Addis Fortune (Addis Ababa)

Ethiopia: New Mining Amendments Favour MSEs Ahead of Cooperatives

Parliament passed amendments to the Mining Operations Proclamation of 2010 into law on Tuesday, December 31, 2013.

Cooperative unions will no longer be allowed to take part in artisanal mining and will instead be replaced by micro & small enterprises (MSEs), according to the amendment. The amendments first reached the floor of the 547-seat legislative assembly on November 19, 2013.

The 2010 proclamation allowed individuals and those clustered around cooperative unions to be issued licenses to engage in artisanal mining. Cooperative unions were able to reserve such areas as "claim areas" and obtain exclusive claim licenses.

This, however, was not always acceptable for regional states, which expressed fears that the cooperatives would use the claims to continue holding the areas indefinitely. This resulted in them failing to approve the claims, leading to endless disputes.

The unlimited duration of cooperative unions, which has led them to reapply for mining licenses after the termination of their contracts, was what prompted the amendment, it was said during the November session of Parliament.

Regional bureaus have complained that the nine-year time limit of mining licenses has created the mistaken view that artisans organised under cooperatives are the owners of the site, along with the minerals.

The amended proclamation reduced the validity of artisanal mining licenses to a maximum of two years with no renewals, as opposed to the previous legislation that allowed licenses to be renewed twice for three years at a time.

The argument from the government's side to introduce this amendment is that mines are perishable products, and thus, the government needs to make sure that successive groups use it so that the job opportunity is availed to more people.

The government's royalty cut from the sale of gemstones has been reduced from eight percent to seven percent. At the same time, they have obliged companies with mining licenses in Ethiopia to reveal the revenues gained from the sale of minerals.

A license for artisan mining, which the 2010 proclamation defines as being manual in nature, and one that does not require the hiring of additional staff for production, is usually given to unemployed youths, so they can raise enough capital to start small businesses.

Artisanal miners have so far been organised as cooperatives with a minimum of 10 members, according to the proclamation, and administered themselves through their own work planning programmes. They can request a mining license from regional mining bureaus or agencies and are given anywhere between 5,000sqm to 10,000sqm of land. The cooperatives can borrow money from micro finance institutions (MFIs).

Some Parliamentarians expressed their concern with the reduction of the government's royalty cut from the sale of gemstones, and the new requirement for companies with mining licenses to disclose revenues generated through the sale of minerals, during November's discussion.

"If this amendment is going to be approved as it is, it will rob cooperative unions of a just and profitable artisanal mining sector they need," an MP said at the time.

Others stated that banning the unions was tantamount to neglecting their contribution to foreign currency earnings.

Currently, a total of 75,000 to 100,000 miners have been organised into cooperatives and 50,000 as SMEs. The lack of basic infrastructure, presence of HIV/AIDS and malaria and the scarcity of drinking and working water, are some of the challenges they face, according to an artisan and small scale mining development package prepared by the Ministry of Mines (MoM).

Nonetheless, artisan mining plays an important role in gold and gemstone production in the country. By the end of the current fiscal year, 18,000kg of gold, worth 700 million dollars, is expected to be produced by artisan miners. This is in addition to 15,000kg of rough gemstones, worth five million dollars.

Ethiopia's export mining revenue fell short of its target by a whopping 255 million dollars, last year. This was largely due to what the Ministry of Mines (MoM) said was a dismal performance in gold exports. The MoM expects to get 777 million dollars from export revenues in 2013/14. this is eight percent less than its projections for the previous year.

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