Ethiopia: Government, private sector steps up mining activity

by Addis Getachew

ADDIS ABABA

The Ethiopian government, along with private sector partners, is taking steps to tap the country's vast underground resources.

“Ethiopia has considerable reserves of gold, potash, zinc, gemstones and tantalum,” geological survey consultant Yalew Bekele told Anadolu Agency on Friday. “But they remain unstudied, unexplored and undeveloped.”

Ethiopian Minister of Mines, Petroleum and Natural Gas Tolossa Shagi told Anadolu Agency on Friday that the government is stepping up efforts to support the mining industry.

“There is hope that Ethiopia will become a country in the short term whose extractive industry will contribute significantly to GDP,” the minister said in an interview.

The minister pointed out that revenue from mining had not met its goal, as defined by the government’s economic plan for 2014. Ethiopia had planned to secure mining revenue of $646 million during 2014/15 but only earned about half of that, $363 million, according to government statistics.

“Within a period of two years, Ethiopia will start natural gas production from its Kalub and Lala areas in the Somali regional state where 7.4 trillion cubic feet of natural gas is being developed for domestic use and for export via Djibouti,” the minister said. The government is financing the project, in a public-private partnership with the Chinese mining firm GCL; GCL will also build the pipeline to Djibouti.

“Indications of much larger deposits of natural gas have been found along the Great Rift Valley stretching as far south as Uganda, and exploration is underway in this area,” Shagi said.

Russian company GBP Global Resources, which was granted the concession in 2014, is currently exploring natural gas and oil reserves along the Ethiopian Rift valley area. Revenue will be shared between the company and the government if reserves are found.

“Currently eight exploration companies including from China and Russia are engaging in exploration and development of natural gas throughout the country,” he said.

The Midroc Group, a company owned by the Saudi businessman Al-Amoudi, is developing gold in Southern Ethiopia. The miner Alana Potash, acquired by Israel Chemicals in March 2015, is working on the massive deposits of potash in northeastern Ethiopia, Bekele said.

Ethiopia is developing its gem stone industry. According to the minister, small-scale traditional miners and middle men are earning about $25 million annually from gem stones that are to be found in abundance in many areas in the country.

“This can be increased tenfold if we transfer gem stone extraction to the mainstream mining sector,” Shagi said. “That is why we have recently put in place a Gemology Institute.”

According to Bekele, only 350,000 square kilometers (135,135 square miles) in total have been studied using seismic techniques for reserves. Ethiopia covers a total of 1,100,000 square kilometres (420,000 sq mi).

“Exploration should be intensified covering an expanded study area,” Bekele said; satellite images and surveys on the ground show Ethiopia holding immense resources under the surface.