The Reporter (Addis Ababa)

26 April 2014

Ethiopia: Govt to Tighten Control On Mining Companies

Prompted by the declining price of gold in the international market, the Ethiopian government is to push local and international companies engaged in gold exploration activity to launch production. Presenting a nine-month report to the House of Peoples' Representatives on Thursday, Prime Minister Hailemariam Desalegn said that though the mining sector was expected to register remarkable growth (in generating foreign currency) the gold export earnings fell by 27 percent, compared to the same period last year.

Hailemariam attributed the drop in gold export earnings to the decline in the price of gold in the international market. In the 2012-2013 fiscal year, gold, the country's highest source of export revenue, fetched 578.8 million dollars, a four percent decline compared to the previous year's performance.

The price of gold,which was 1900 dollars per ounce, dropped to 1,200 dollars. The government now wants to export more gold by pushing companies engaged in gold exploration projects to start production. Hailemariam said the government should persuade mining companies to start mining and exporting gold.

He said that although the price of gold is declining in the international market the government will strive to increase the export earnings from gold by improving leadership, technology, professionalism and marketing strategies. He said the amount of gold produced by artisanal miners could also be boosted if the bottlenecks in the sectors could be eliminated.

Artisanal miners are contributing a significant share to the country's gold export. Last year artisanal miners panned and sold 8.3 tons of gold valued at 420 million dollars to the National Bank of Ethiopia (NBE). A senior official at the Ministry of Mines told The Reporter that the ministry will tighten controls on companies engaged in mineral exploration projects.

"The ministry will closely monitor the activities of the companies engaged in the exploration and production of minerals. We will identify the companies that are working according to their work plan and those who fail to perform to the level of our expectation," the official said.

He said that the ministry will persuade companies that had discovered gold ore to start mining as soon as possible. National Mining Company, MIDROC Gold, Nyota Minerals, Ezana Mining, Tigrai Resources, Stratex and the latest entrant, Ascom Mining, are the major companies that have discovered new gold ore deposits in different parts of the country. Some of these companies are in the process of starting mining activities.

A private mining consultant told The Reporter it was difficult to persuade companies to start production immediately after discovery is made. "You need to conduct feasibility studies. Companies should raise funds from banks and stock markets to venture into developing mines. All these require prolonged time and the Ministry of Mines knows this very well," the consultant said.

The Ministry of Mines is envisioned with foreseeing the mineral resources contribution to the foreign currency earnings increased by 10 fold, and be the back bone of the industry in 2020-2023.

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