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Ethiopia: Derba East Africa Coal Mining Company on the Edge of Extracting Coal
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Addis Fortune (Addis Ababa)
25 March 2008
Posted to the web 25 March 2008
Michael Chebud
Addis Ababa
Derba East Coal Mining Plc, a joint venture of Debra MIDROC and East Africa Holdings, has finally acquired legal status and registered at the Public Notary Office in December 2008. The newfound company intends to produce over one million tonnes of coal a year by engaging in surface and underground mining.
"The coal that is to be extracted by the mining company is initially planned to be supplied to Derba-MIDROC and Dire Dawa (which has been renamed National) cement factories," Haile Asegide, CEO of Derba MIDROC, told Fortune. "But the company will eventually expand its supply to cement as well as glass and bottle-manufacturing factories."
A subsidiary company of MIDROC Ethiopia, Derba MIDROC, is constructing a cement factory with an investment capital of 2.4 billion Br. Ninety-two per cent of the company is owned by the MIDROC Group while the remaining shares are owned by Sheik Mohammed Hussein Ali Al-Amoudi, the Saudi business tycoon who was recently ranked as the number one richest black man in the world by Forbes Magazine.
Meanwhile, East Africa Holdings has purchased 51% of the former Dire Dawa Cement Factory from the Privatisation and Public Enterprises Supervisory Agency (PPESA) close to two years ago. Following the procurement, the company began expansion works planting additional machines next to the existing ones to increase the production capacity of the factory.
Including National Cement, Factories that are currently active include the state-owned Mugher Cement Enterprise and Messebo Cement Factory under the ownership of the Endowment Fund for the Rehabilitation of Tigray (EFFORT). All these factories use furnaces for burning in their production processes.
Cement is made from a mixture of calcium carbonate, silica, iron oxide and alumina. According to the World Coal Institute, a high temperature kiln, fuelled by coal, heats the raw materials to melt partially at 1,450 degrees centigrade transforming them chemically and physically into a substance known as clinker.
So far the cement factories in Ethiopia have been using light fuel oil in order to generate the heat that they need to produce clinker. On top of this, some factories that need coal in their production processes use electricity. But Haile has stated that "the cost of electricity for these factories is unbearable."
Close to three years ago, the Oromia Bureau of Mines and Energy granted an exploration plot to East Africa in the Moye Woreda of the Jimma Zone, 416Km outside of Addis Abeba. In Moye alone, there are over 20 million tonnes of coal, according to a study conducted by the Ethiopian Geological Survey Institute.
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According to Haile, further intensified studies are currently being undertaken by the Geological Survey, the Geological Department of the Addis Abeba University and a Chinese Firm, Shenyang Design. The projected cost is estimated to be close to six million dollars. Of the total 200 million dollar investment intended for the entire project, the cost of dozers, graders, dump trucks as well as other machineries, is estimated to be at 30 to 40 million dollars.
The memorandum of understanding between the two companies was signed in March of last year at the Sheraton Hotel in Addis by Mohammed and Buzuayehu Tadele, chairmen of MIDROC and East Africa Holdings, respectively.
According to Buzuayehu the study that is being conducted by the Chinese firm has shown promising results. "According to the findings of the study, we will in the near future be able to commence surface mining," he told Fortune.
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