, “Pharaoh Mining Company”, and became responsible for supporting services such as labor and material supply.

Egypt’s actual share in the agreement did not exceed 3 to 8% of the total gold extracted because the Australian company’s share of profit, operation, extraction, and overseas shipping consumed the remaining 97%, according to a report by Al-Gomhuria newspaper.

After the January 2011 revolution, mine workers raised their demands, revealing issues such as gold smuggling and the Australian company’s purchase of gold from local miners. A detailed message on Facebook in the workers’ name, along with videos, led to social media uproar and the creation of pages demanding Egyptians’ rights to their plundered gold.

A lawsuit was filed by Hamdy El-Fakharany, a member of parliament, against the Australian company, requesting the annulment of the contract. Two years later, the court ruled in favor of annulment, raising hopes among Egyptian investors to start gold mining, which had faced resistance from the government.

Sami El-Raghy appealed the ruling, and his brother, Brigadier Ismat El-Raghy, the General Manager of Security and Public Relations at the mine, joined him as the company’s shares had dropped by 57% due to these disputes.

In recent times, the Australian company obtained a tailored ruling to stop the annulment of the agreement in June. This ruling was scarcely published by the press, and Hamdy El-Fakharany, who had filed the lawsuit, was imprisoned on charges related to opposing the regime. However, a piece of news was published as a great joy for Egyptians on October 22, 2016, about the first profit-sharing from the mine’s gold in the past 20 years.

Is this story worth all the fuss? Absolutely. According to a government report published by Al-Youm Al-Sabea, the Sukari Gold Mine is currently preparing to become one of the top 25 mines in the world. It has a gold reserve estimated at 15.7 million ounces, with 1300 tons of gold to be mined, valued at over $50 billion. Egypt will receive $200 million annually from the company for 20 years, totaling $4 billion out of the $50 billion.