Chongqing State, China to provide $10m to ease exploration burden of firms
Addis Ababa, (Forutnue)
The Ethiopian Ministry of Mines (MoM), in collaboration with the Mines Bureau of Chongqing State, China, is to prepare various maps for mining investment covering 120sqkm of land in southern and south-western Ethiopia.
This collaboration was born out of a memorandum of understanding, (MoU) signed in December, 2011, between the Bureau of Mines & Minerals Exploration Development of China, the Ethiopian Geological Survey (EGS), and the Ministry of Mines (MoM), which was an outcome of Prime Minister Meles Zenawi’s visit to Chongqing in August of the same year, meeting with Bo Xilai, the state’s secretary of municipal committees, in the company of Sufian Ahmed, minister of Finance & Economic Development (MoFED).
Geological experts from the Chinese Bureau presented a project proposal, following their own preliminary study, to the top management of the MoM, including Sinkinesh Ejigu, the minister, on Tuesday March 28, 2012, at the MoM’s head office along the road to CMC.
“Since it is a joint project, we need to review it,” Masresha Gebreselassie, general director of EGS, said, commenting that the proposal would be referred to the MoFED within two weeks’ time. A binding contract will be signed following a nod from this Ministry.
This project will take five years, fieldwork beginning in 2013. The Chinese Bureau will put 40 of its experts and 10 million dollars into it, three million of this in the first year alone, according to Masresha.
Local experts from the EGS, housed at the MoM, will assist it. The MoM will provide offices and other necessary materials to the expatriate experts, according to Masresha.
The project includes developing geological, mining, and geophysical maps of the area, based on various studies, including some test drilling, if necessary. The maps, Masresha says, will provide basic geoscience information for private investors that wish to involve in mineral development and exploration.
“The study will be conducted in areas that are not being developed by companies,” Maseresha told Fortune.
The Ministry, which to date has given around 200 licenses, including 56 exploration and seven production licenses last year to 100 local and international companies, has ceased issuing licenses for the past five months.
Most of the existing concessions are situated in northern and western Ethiopia, for which better basic geological information is available, said Masresha. More than half of the 56 licences issued are located in Oromia and Benishangul Gumuz regional states. The Geological Survey of China prepared maps for these two areas, in a project that ran from 2008 to 2010.
Investors have incurred additional costs to conduct basic studies on their own, according to Melaku Beza, CEO of National Mining Corporation (NMC), which recently announced the largest ever finds of gold reserves in Ethiopia, in Oromia and Tigray regional states.
“Because there was no basic data in the north, we were obliged to carry out the study at our own expense,” he said. “Since the country did not have the skilled manpower in the sector to collect and analyse data, it has been a challenge for companies.”
The new study is part of the government’s plan to increase the coverage of geological related mapping from 50pc to 100pc in the five-year period, ending in 2014/15, as well as increasing evaluated and delineated areas of potential industrial exploration from 48 to 77. Deposits of 22 different minerals, including some industrial minerals are available at the 48 sites, EGS data shows. Some, such as phosphate, gypsum, and shale oil, are already being extracted.
“The project will attract many companies and increase Ethiopia’s bargaining position,” Masresha said.
The government plans in its Growth & Transformation Plan (GTP) to increase foreign currency generated from minerals from 108 million dollars to 277 million dollars, by the end of the period. During the past six months alone, mining investment has contributed 48.3 million dollars, achieving 97pc of what the Ministry planned of 50 million dollars, according to data of the MoM. The Ministry has collected 62.2 million Br in the form of royalties from 16 companies, of which MIDROC Gold Mine Plc has paid the highest, at 60.1 million Br.