BY BACHA ZEWDIE
The importance of mining sector for development of the country’s economy is high, especially for earning foreign currency, creating job opportunities and being a source of income for citizens. Ethiopia is paying attention to the sector by taking into account the contribution of the mining sector to the economy in the ten-year master plan. Following this, a number of mining research and prospecting activities have been carried out in the sector. Companies are also entering the sector through gold mining development. According to data from the Ministry of Mines, when these companies start producing gold, they will earn more than what is currently available through traditional methods.
Currently, most of the gold produced in the country is found in traditional ways. In this way, a large amount of gold has been supplied to the National Bank. Recently, however, it has been revealed that the amount supplied to the National Bank has been reduced because of illegal trade. Recently, Prime Minister Abiy, while giving an explanation to the questions of members of the House of Representatives, stated that the amount of gold that should have been received from Benishangul Gumuz to the National Bank was not received this year. As to him, 20 quintals of gold was supplied to the central market from Asosa last year, but this year only three quintals were supplied.
According to ENA, 172.25 million Dollars of foreign currency was obtained from mineral exports in the past nine months. Out of this, 150.6 million Dollars was obtained from gold. This performance compared to the same period of the last fiscal year was reduced by 61% in volume and 66% in income. It can be understood from this information that due to illegal gold trading, the country is not benefiting as much as it should be. The government is fully aware of the problem and is working to solve it in collaboration with gold producing regions. On the other hand, the Ministry of Mines, gold producing regions, and the gold buyer National Bank are taking measures to prevent and control the illegal trade together with the security agencies.
The country’s security and safety task force is also taking measures against illegal traders. Actions have been taken against the perpetrators of illegal actions at the state and federal government levels. In a recent statement issued by the Security and Safety Joint Task Force, it was announced that a number of foreigners and their collaborators, Ethiopians who entered Ethiopia illegally without valid travel documents, entry visas and residence permits and were engaged in gold and various mineral exploration in Gambella and Benishangul Gumuz regions, were arrested.
The National Bank has been taking over gold from producers by raising the gold price higher than the international market. It can be recalled that the bank announced last year on June 23, 2022 that it would pay 35% more than the world price. It was also mentioned at the time that the bank made the amendment in consideration of the current situation. The price increment resulted in more amount of gold supplied to the bank. The bank recently announced that it has revised the price again.
According to the board’s decision, it found necessary to improve the increase based on daily international gold market by eliminating the 35% increment. In the reform measures taken by the bank, 35% for those who supply gold from 50 to 150 grams, 52% from 150.01 to 1000 grams, 55% from 1000.01 to 5000 grams, and more than 60% for those who supply more than 5000.01 grams. Experts in the field, while approached by Ethiopian Press Agency, have given their recommendation.
One is Menyahl Teferi (PhD), dean of the Department of Geology at Bahirdar University, who is working with the Amhara Regional Mining Office by helping with research and support requests in the mining sector. According to him, one of the challenges of the mining sector is illegal trading. Dr. Menyahl said that if the government fails to regulate this action, it will not be possible to get the expected foreign currency from the sector as a country. He also expressed his concern that in this trend, the mining sector will continue to prosper not the country but individuals and brokers.
Improving the price of gold offered to the National Bank is one of the best solutions. Shortening the long chain through which the gold transaction is carried out should be another solution, he said. He said; “Unless the transaction is facilitated, and the developer needs to go long way to sell, he will be exposed to illegal brokers.” He added that another solution is to reduce the problem by facilitating close trading between the developer and the legal entity making the purchase.
According to him, it is expected from all government structures to carry out a concerted action in the mineral development locations by establishing an operating system that monitors and controls the mining and trading. There must be a legal process. Dr. Menyahl also mentioned that marketing non-value-added minerals is another way to spread illegality. According to the experience so far, it is raw ore that is widely marketed, and the value that the mineral can generate when it is marketed in this way is not as high as the estimate. He pointed out that providing non value-added minerals to market is a big challenge to find better price.
According to him, lack of quality is another problem. The fact that the mineral development is not supported by scientific means and technology has also caused the quality to deteriorate. This should be taken into account as poor quality will also cause price drop. Mentioning that technology helps to avoid loss of quality, he pointed out that the development should be supported by technology. The developers working in the sector should have the skills organized by the association. Another solution he mentioned is to create a way to get rid of brokers in the middle who pursue only their own interests. The dean said, “Mineral developers will be happy if they hand over the gold directly to the National Bank of Ethiopia in a legal way.” He believes that the developer will not benefit from the illegal transaction, but the brokers. It is best for the gold developers to deal directly with the bank, he advised.
In his response to the question of what is expected from whom in solving the challenges in the sector; he pointed out that there is a need for coordinated work to prevent the transaction from being illegal. The Ministry of Mines, the offices established in the place where the development takes place, should create a system where they can directly communicate with the National Bank of Ethiopia. If a well-intentioned work is done, challenges can be faced together, he underlined.
Mekuria Basaye, the owner of Time, a member of General Business Group, who recently engaged in gold mining in Anasora, Bore, Ordajila districts of the Guji zone of the Oromia region, has installed a gold washing machine for the gold development work planned to be carried out in the area along the Genale river basin. He said that he does not believe that price increment by the National Bank will be a solution for sustainable control. He pointed out that following the price increment, there was rise in the black market.
“The problem in the sector is not only a market issue,” Mekuria said adding he pointed out that legal guidelines should be established by strengthening monitoring and control. His company was not developing in the fiscal year because the local government did not create a favorable environment for his work. Mekuria added that the recent phone calls he received from the security agency in relation to the gold development that he had started gave him hope. He stated that if the security agency does the necessary law enforcement work in the area, his organization will work 24 hours a day to achieve the results that the country expects from the sector, and he will discharge his responsibilities as a stakeholder.
He has repeatedly emphasized that the regulatory system should be maintained to prevent illegality. The government should screen out those involved in illegal mineral trading and bring them to the law and strengthen the monitoring system. He also pointed out that gold continued to be sold illegally to neighboring countries like Somalia, Kenya and other countries. He mentioned that Kenya, which is not known for its tantalum mining today, is supplying tantalum to the world market, stating that the source of tantalum is Ethiopia. “Gold is a resource that comes from the ground. It is the government that gives permission to the producer for the development to take place.
” The licensing body is required to monitor and control the gold produced by the producer to prevent it from being sold to illegal traders. As to Mekuria, the work of preventing the illegal trade should not be considered as the sole responsibility of the government. The country’s severe shortage of foreign currency is causing economic damage to citizens, preventing patients from getting medicine and related issues. This challenge should not only concern the government rather, the party involved in the development is also responsible.
THE ETHIOPIAN HERALD WEDNESDAY 17 MAY 2023
