A research conducted by World Bank last year indicated that the traditional mining sector has created employment opportunity for more than 1.2 million work force formally and informally in Ethiopia. Traditional mining is also the backbone of the mining sector productivity compared to that of companies. It takes the lion share of foreign currency earning of the mining sector.
Jigsa Kidane, Traditional Mining Coordination and Support Director with Ministry of Mining, Petroleum and Natural Gas told The Ethiopian Herald that in the past six months of this fiscal year, traditional mining covers 78 per cent of the total foreign currency earned from the mining sector. The sector also created more than 51,000 job opportunities in six months. This indicates that compared with the productivity of companies in the sector, traditional mining is more productive and creates more jobs for the youth. Jiksa said that traditional mining especially gold supply to the National Bank is decreasing from year to year since 2013.
According to Planning Director with the Ministry, Geremew Regassa, in 2012 the country earned 654 million USD foreign currency from the mining sector, but 2017/18 performance was 133.6 million USD. He added that the performance of the past six months was 30 million USD, which is by far below the plan. This indicated that not only the traditional mining sector, the productivity of companies is even more decreasing.
The prevalence of contraband and informal trade in the traditional mining sector, revoking Midroc Gold Mining and Ezana Gold Mining material shortage were the main factors for productivity and foreign currency performance decreasing specially in recent years. The country has put a policy framework to make the mining sector to be the backbone of the industry input by 2023 with an increase in the sector’s contribution to the GDP from two to ten percent and a tenfold increasing in foreign currency earning. However, the productivity of the sector is decreasing from year to year in the past five to six years especially in terms of foreign currency earning.
Traditional mining is practiced in all states and accounts for the largest portion of the foreign currency that the country obtains from the sector, according to Jiksa. 78.28 percent of the foreign currency of the past six months of the mining sector was earned from the traditional production while companies take only 22.72 percent.
The recent year’s share of the sector comparing with companies was also more than 54 percent, he noted. Gold, Opal, Emerald, Sapphire and Tantalum are the main mineral items produced by traditional miners. In addition metallic minerals, value added opal, chromite and other precious mining products are also produced in the sector. Almost in all states, traditional mining production is available although it depends on the kind and amount of minerals. Yet the sector is affected by many factors in recent years.
According to Jiksa following the decrease in the supply of Gold to National Bank of Ethiopia (NBE) the government has conducted researches to identify the main reasons. Since mining is mostly dependent on traditional method, the government has put solutions to solve the problems with traditional mining mainly market related problems, according to Jiksa. After identifying the problems, the ministry with NBE discussed on the measurements mainly providing easily accessible market for all mining producers and licensed mobile transporters, the director noted.
As an incentive to gold suppliers the bank has decreased the minimum threshold first from 250 grams to 150 grams three years ago and again to 50 gram last year, but to no avail. According to recent researches the identified shortages of the sector is mainly market problem for traditional mining producers, Jiksa underlined. The productivity is continued, yet provision of Gold to National Bank remains decreasing.
According to him the main factor on the market of mining products is informality dominance and contraband. Weakness in supporting and formalizing traditional mining producers, lack of technology support, capacity limitation, and absence of strong market linkage with remote area producers are also the main limitations of the sector. To solve the root causes of problems surrounding the traditional mining sector strategically, now, Traditional Mining Development Strategy is under preparation and the ministry is working to increase the provision centers of gold jointly with NBE, Jiksa noted.
Minister Dr. Samuel Urkato on his part stated that to increase the productivity and foreign currency earnings from the mining sector, the ministry are working aggressively and give special attention to formalize the traditional mining both in market linkage and in production.
The minister said that since more than 1.2 million productive human power is participating in this sector, supporting the traditional production through technology, market linkage, formalizing the informal way will contribute to solve problems of the sector. In addition to solving the problems of companies engaged in mining production.
Controlling contraband, widening investment by attracting international companies, introducing geographic information system (GIS) to traditional miners, widening gold supply centers, putting in place a modern supply system are suggested as strategies to solve the problems of the mining sector thereby addressing the foreign currency earning of the country. Natural Resource, Irrigation and Energy Affaires Standing Committee, Mining and Petroleum Sub Committee Chairperson, Honorable Jembernesh Kinfe told The Ethiopian Herald that the foreign currency earnings of the sector is very low.
She added that the ministry is taking necessary reforms, yet widening investment in the sector, exporting value added products, formalizing the traditional mining and controlling contraband needs serious and urgent solutions. By developing geological information, formalizing the traditional mining, supporting the traditional producers, and solving the problems with Ezana and Midroc companies, the ministry vows to increase the productivity and foreign currency earning of the sector. In addition to solving the obstacles of traditional sector, revoking of Midroc Adola Gold Mining will get solution on the next 100 days plan of the ministry. Currently 60 companies are engaged in mining while 76 are undertaking exploration activities in the country, Dr. Samuel said.
Herald February 9/2019
BY DARGIE KAHSAY
