Egypt targets 5-6 percent GDP contribution from mining sector

Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, announced the resumption of development activities at the Zohr gas field, with plans to drill two development wells in January. He also revealed the launch of a mineral resources portal in 2025, and the opening of several mining areas for investment, aiming to attract more investment and create added value for the national economy.

Speaking at a plenary session of the Senate, El Molla responded to two discussion requests submitted by several senators. These discussions centered on the government's strategy for utilizing and developing mineral resources to boost the Egyptian economy, and the ministry's efforts to transform the Egyptian Mineral Resources Authority from a service-oriented entity to an economic one.

El Molla pointed out that the ministry has developed a strategy to address current needs, building on past achievements. This strategy targets six key areas to ensure the provision of petroleum products to citizens at the lowest cost. These areas include increasing production, intensifying drilling and exploration activities, optimizing refining and petrochemical infrastructure, and achieving a major transformation in the mining sector to increase its contribution to the GDP.

Furthermore, the strategy outlines plans to restructure Egypt's energy mix in cooperation with the Ministry of Electricity and Renewable Energy, with the goal of increasing the share of renewable energy to 42% by 2030. This transition will help utilize natural gas in value-added industries and allow the export of surplus gas. Another key component of the strategy emphasizes the importance of health, safety, environmental sustainability, and energy efficiency, aiming to create a safe working environment, attract investment, and support sustainable development projects, particularly those focused on reducing carbon emissions.

Egypt also plans to leverage its strategic geographical location to enhance regional cooperation and optimize the use of its infrastructure. This includes establishing partnerships with neighboring countries to capitalize on new discoveries and utilize Egyptian infrastructure to import and re-export Cypriot gas, or for domestic consumption, ultimately supporting value-added industries such as petrochemicals.

The strategy calls for strong cooperation between the ministry, government agencies, the parliament (both the House of Representatives and the Senate), and investment partners in the production sector. El Molla also highlighted ongoing efforts to accelerate investment in the mining sector and maximize the added value of mineral ores through legislative and legal reforms. These reforms aim to amend contract models to align with international mining standards, regulate financial systems, licensing and organizational frameworks, and transform the Mineral Resources Authority into an economic entity.

In addition, the strategy emphasizes strengthening digital infrastructure through the establishment of a digital mining portal and the development of managerial and technical capabilities through specialized training programs. Egypt possesses abundant mineral resources, with proven geological reserves that can be extracted using advanced technologies. El Molla pointed to major ores in the north-eastern desert and Sinai Peninsula, such as phosphates, iron, lead, zinc, sulfur, kaolin, and coal. He also noted that there are 150 companies active in the Egyptian mining sector, including eight international companies engaged in gold exploration and mining.

Moreover, preliminary framework agreements have been signed to facilitate investment in gold exploration, and a draft law has been proposed to amend mining agreements, particularly in exploration and prospecting, to make them more attractive to investors. Finally, El Molla outlined the key components of the 2025 work plan, which include increasing productivity, intensifying research and exploration activities, optimizing refining and petrochemical resources, expanding the use of natural gas in homes and vehicles, reducing spending on oil product imports, and launching the digital mining portal to attract more investment in the sector.

In December 2024, Egypt launched a new initiative to support the private sector in purchasing machinery and production lines. Announced by Deputy Prime Minister Kamal Al-Wazir and Finance Minister Ahmed Kouchouk, the initiative allocates 30 billion Egyptian pounds (approximately $589.8 million USD) for businesses in key sectors such as pharmaceuticals, food production, engineering, chemicals, textiles, mining, and construction materials, with a focus on high-priority areas like Upper Egypt and the Suez Canal region. The five-year initiative offers subsidized financing at a 15% interest rate, with a maximum of 75 million Egyptian pounds for a single company and 100 million Egyptian pounds for related parties. Companies that increase local added value may receive additional interest rate reductions, with eligibility requiring building permits and completed construction. The initiative will be re-evaluated based on actual production increases and local industrial localization.