13 January 2013

Ethiopia: Rough Gem Exports to Be Banned

The federal government will soon ban the export of rough opal, a precious gemstone; a move aimed at persuading exporters to add value and hence increase revenues, according to senior officials at the Ministry of Mines.

It will be the second extractive resource to be banned, after the Ministry stopped the export of unprocessed tantalum five months ago.

Although opals remain low in the nation's growing revenues from exports, the precious gemstone has gained momentum recently, after being included in the list of exportable items, in 2005. It has since increased, both in terms of production and revenues.

Opal is used to produce ornaments and jewellery, largely blended with gold and diamond.

Ethiopia exported 10,104Kg of gemstones during the last two quarters of the current fiscal year; 600Kg larger than the Ministry's anticipated capacity. This has generated 4.6 million dollars in export revenues, which is equivalent to what gold has brought in, during the same five months, in 2012/13.

India, one of the largest exporters of gemstones in the word, is also the largest destination for opal, buying close to 80pc of Ethiopia's exports last year.

Close to 2,061 individuals, organised under 17 associations, are engaged in opal mining, in Wollo, Delanta, Amhara Regional State, where the precious stones are extracted. These artisans extract the stones and sell them on to the 200 exporters, recognised by the ministry.

Almost all export the precious stone in its rough form, without any value addition, according to Tekle Yilma, president of the Ethiopian Gemstone Association.

"The industry is pretty new and requires time to evolve," he told Fortune. "It is a recent phenomenon to see the sector is booming."

Of the total amount of opal exported, only 5.83Kg is done so after being polished, generating a mere 184,724 dollars, whilst the remaining rough stones generated 4.4 million dollars. Senior officials at the Ministry, last week informed exporters to prepare for value addition, through the procurement of opal polishing machines.

The ban has been prompted by the significant price gap between polished and non-polished opal, hence depriving the country of obtaining more benefit from its resources, according to an economist at the Ministry.

Only six of the 52 members of the Association have cutting and polishing machines, which cost between 800 dollars to 3,500 dollars.

"We support the idea," Tekle told Fortune. "Returns for polished opal are high for the country as well as for us. We're not only exporting the stones to India, but also creating employment opportunities that we need here so badly."

Close to 1.8 million people are employed in the opal gemstone industry in India, an Indian government website, www.investinindia.com, disclosed. Gemstone is also one of the leading foreign exchange earners for the country. India projects the generation of 35 billion dollars from processed opal export, in 2015.

Opal exporters in Ethiopia are required to repatriate 1,500 dollars, when exporting one kilogram of first grade rough opal, and 800 dollars and 450 dollars for second and third grade, respectively. The Ministry revises the repatriation amount every three months, considering international prices. However, when exporting a kilogram of polished opal, exporters are expected to repatriate 40,000 dollars.

Colours in clay and base, as well as the size of the stones, are among the considerations taken into account in determining the grade, according to Brehanu Kassa, an exporter of black opal. If the stone has a larger size with no cracking, and if it has a black base color with green, red and gray clay, it is a grade one opal, Brehanu said.

Although Ethiopian opal has gained recognition in the opal market next to Australia, which is the world's top producer, it has not received enough attention from the government so far, according to a geologist who lectures at the Geology Department of the Addis Abeba University.

"No one has conducted a comprehensive study to determine opal's potential," he told Fortune. "But devoid of petroleum discovery, thus far, opal might be the brightest hope for the country's economic development."

This is the volcanic rock located in Northern Wollo Zone, Amhara Regional State which most of the inhabitants mine the precious stone.

Copyright © 2013 Addis Fortune. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.