Located in the heart of the Western Desert, Abu Tartour mine is the world’s second largest phosphate mine with a verified reserve of 700 million tons and a potential reserve of 10 billion tons. However, Egypt Phosphate Company— which runs the project— has been exposed to many pitfalls from the outset, starting with poor planning, to overstated investment costs, and ending with strikes after the success of the January 25, 2011 revolution.

Restructuring due to losses

Located in the heart of the Western Desert, Abu Tartour mine is the world’s second largest phosphate mine with a verified reserve of 700 million tons and a potential reserve of 10 billion tons. However, Egypt Phosphate Company— which runs the project— has been exposed to many pitfalls from the outset, starting with poor planning, to overstated investment costs, and ending with strikes after the success of the January 25, 2011 revolution.

Restructuring due to losses

Despite the returns the project could have generated – the estimated profits of each 100 million tons of phosphate are US$33 million according to international prices – the former management of the mine had debts totaling 13.4 billion Egyptian Pounds (nearly US $ 2 billion) in 2003, which prompted the government to restructure the project through establishing the Egypt Phosphate Company (EPC) to run the mine. The shareholders of the new company are the Ministry of Finance National Investment Bank (50% of shares), the Petroleum Company (20%), the Mineral Wealth Authority (20%), and the Ganoub El Wadi Petroleum Holding Company (10%).

Typical waste of public money

Nevertheless, the series of losses did not stop. In 2011, a report of the Central Auditing Organization (CAO) revealed that the investments pumped to finance the project’s complementary projects – railway of the New Valley-Red Sea, power line of Nag Hammadi-Abu Tartour, and the expansion project of the port of Safaga and the loading dock – were higher than the approved costs by 352%. CAO stated that the mine project was a typical example of public money wasted over 34 years, due to poor planning, no feasibility studies and the consequent conflict of relevant decisions and policies, which prevented realizing desired goals.

Successive strikes

On the other hand, a series of crises between miners and the EPC board of directors started in the the middle of last January and resulted in the loss of 5 million Egyptian  pounds (US $729,000) a day.

“Since the beginning of the sit-in, we have been demanding a financial and administrative restructuring of EPC and the development of a financial list for the workers to realize justice, equality and transparency,” said Muhammad Abduzzaher, a protesting miner, adding that the workers knew nothing about the EPC’s returns and profits and stressing that they stopped extracting and selling crude phosphate until all their demands were met.

Amgad Adlan, another protesting miner, said there was neither an apparent contract of EPC nor a clear financial list, and that the salaries of eight workers were suspended and they, along with 18 other workers, were given admonitions of dismissal while they only demanded their rights, Adlan said, adding that the workers were also subjected to continued threats and intimidations by the board of directors.

Reconciliation endeavor

According to the director-general of the New Valley Governorate Manpower and Immigration Directorate (MID), Ahmad Khater, the workers’ crisis is attributed to the wrong explanation of the many relevant applicable laws, such as the Law of 1947 on civil servants, Law no. 48 on the establishment of the public sector companies, and Law no. 159 on joint stock companies. His directorate, he says, is making great efforts to bring the views of workers and the EPC board of directors closer, and that the interpretation and enforcement of relevant laws were marked with many administrative as well as financial mistakes.

Satisfactory solutions

On February 17, 2013, MID managed to reach an agreement on the workers’ crisis. Khater said the miners ended their strike after forming a committee – comprising three representatives of EPC, the General Union of Mines and Quarries, and the workers – to study the amendment of the regulations of the workers’ affairs and review the wage structure implemented after the pay raise of 45% on November 14, 2011. EPC shall also enable workers to participate in its board of directors pursuant to Corporate Law no. 159 of 1981 and remove all penalties imposed against workers. The 10-point agreement was considered a victory that realized a great deal of the workers’ demands.

Fact-finding committee

In order to decide the future of the mine, a fact-finding committee – comprising members of the Shura Council and headed by  Ra’ed Zahreddine – met the project management and requested 43 important documents to examine the problem and find a solution. 

Zahreddine said the project management only presented 10 documents on the pretext that only these documents were relevant to the problem, and refused to present the project statute, the EPC functional structure, the workers’ contracts and complete data, and the EPC incorporation decision.

Private interest

Zahreddine explained that the committee observed several violations, at the top of which was the fact that the project turned into a private interest benefitting seven contractors and four companies marketing phosphate to various countries around the world. According to him, the workers do not really participate in the production process because they are marginalized by the board of directors and due to reliance on contractors and brokerage firms that hire 100 instead of 950 workers who used to work at the project. Zahreddine suggested that the project was run by the EPC headquarters in Cairo since the EPC chairman lived there.

Response

On the other hand, the EPC director, Arabi Saiyed, said, “EPC has responded to all matters related to the workers’ conditions in the New Valley only since this is what we have been notified through the Shura Council’s letter based on which we submitted the necessary documents.”

He explained that EPC managed for the first time in more than 30 years to gain profits due to its policies in the past years to get out of the dark tunnel. “We have been able to start settling the EPC debts and gain profits through raising the value of the contracts, which has directly led to increased salaries of workers and providing them with social, health and cultural services,” he added.