Egypt: Overview Of The Mineral Resources Law No. 198 Of 2014

Last Updated: 2 July 2015
Article by Youssry Saleh & Partners

Egypt has enormous mineral wealth, but it does not yet exploit it properly. This is because the participation rate of the wealth in the gross national product, according to the Ministry of Planning for the fiscal year 2013/2014 is estimated 4% only. This production percentage is nothing in relation to the wealth that Egypt possesses. For example, copper and white sand which are used in silicon industry, an essential element in the production of photovoltaic cells for power generation; Egypt imports 200,000 tons of copper each year and it was recently permitted to export white sand.

In Egypt, there are precious rich metals like gold, but it's not extracted in adequate quantities for two reasons:

  • Its volume and quality in the Egyptian mountains and lands.
  • The inexperience of the Egyptian companies which are specialized in this industry.

Egyptian government has realized that it is important to introduce new legislation to coordinate the search and exploitation operations in Egypt as well as encourage investors to invest in this field, so Mineral Resources Law No. 198 of 2014 had been issued.

Therefore, in order to clarify terms and conditions of the said law a brief overview is provided herein.

The scope of the application of the law:

This law is applied on search and exploitation operations for the raw materials of mines and quarries, and salt pans. However, the search of nuclear materials and radioactive isotopes is out of the scope.

The law is applied to search agreements of minerals and its exploitation.

Timeline:

All the licensees related to mines, quarries and Salinas issued prior to this law, remain valid and enforceable.

The annual renewal value and the license fees should be adjusted for the renewal term.

Important Terms:

Search: The process of exploration of the Earth's surface and its interior examination to determine their suitability for economic exploitation

Exploitation: Extraction of mineral raw materials from the Earth's surface or its interior

Mining: The extraction operation and fixing the mineral ores to become valid for use.

Relevant Authorities responsible for implementation of the law

Egyptian Mineral Resources Authority

It is the concerned institution to run and manage the activity of mineral wealth in Egypt.

Authority's Competencies:

  • Organization of the search and exploitation operations of ore mines and control over those operations.
  • Technical supervision of the operations of extracting raw materials.
  • Coordination within and between the governorates that have a relation with search, exploitation for quarries and Salinas ores.
  • Approval for issuing the licenses for mines.

Features for the authority:

  • Conducting research and exploitation.
  • Establishment of companies for research, exploitation, mining or contribution to or participation in companies operating in this area.
  • Suggesting areas of research and mining exploitation after the approval of the minister or the competent governor, according to special regulations without referring to legislation of bids and tenders and after the approval of the Secretary of Defense on the suggested

The competent minister or governor:

The Minister of the competent Ministry in the mineral wealth activities in Egypt.

His Competences

  • Approving the search and exploitation licenses of mines.
  • Licensing to search and exploit the mines to company or association or institution under certain conditions without restriction to mineral wealth rules, and this is according to the law.
  • Suspension and cancellation of licensing of the search and exploitation licenses of mines temporarily, based on the decision of the competent Authority. This is due to the existence of extreme danger on the safety of the work or workers or the licensed area or to give the competent Authority to get special technicians to prove that there are technical Irregularities in the area.

The concerned province is the managerial institution which is specialized in managing the quarries and salt pans located in its area and under the technical supervision of the institution.

Its Competences:

  • Approving the licenses of the search and exploitation of the quarries and salt pans.
  • Licensing according to the search and exploitation law of mines to company or association or institution under certain conditions without restriction to mineral wealth rules.
  • Stop licensing the search and exploitation licenses of mines temporarily, based on the decision of the competent Authority. This is due to the existence of extreme danger on the safety of the work or workers or the licensed area or to give the competent authority to get special technicians to prove that there are technical Irregularities in the area.

Regulations of search license in mines:

  • The license of search in mines should be issued by the decision of the Minister or the Governor with the approval of the competent Authority.
  • The duration of the search license is two years and can be renewed for one period only
  • It's not allowed for the search licensee to take ore sample unless a written approval from the competent authority is obtained

Notice:

The competent Authority guarantees to compensate the licensee in case if the licensed area is an area for the public benefit and as a result of this work there will be damages that will hinder the process of research and exploitation.

Spaces that are allowed to have a license for the research and exploitation in mines:

  • Area is not more than one kilometer square, the licensee should be issued by the competent Authority.
  • Area is not more than sixteen kilometer square the licensee should be issued by the Minister.
  • Area is more than sixteen kilometer square the licensee should be issued as per the law.

Regulations of exploitation licensing of mines, quarries, and salt pans:

  • Obtain a valid search for mineral raw in the same required space, whether the exploitation for the whole space or part of it.
  • Provide a technical report from the licensee that proves the existence of raw materials. This report should show the economic returns from the exploitation and exploitation program and the necessary guarantees .
  • The approval of the license is done by the Minister or the Governor after the approval of the competent Authority ; In case of refusal of the license, a reasoned decision should be available.
  • The duration of the exploitation license shall not be more than fifteen years and may be extended under the law for five years.

Notice:

It is allowed for the competent Authority –as an exception- to issue the exploitation license through public bidding in the areas that has raw materials.

Fees payable for research and exploitation:

The licensee should pay to the competent Authority the fees according to the licensed area:

  • Annual rent determined by the executive regulations of the law and would be paid a year in advance, and the competent Authority may change the annual rental value of the ore mines every four years, with the consent of the President of Council of Ministers.
  • Annual royalty fee of not less than 5% of the annual production of the raw value.
  • 1% of the annual production value of the ore mines allocated to contribute to the development of the province where the exploitation area is located.

Cases of licenses cancellation:

Licenses cancellation should be issued by the Minister or the competent Governor after the approval of the competent Authority.

Reasons for cancellation:

  • Non-payment of the rent or royalty fees within sixty days of the due date.
  • Violation of the provisions of the law or its Internal Statute.
  • Violation of license terms.
  • Declaring bankruptcy of the licensee under an enforceable judgment.
  • In case of liquidation of the licensed company
  • Failure to start the business for a maximum period of one month from the date of receipt of licensed area, this is due to reasons related to the licensee or discontinuation of the business without written permission from the competent Authority for a connected period of three months or lack of seriousness for six months
  • Assigning the license to third parties or subletting without the written approval of the competent Authority.
  • The licensee exports the extracts on the land outside the boundaries of the licensed area without getting a lease for them.
  • In case licensee extracts ore from outside the licensed area.
  • In case of death of the licensee and absence of claim from within a period of ninety days from the date of death. In case the heirs decided to take his place, he should have the required efficiency of the implementation of the license.
  • Violation of the operating conditions and failure to liquidate these violations within sixty days from the date of the warning received by the licensee.
  • Evidence of contamination of the licensed area for some reason due to the licensee.
  • The licensee provides false statements or false documents to the competent Authority.

Irregularities subjected to criminal penalties:

Extracting the ores from the mines or quarries or salt works without a license. The scheduled punishment is imprisonment of not less than one year and a fine of not less than two hundred and fifty thousand pounds and not more than five million pounds.

Extracting the ores from outside the limits of the licensed area. The scheduled punishment is a fine of not less than two hundred and fifty thousand pounds and not more than five million pounds

To issue or to participate in issuing a a license of a socket in an agricultural land. The scheduled punishment is imprisonment for not less than one year and a fine of not less than two hundred thousand pounds and not more than a million pounds.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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