BY BACHA ZEWDIE
Ethiopia’s virtually untapped, diverse and vast mineral resources offer huge potential opportunities for exploration and development. These include – but are not limited to – tantalum, potash, gemstones, gold, iron ore and various industrial, energy and construction minerals.
This extraordinary potential coupled with improving government policies and regulations indicate Ethiopia is now very much on the radar screen of international mining investors, documents indicate.
A case study outlines 5 reasons why one needs to take a look at Ethiopia, one of Africa’s best performing economies. These are: Ethiopia’s high economic growth; extraordinary mineral potential; modern geodata to support exploration; a stable legal framework and major investments in infrastructure and accessibility.
Ethiopia has a mining pedigree dating back more than a millennium. Despite this long history, today commercial mining is still in its early stages, providing ample opportunity for those wishing to invest in its mining sector.
Firehiywot Fikadu, Communication Director at the Ministry of Mines and Petroleum (MoMP), told The Ethiopian Herald that the country has great amount and variety of minerals throughout its breadth and width that include precious and construction minerals.
The mining sector’s export trade performance is promising at the moment. Comparing the past six months’ performance with the plan for the current budget year indicates the championship of the sector. It earned 339.51 million USD, much exceeding the plan to earn 171.57 million USD.
This performance puts the sector at the leading position among the five targeted pillars such as agriculture, mining, tourism, ICT and manufacturing in the export trade sector, she said.
This budget year’s first half achievement exceeds not only its intended plan, but also last year’s same time income performance by 320.78 million USD. The mineral sector’s export trade basically focuses on jewelry minerals; and the amount earned this year is from these minerals. Among these, gold minerals take the lion share by earning 335.54 million USD.
According to Firehiywot, this achievement is attained due to integrated efforts like improvement in the process of National Bank of Ethiopia making gold exchange only through the bank by eliminating illegal brokers; rising in the price of global gold market and strong measures against contraband trade.
Besides, what makes the success amazing is the maximum amount earned from the minerals extracted by traditional miners. In this regard, States have played a remarkable role by supporting the process and providing what the miners need.
On the contrary, many of the modern miners are not fully engaged in the sector yet and those on the duty are contributing a little amount at the moment, she said.
This high amount of foreign currency earning success, indicated in the Ministry’s report that takes the upper hand among the targeted pillars, is of paramount importance for the country’s economic growth. It places a positive impact on the Gross domestic product (GDP) and believed to uplift the economy one step, she noted.
Aspiring to achieve more from the sector and for the maximum benefit of the traditional miners, the government has allocated 10 million Birr to launch exchange market centers for opal, emerald and sapphire minerals at three different locations: Wollo Delanta, Borena and Guji. These market centers will give the miners better opportunity to directly trade with the buyers without the interference of the brokers and become economically advantageous.
To this end, the construction phase of the exchange centers will kick off soon and legal framework manuals will be prepared with the consultation of the concerned bodies. Functionality of these exchange centers along with the legal framework will systematically put aside illegal traders and brokers, she said.
Firehiywot further explained that technology aided large-scale mining companies are also encouraged as the outcome of their engagement in the mining system places a significant impact on the country’s foreign currency earnings.
Their engagement with no doubt will uplift the amount of export products which in turn multiplies the hard currency earnings. MIDROC company is almost on the last stage to engage in the sector and others those paused the mining process due to various reasons are spurred to resume their exploration.
“We never stop here being satisfied by the achievement we registered in the past six months. Rather, we exert effort in attracting more extractors and encourage the existing ones.
To this end, mines and petroleum policy is already designed and handed over to the prime minister’s office, expecting endorsement soon,” she remarked.
In the same vein, Ethiopian Broadcasting Corporation has conducted a discussion program recently through a TV channel with three experts on Ethiopia’s mineral potential and related activities underway. Attending the discussion, Rahel Getachew, an economist and consultant, said that Ethiopia is blessed with gold and other jewelry minerals.
Though the amount and type vary, the country has a high stock of minerals with vast area coverage almost in all states that makes it among the top competitive countries in the world.
According to Rahel, gold mining had begun some three thousand years ago; recently, traditional mining has been underway since the imperial era. In addition to gold, there are other jewelry minerals such as emerald, sapphire and opal which are top ranking in the global market.
The traditional mining sector has provided job opportunity directly for over 1.3 million miners and indirectly for about 7.5 million citizens. This sector contributes more than 60 percent of the country’s gross minerals’ product. The miners are supplying such an amount by passing through a number of challenges like limited institutional and personal capacity, licensing and related technical supports from the states, financial constraint and legal procedures that do not allow them use technology among others, Rahel said.
Abebe Bedassa, Minerals and Petroleum Licensing Management Director, for his part said that list of minerals begin with construction inputs like gravel, stone and sand. These construction materials are available at every part of the country. “But our focus, mostly, is on those earning foreign currency and employing many people.”
Minerals are classified as construction, industry, jewelry and precious and semi-precious. The country is rich with minerals that can be input for the manufacturing industry and agriculture. The wide array of industrial minerals can also be exported to draw hard currency. For instance, apart from gold, there is a high deposit of potash in the country particularly in Afar State.
As per the viability study conducted by three companies, there is estimated up to 7/8 billion tons of potash deposit that can be easily developed. Recognizing this verified study output, Ethiopia’s government has stretched infrastructure for the efficiency of its development.
There are more sites not covered by the study yet. In general, as it is estimated, there is about 13-15 billion tons of potash deposit in the country that can be used for fertilizers, Abebe said.
Similarly, according to Abebe, there is great deposit of cement and coal minerals in the central part of the country, but the problem is appropriate viability study, rating and verification are not conducted on these resources.
The reason is, in addition to absence of minerals policy, there is lack of capacity in trained manpower and infancy level of industries including those coming from abroad that limited the country’s benefit from the sector, Abebe said.
Dr. Solomon Kasa, Director of Petroleum Exploration and Development, for his part said: “The presence of petroleum and natural gas in different parts of the country was known some 40/50 years ago. However, there are some reasons why we couldn’t use the resources yet.
One is the time of the discovery which was the transition period of political regimes from Haile Silassie to Derg and from Derg to EPRDF. During these periods, the companies undertaken the study left the country as a result of consequences of the transitions.”
The other is companies encounter capacity limitation at a time because of contract agreements they make with different countries. They pay more attention to the areas with excess potential and accessibility. And the other is petroleum price fluctuation in the global market.
When petroleum prices go down because of some global incidents like COVID-19, the companies lack appetite for new exploration as a result of financial dearth since the sector needs great investment, Solomon said.
For the country to fully benefit from its minerals and petroleum potential, activities like online licensing and bidding system are commenced by the Ministry to ease the bureaucratic chain though more effort is needed to better efficiency.
These beginnings along with other production boosting measures will augment the country’s competitiveness, Abebe said. Aiming to attract foreign investment, providing sufficient information and data on minerals and petroleum potentials, inviting potent companies and putting the sector among the leading foreign currency earning pillars are key factors to succeed the homegrown economic reform, the experts said
The Ethiopian Herald January 29/2021
