12 April 2014

Ethiopia: Brazilian Mining Giant to Pull Out of Ethiopia

The Brazilian mining giant, Vale, which has been engaged in mineral exploration project in Southern Ethiopia since 2011, is to pull out of the country by suspending its exploration project, it was learnt.

Vale, the number one iron ore producer in the world, secured exploration area covering 900 sq.km plot of land in the Konso area from the Ministry of Mines in 2011. At that time the company agreed to prospect for gold and base metals like copper, silver, cobalt and zinc. The concession area is found between the Oromia and Southern Peoples, Nations and Nationalities Regional State.

Sources at the Ministry of Mines told The Reporter that the exploration area is known for gold deposit but Vale was looking for base metals such as Nickel, cobalt and chromium. "They were primarily looking for nickel," sources said. Vale conducted geophysical surveys, including an airborne survey. Reliable sources told The Reporter that the company has discovered nickel mineral deposit. However, sources said executives of the company decided to relinquish the concession and pull out of Ethiopia.

"Vale is a giant company and the amount of nickel discovery is not to the level of their satisfaction. They were contemplating to secure additional exploration area but abruptly decided to pull out," sources said. "It could be a technical reason,'" they added. Officials of Vale were not available for comment.

In a related news, the British mining company, Stratex International Plc, which is prospecting for gold in the Afar and Tigrai Regional States, is to relinquish its gold exploration areas and pull out of Ethiopia.

The company recently announced that it relinquished three gold exploration projects in Ethiopia. In a statement sent to The Reporter last month Stratex said that though it discovered gold deposits in different localities in the Afar and Tigrai Regional States three license areas have been relinquished due to technical reasons. Stratex relinquished the Tendaho, Berhale and Tigrai license areas. Despite the ups and downs encountered in the exploration projects, the company said it remains positive about the potential for a discovery of gold in the northern part of the Ethiopian Rift Valley. The company has applied for two exploration areas in the Afar Rift Valley.

The Company said it was awaiting the award of two new licenses in the Rift Valley, covering areas where remote sensing studies have indicated good potential for further discoveries. However, sources said that Stratex has also decided to pull out of Ethiopia. "It is a technical decision but the delay in processing their application for new exploration area may have contributed to their decision to pull out," sources said. Stratex reportedly secured an exploration license in Tanzania. Sources claim that the company submitted its application in Tanzania long after it requested exploration areas in Ethiopia.

However, Stratex is denying its decision. In a written response to The Reporter the communication manager Claire Bay said, "Although we have dropped a number of licenses, we do still hold our key Blackrock project in the Afar. We are also awaiting the award of two new licenses in this region.

"The reason is indeed technical and related to the fact that the results yielded at said licenses did not warrant further expenditure," Claire said.

Industry analysts warn that the Ministry of Mines should pay due attention to the companies engaged in exploration projects in different parts of the country. "The ministry should closely follow up the mining companies' activities. Officials of the ministry should ask the companies what problems they face and provide solutions. Even if it is a technical problem, experts of the ministry should consult the companies. You can not simply let giant mining companies like Vale and BHP go," the analyst said. The Anglo-Australian mining giant, BHP Billiton, pulled out of Ethiopia in 2012. The company was engaged in potash exploration project in the Afar Regional State.

Officials of the Ministry of Mines did not respond to phone calls and text messages. Former Minister of Mines Sinkenesh Ejigu previously said that the ministry can not do anything when a management of a company decide to pull out and concentrate on other exploration project found in other parts of the world. "It is a matter of choice and there is nothing we can do about it," Sinkenesh said. The Ministry of Mines is hard hit by brain drain. Most senior experts left the ministry in search of better pay. The ministry is now unable to process exploration license applications promptly and local and international companies are furiously complaining about the lack of efficient service in the ministry. Senior officials of the ministry admit the deficiencies in the service provision.

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