Ethiopia: State to Electrify Tulu Kapi Gold Mine

EEP announced a bid to hire a company for the substation's construction

Formed by a joint venture of the British company KEFI Minerals and the government of Ethiopia in April 2015, Tulu Kapi Gold Mine S.C signed a long-term mining agreement with the then Ministry of Mines.

The government has started the process of building a power substation to supply Tulu Kapi Gold Mine, which recently faced an attack by an armed group. The 15-million-dollars substation construction project will be tendered for an international bid by Ethiopian Electric Power.

The substation will have a capacity of transmitting 132KV and stretche 47Km to connect the gold mine site with an existing power grid located in Gimbi town. The gold mine, which hopes to start extraction by 2021, started operations four years ago and does not currently have a power supply, according to Harry Anagnostaras-Adams, executive chairperson of KEFI Minerals, the company that operates the mine.

"We haven't yet built any industrial production facility, since we don't have any power supply," Harry said. "We've been using power generators for our activities."

Formed by a joint venture of the British company KEFI Minerals and the government of Ethiopia in April 2015, Tulu Kapi Gold Mine S.C signed a long-term mining agreement with the then Ministry of Mines.

The government of Ethiopia has a five percent share in the company and is obliged to contribute by developing infrastructure, such as roads and electric power.

Tizazu Bireda, an electrical engineer and lecturer for more than two decades at Addis Abeba University's Institute of Technology, applauds the government's initiative. However, he believes that KEFI Minerals has to provide technical assistance for Ethiopian Electric Power to facilitate the construction of a power substation.

"Since financial problems will be the main obstacle for the government," Tizazu said. "KEFI Minerals should support the government in bringing forex."

KEFI Minerals, a London-listed company, specialises in gold and copper exploration with two ongoing gold projects in Ethiopia and Saudi Arabia. The company has also secured another concession to explore gold on 1,100Sqm of land located adjacent to Tulu Kapi, which is situated approximately 360Km west of the capital.

To have efficient power generation and distribution, the government has to involve private investors in the sector, according to Atlaw Alemu (PhD), assistant professor in Addis Abeba University's faculty of business & economics.

The country currently has the capacity to generate 4,300MW of power, of which 90pc is produced from hydropower, while the remaining eight and two percent is from wind and thermal sources, respectively. The country has the potential to generate over 1.4 million megawatts from hydroelectric, solar, geothermal and wind sources, according to internal studies.

"The government shouldn't be involved in all infrastructure development," Atlaw said, "so it should open the door to private electric power producers."

Providing better power supply for international companies is essential to attract foreign direct investment and to satisfy foreign companies that have already invested in the country, according to Atlaw.

At the end of last month, the Tulu Kapi site was attacked by six armed men who invaded the company's premises.

Harry says that the company will start operations after the security in the area is assured and the community is ready.

"All stakeholders should sign documentation conceding to work on the security and stability of the area in a written obligation," said Harry. The mining sector of the country has faced a hard time over the last two years, contributing to significant declines in export revenues.

In the first three quarters of the current fiscal year, Ethiopia generated 39.6 million dollars from mining exports against the government's estimate of 766.9 million dollars. The revenue was generated from the export of 646.3Kg of gold, 1,354.3 cubic metres of marble and 145.7tn of tantalum. Five years ago, the country earned 541 million dollars from mining exports.

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