RAYMOND, Maine — In 2018, Egypt produced 14,680 kg of gold, roughly equivalent to 32,000 pounds. This figure was the beginning of a boom for businesses mining and exporting gold in Egypt. In 2021, Egypt relaxed the rules and regulations for foreign investments. Despite the good news, in late September 2021, Egypt’s gold exports decreased, foreshadowing a drop in income and job availability.
Gold In Egyptian Culture
Gold is ingrained in Egyptian culture and has been a trade commodity since the time of the Nubian kings, in 650 BC. Egypt’s mining industry developed under those kings. Ancient Egyptians also used gold for simple coins. As Egypt integrated gold into daily life, it placed heavy value on it over time. So it is not surprising that Egypt’s emphasis on the gold trade has lasted to the 21st century.
Established in the late 19th century by the Egyptian government, the Egyptian Mineral Resources Authority (EMRA) oversees geological and geoenvironmental surveys and studies. With one of the surveys the EMRA conducted in 2020, Egypt discovered an untapped gold mine and saw the opportunity to strengthen foreign partnerships and investments.
2020’s Gold Boom
In 2020, Egypt had a significant increase in gold production and export. For three-quarters of 2020, gold exports saw a 76% increase in revenue, jumping from $1.392 billion in United States Dollars (USD) to more than $2.4 billion in USD.
In 2018, Egypt’s Mineral Resource Law 198 underwent drastic reforms. Initially, this law placed a 20% fee on foreign investments and any business conducted in Egypt. The 2018 changes to the laws eliminated that fee. With the discovery of the new gold mine in June 2020, the number of foreign businesses intending to begin operations in Egypt soared. At the same time that foreign investors were bringing their money to Egypt, Egyptian citizens were encouraged to invest in local gold mine operations.
Local Egyptian billionaire, Naguib Sawiris, owner of AKH Gold, had one investment that initiated Egypt’s gold boom. Sawiris’s investment brought $4.1 million in USD to the region for investing in gold mining. These funds allowed for more contracts for workers with increased pay.
Gold Production and Export Contribution to Jobs
The primary mine in Egypt is the Sukari Mine. This mine opened in 2009 and started operations with a minimum of 850 workers. This number remains stable, but with Egypt’s decrease in gold exports, there is concern about employment availability.
The Sukari Mine is owned and operated by Centamin, a “mineral exploration, development, and mining company.” Centamin was founded in 1970, and as of 2021, employs more than 3,000 people. The lowest salary recorded for a current Centamin position is 4,000 Egyptian pounds, slightly more than 250 USD a month. Estimating with 4.5 weeks in a month, five days in a workweek, and eight hour days, 250 USD a month means that some Centamin employees live fifteen cents above the extreme poverty level, at 1.40 USD per day. Prospects for salary improvements were good between 2018-2020, but since Egypt’s decrease in gold exports, the funds are likely to tighten and threaten more workers with extreme poverty.
Egypt’s decrease in gold exports became apparent in February 2021. The immediate impact of the decrease was unclear, but Egypt’s gold exports have suffered since February. Gold prices on a worldwide scale fell to less than 2%, and as of October 2021, decreasing gold prices continued.
Gold prices are dependent on the value of the United States dollar, and the dollar in 2021 hit an all-time high. Upon this strengthened dollar, the United States Treasury Department released a report predicting incoming drops in gold prices instigated by high inflation, interest rates and prices to come in the months following September 2021. The falling prices in gold led to Egypt’s decrease in gold exports. Few buyers and individuals are willing to invest in gold as the prices fall. Egypt’s gold production companies, Cetamin and Sukari, are losing business. The faster they lose business, the quicker people will lose jobs and their sources of income. As of 2021, Egypt’s poverty rate stood at 29%. It is now expected to rise with the looming decrease and continued difficulties in gold’s exportation and production.
Can Egypt’s Gold Production and Exportation Stabilize?
All is not lost. Financial experts are predicting increases in gold prices when the COVID-19 pandemic ends. When the pandemic ends, financial experts forecast that world leaders will be putting into effect policies to stabilize the price of gold, which will stabilize the gold exportation and production markets.
When the prices of gold stabilize, the production of gold will resume at its normal pace. Egyptian companies, Centamin and Sukari primarily, will be free to produce and export their gold normally. Then Egypt can continue business and operations with foreign investors to improve the Egyptian job market and economy.
– Clara Mulvihill