Does Egypt Really Need a National Gold Refinery?

The repeated discussion about Egypt’s intention to establish a national gold refinery raises a legitimate question: are we facing an economically justified project driven by hard numbers, or an idea that is politically appealing but misaligned with production realities?

In the gold sector, good intentions and slogans about “value addition” are not enough. At its core, the issue is governed by precise calculations related to production volumes, raw material flows, operating costs, and expected returns.

By nature, gold is not merely a commodity but a full-fledged industry that requires sufficient production scale and a supportive legislative and commercial framework for refineries to become a source of added value rather than a capital burden.

How much gold does Egypt produce?

According to available data, Egypt’s official gold production stands at around 18–20 tonnes per year, more than 95% of which comes from the Sukari mine in the Eastern Desert. Other concessions remain either in exploration phases or limited production stages, collectively producing no more than one tonne annually.

As such, Egypt’s total official gold output revolves around 20 tonnes per year — a modest figure when compared with countries that operate large-scale gold refineries.

It is sometimes argued that non-official (artisanal) gold production could alter the economic feasibility equation. However, realistic estimates, based on expert testimony and field observations, suggest that informal gold output in Egypt ranges between 3 and 7 tonnes per year at best, with no precise way to accurately quantify it.

Even under the most optimistic assumptions, total production (official plus unofficial) would not exceed 27 tonnes annually — a volume that does not economically justify the establishment of a large, capital-intensive gold refinery.

Simply put, this level of production does not place Egypt among countries that require high-capacity refineries, nor does it compare with nations that process hundreds of tonnes annually.

Are we losing value by refining abroad?

One of the most common arguments in favor of a domestic refinery is that Egypt exports its gold in raw form and therefore loses part of its value. Technically, this claim does not hold up.

Egyptian gold is produced in the form of doré bullion with relatively high purity, and global refining costs are minimal, representing no meaningful drag on returns. Refining abroad does not constitute an economic drain that would justify heavy domestic capital investment.

Gold from the Sukari mine is classified as doré with purity levels ranging between 90% and 95%, which is globally acceptable. Refining costs abroad are relatively low and do not materially affect export revenues.

Globally, refining costs per ounce range between $5 and $10 — meaning Egypt does not lose substantial value by refining outside its borders, particularly given the limited scale of production.

Existing local refining capabilities

Perhaps the most critical point in this debate is that Egypt already possesses entities capable of refining gold circulating within the domestic market.

Several companies operating in bullion manufacturing own private refineries that actively collect gold from the local market — whether from recycled jewelry or industrial scrap — refine it, and reprocess it domestically according to established industrial and commercial standards.

The presence of these companies confirms that technical and human capabilities already exist, albeit on a medium scale, and that the volume of gold circulating within the Egyptian market can be accommodated without the need for a massive standalone refinery. Any company with an existing refinery, inside or outside Egypt, can handle this production volume without operational difficulty.

Why do refineries succeed elsewhere?

The UAE is often cited as a model when discussing gold refineries, but this comparison overlooks fundamental structural differences.

The UAE did not build its refineries based on domestic production, but rather on its role as a global gold trading hub — receiving raw gold from dozens of countries and operating cross-border trading and recycling networks.

Egypt, by contrast, is not a transit hub for gold, lacks consistent regional inflows of raw material, and does not have a regulatory environment that facilitates large-scale gold imports and recycling. Replicating the experience without replicating its conditions risks creating a facility operating at half capacity — or less.

This debate must also be viewed within the broader African refining landscape. Africa already hosts major refineries capable of processing volumes far exceeding Egypt’s production.

South Africa’s Rand Refinery — the largest in Africa and among the world’s largest — processes hundreds of tonnes annually and operates under London Bullion Market Association (LBMA) standards.

Countries such as Ghana and Tanzania also host regional refineries serving domestic production and accepting feedstock from neighboring countries. Refining costs in these facilities are relatively low, typically ranging between 0.5% and 2% of gold value in large refineries, and up to 2–5% in mid-scale facilities — equivalent to only a few dollars per gram.

This reality underscores that Egypt’s gold output can easily be absorbed by existing refineries in Africa or elsewhere, without the need to build a new large-scale facility unsupported by pressing technical or economic necessity.

Moreover, Egypt is not a regional hub for raw gold trade, does not have an active gold import network, and lacks a comparable legislative framework that would allow for massive feedstock inflows.

The real risk: an idle asset

The issue is not the concept of a refinery itself — but its scale.

Building a large gold refinery requires stable annual throughput, high utilization rates, and the ability to attract raw material from abroad — conditions that are currently absent in Egypt.

The likely outcome of such a project, if oversized, would be idle capacity, higher per-gram operating costs, and weak returns on investment — turning the refinery from a value-adding asset into a financial burden.

Economic logic suggests Egypt may benefit from a small-to-medium refining unit with capacity aligned to domestic production — capable of serving official and informal gold flows, as well as the needs of the local market and the central bank.

Jumping directly to a large-scale refinery is a decision not supported by current data, regardless of how appealing it may look on paper.

Available figures do not indicate that Egypt needs a large gold refinery modeled on Gulf experiences. However, this does not negate the potential value of establishing a small or medium-scale refining unit with annual capacity of 30–50 tonnes, serving domestic production, informal gold flows, and the needs of the local market and the central bank — without imposing unjustified investment burdens on the economy.

In the gold economy, a country’s strength is not measured by the size of its refinery, but by how well it aligns with production and trade realities. Any decision that ignores this principle remains premature.

This underscores the need to approach the gold refinery file through the lens of numbers — not aspirations.