TEXT OF COMMENTARY
SCOTT JAGOW: Today, I’m in front of the Cairo stock exchange, as we continue our series, The Middle East at Work. At one time, the Egyptian exchange was one of the world’s biggest. But it closed in 1961 for more than three decades under a push for socialism. Now it’s making a comeback. Last year, Egypt’s stock market saw 51 percent growth. Gold prices keep hitting record highs, but until now, Egypt has largely missed out on the gold boom. Amy Scott reports.
AMY SCOTT: At the Egyptian Museum in Cairo, a tour group gawks at a golden shrine the size of a small room. It’s one of four gilded boxes that housed the mummy of young King Tutankhamen.
WAFAA AL-SADDIK:
They call him the Golden Boy or the Golden Pharaoh, because most of the objects are made either solid gold, or gilded.
Wafaa Al-Saddik is the museum’s director general. She echoes a common belief in Egypt. That the Pharaohs, followed by the Romans and the British pretty much cleaned Egypt out of its gold.
AL-SADDIK: We still have some gold, but not so pure, like what the ancient Egyptian used.
It’s pure enough for Joseph El-Raghy. He’s CEO of Centamin Egypt. The Australian-Egyptian company is building the country’s first major modern gold mine in the Eastern Desert near the Red Sea. At his office in Alexandria, El-Raghy rolls out a map and points to a tract of sandy hills. He says more than ten million ounces of gold lie below ground there. With gold prices nearing $1,000 an ounce that’s close to ten billion dollars worth.
JOSEPH EL-RAGHY: The estimates are that over 55 million ounces has come from this Red Sea Hills area of Egypt, which makes it one of the biggest gold fields in the world.
Big enough to rival major African producers like Tanzania. But until recently, Centamin’s had the gold field pretty much to itself. After Egypt’s socialist revolution more than 50 years ago foreign mining companies fled. An antiquated mining code hasn’t given them much reason to come back. Frank Sader manages Middle Eastern policy reform at the International Finance Corporation, or IFC. It’s the private sector arm of the World Bank. He says under the current system, more than half a company’s revenues go to the Egyptian government.
FRANK SADER: The average company would find it way more attractive to go to other countries with a better developed framework. Be it South Africa, Chile, you name it, rather than Egypt.
Centamin was willing to work with the government, but it took years of legal battles. El-Raghy admits most companies wouldn’t have the patience.
EL-RAGHY: I guess we have a real interest in getting mining going in Egypt, because we are an Egyptian family, and an Egyptian company really. If you weren’t you probably wouldn’t be here.
That’s starting to change. A handful of other foreign companies recently signed deals to begin exploration. The Egyptian government is crafting a new mining code more favorable to outside investors. After a dozen years of drilling, Centamin is due to pour its first gold bar in December. With a new law opening Egypt for investment, Joseph El-Raghy expects some company in the desert.
JOSEPH EL-RAGHY: Yeah, I think there will be a real mining boom here in Egypt. The fact that it’s wide open, with a new mining code, we’ll have a lot of people come.
People come every day to buy Egyptian gold at the Khan El Khalilim, Cairo’s famous bazaar. Jewelers sell golden Nefertiti heads and camels. The tourist trinkets are made here in Egypt. But the gold itself?
FATHEY: All overseas. Most of it comes from South Africa.
Gold dealer Yaki Boutros has heard about efforts to revive the Egyptian mining industry.
EL-RAGHY: Hopefully the amount of gold will be enough to stabilize the price in Egypt, maybe add to our national income. I’m sure it will help.
Not that the tourists care where the gold comes from, he says.
They only ask about the price.
In Cairo, I’m Amy Scott for Marketplace.
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