Al-Ahram Weekly | Economy | Gold lure in Egypt

		Al-Ahram Weekly Online 28 June - 4 July 2001 Issue No.540
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Gold lure in Egypt
Rushdi Said* discusses the prospects of gold mining in Egypt and the difficulties involved

I read with great interest Jasper Thornton's report on the enormous gold deposit which is claimed to have been discovered in the Eastern Desert of Egypt ("Metal urge," Al-Ahram Weekly 7 June '01). The report is based on an interview with the officers of the Australian Mining Company (Centamid) to which the discovery was credited. The company was granted a 1,400-square-kilometre concession around the old Sukkari gold mine in the Eastern Desert of Egypt in 1994. The results of the exploratory work it undertook in the area showed that gold is ubiquitous and is disseminated in the country rock surrounding the old gold mine at an average cut-off rate of one gramme per ton of rock. The analyses of many thousands of samples that were raised from 189 boreholes sunk in a small part of the concession area proved the presence of 1.8 million ounces of gold disseminated in about 60 million tons of rock. Since this area represents one tenth or one out of 10 other areas that seem to have the same potential, it is reasonable to believe that the entire concession has an exceptionally large reserve of gold. If developed it can be "one of the top 10 gold mines in the world" and can make Egypt an extremely rich country. The proceeds of the mine could "dwarf tourism, oil and receipts from the Suez Canal" according to the report.
The article admits that the Geological Survey of Egypt knew about this deposit but decided against its development because it did not anticipate its enormous dimension or recognise its economic potential. The reason for the Survey's decision, according to the article, was that it did not know about the technological innovations that have transformed the mining industry and have made possible the economic extraction of these low- grade ores. In fact, the whole mining industry of Egypt, according to the article, lagged behind in the years that followed President Nasser's decision to kick out the British, who were running booming and successful mining operations in the deserts of Egypt. Having lived and followed the mining industry during these years, I can state with certainty that nothing could be farther from the truth than this statement. Egypt has never had a thriving or a state-of-the-art mining industry that played any significant role in its economy until the 1960's. All mining operations that were conducted in Egypt before the 1956 Suez crisis and the departure of the British were small and primitive even with the standards of their time. It was only in the 1960's when Egypt formulated its first five-year plan of development that it started looking seriously into developing its mineral wealth. During the two decades that followed the launching of the plan, the Egyptian Geological Survey Authority was rebuilt, modernised and equipped with the most up-to-date tools of exploration. In fact, it was during the 1970's that the discovery of the gold deposit of the Sukkari area, whose development is being explored by the Australian Company, was made. The discovery was the result of a pioneering and daring experiment in the field of gold exploration that extended the search for this precious metal to the country rocks that surround the established gold mineralisations, something no one had attempted before. Gold exploration work until that time had been restricted to the thin quartz veins that cut across these rocks which nobody had ventured to consider exploring. Three promising areas of the country rocks surrounding the old gold mines of the Eastern Desert -- Barramiya, Sukkari and Hangaliya -- were chosen to be tested for this pioneering exploratory work. They were drilled and proved to contain gold. The Sukkari was the most promising of the three areas. It proved to contain 980,000 ounces of gold at a cut-off of one gramme a ton. Despite the fact that this amount of gold is more than half the amount of gold that the Australian Company has proved in the same area after seven years of work, it was described in the Weekly's report as "paltry." The amount of gold earned that description because it was given in kilogrammes rather than in ounces.
Contrary to what one is led to believe from reading the article, the Geological Survey was well aware of the new techniques of mass extraction and lifting of rock that were introduced in the mining industry. In fact, it was this awareness that initiated the exploratory work that led to the Sukkari discovery and also to its abandonment when it was found out that the application of these techniques could not make its extraction economical. The Survey Authority, which I headed at that time, conducted a feasibility study which showed that the capital investment needed for the development of this ore would be high, the price of energy and water forbidding and the cost of providing the area with the minimum infrastructure dear. Under such circumstances, the $8 worth of one gramme of gold contained in each ton of rock would not cover the cost of its extraction, lifting, crushing, grinding and treatment. In light of this, I decided to cut short the exploratory programme in the Sukkari area and to shelve any thoughts of developing that ore. I do not see that the results of the work of the Australian Company, as given in the Weekly article, have changed that picture. It is possible, however, that the company is holding back some information that makes it optimistic with regard to the successful development of the gold it has found in the Sukkari region of the Eastern Desert of Egypt. Until that information is disclosed, I am of the opinion that the difficulties that the company is finding in raising the capital needed for the development of the ore stem from the unfeasibility of the project rather than from the shyness of foreign capital to come to "exotic" Egypt, as mentioned in the article.
It may be of interest to point out here the lesson that can be drawn from the endeavours of another foreign company that explored for and discovered a similar gold deposit in another area in the central Eastern Desert (Abu Murawat area) in the 1980's. The company found the development of the deposit uneconomical and decided to abandon it. The decision was taken despite the fact that the ore was richer in gold content than that of the Sukkari area, each ton of ore containing double the amount of gold found in Sukkari.
An additional factor that helped me take the decision to stop any further exploration work in the Sukkari area and to shelve any plans of its development was my awareness of the detrimental and everlasting environmental effects that the massive removal of rock could bring to the serene landscape of the desert. In addition, I was also aware of the enormous harm that could be caused by the extensive use of cyanide to extract the gold from its rock. Cyanide is an extremely toxic material and its use on the scale anticipated in a mining operation of the dimensions mentioned in the article will be deadly. These considerations should be taken into account before the launching of any mining project in the area.
* The writer is the former head of the Egyptian Geological Survey Authority.

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