Ethiopia – an emerging mining location

Minerals in Danakil Depression, Ethiopia
Sulfur, salt, and other minerals color the crater of Dallol, a volcano in the hottest place on Earth, Ethiopia's Danakil Depression. Photograph by Carsten Peter

Ethiopia is an up-and-coming mining location. Mining Engineer and senior consultant Wondimu W.Yohannes gives a personal perspective.

By Wondimu Yohannes

Emerging mining frontiers are often not new but for a variety of reasons they have fallen from the mining company radar.  Sometimes it is political instability, the worst case being civil war, or that the taxation or legal code is not as attractive as other locations across the globe. In some cases it is that they are simply forgotten.  My country, Ethiopia, has fallen into all these categories yet it has considerable mineral deposits including gold, industrial minerals and rare metals.  Over the past year I have been working ‘back home’ and witnessed a sea change in mineral exploration with a number of companies, particularly juniors, engaged in precious metals exploration. The rich geological potential, the relative political stability, and new competitive investment and taxation codes are considered to be the main factors for the enhanced mining investment.  However this environment also has its challenges for investors, governments and local communities.

Wealth of resources

The geology of Ethiopia can be divided into three major geological terranes. Proterozoic crystalline basement, most prospective for gold, underlies about 19% of the country hosting nearly all of the known gold occurrences. Late Palaeozoic, Mesozoic and Tertiary continental and marine sediments occur mostly in the east and occupy about 25% of the land area of Ethiopia, with the remaining 56% underlain by Cenozoic volcanic and sedimentary rocks, including those of the East African Rift Valley which transects the country in a north-easterly direction.  This gives a wide variety of mineralising environments.

Historically, the international mining industry has paid relatively little attention to the gold potential of Ethiopia despite placer gold mining dating back at least 2500 years. It is estimated that very large tonnages of gold have been produced from deposits of this type. In terms of geological mapping the Geological Survey of Ethiopia  (GSE) has covered about 50% of Ethiopia’s 1.2 million km2, including the major greenstone belts, at 1:250,000 scale. Since then potentially economic gold resources, mainly in mesothermal or orogenic deposits, have been outlined at several localities. However, most investigations have been of a reconnaissance nature with extensive areas of prospective ground remaining under-explored.

The first major exploration campaign for gold was the Adola Gold Exploration Project led by the former Soviet Union in the early 80s concentrating on the Southern Greenstone Belt.  This was followed by the GSE working in collaboration with the United Nations Development Programme (UNDP), initially in western Ethiopia. Subsequently the focus shifted to southern Ethiopia, with an airborne geophysical survey over about 3000 km2 of the Adola Belt carried out in 1993. The next major initiative was the five-year Ethionor project, a Norwegian-GSE collaboration that started in1996.

Historically a number of companies carried out systematic exploration. These included Ashanti, Canyon Resources, Emerging Africa Gold, Golden Star, JCI, Rift Resources and Tan Range. According to a study funded by the UNDP gold, tantalum, soda ash, potash, nickel and platinum minerals have the most potential for development.

Significant gold mineralisation is found in three regions; Southern Greenstone Belt (including the Adola, Ageremariam and Moyale areas);  Western Greenstone Belt (including the Akobo area) and the  Northern (or Tigray) Greenstone Belt.  More than sixty shear-zone hosted gold occurrences have been identified in the main greenstone belts but no detailed information is available for most of these. In recent years the GSE has carried out regional and detailed surveys in several prospective sectors of the greenstone belts. The diverse geology of Ethiopia has  potential for the occurrence of gold in a variety of deposit types in addition to mesothermal quartz-veins including epithermal gold in rift and other volcanic settings, porphyry copper-gold, ophiolite-associated, intrusion-related gold, iron-oxide copper gold (IOCG), gold-bearing massive sulphides, and finally placers.

Renewed interest

In the past two years or so the situation has changed dramatically with early and advanced explorations  underway by international and local companies. These include Aberdeen International Inc, a Canadian company targeting gold and associated metals in western and northern greenstone belts;  Ezana Mining Development plc. in joint venture with the Chinese company  Donia Beijing is conducting base metals resource estimation as well as exploration in northern greenstone belt.  Stratex International plc  and Nyota plc. are exploring gold and base metals in northern greenstone belt.  Midroc Gold Pvt Ltd has started deep bore hole drilling in  the western Ethiopia greenstone belt in addition to operating the Legadembi mine that produces c 130,000 oz annually. Exploration for base metals and industrial minerals continues including Canadian Allana Resources potash project in the Danakil depression. Saink Potash plc of Indian is also exploring in the area.

Factors of investment attraction and development

The stimulus for this extensive exploration work is the revised legislation.  In July 2010 the government enacted new mining and mining income tax laws entitled, ‘A Proclamation to Promote Sustainable Development of Mineral Resources’ to make the minerals sector more favourable for foreign investment. The main points are listed below

Licenses

Four types of licenses: Reconnaissance, Exploration, Retention, Artisanal, Small Scale Mining and Large Scale Mining Licenses

Licensing Authority of the Ministry and the regional states: The regional states issue artisanal mining license and reconnaissance, exploration and retention licenses with respect to construction and industrial minerals. The Ministry of Mines (MOM) has the power to issue reconnaissance, exploration, retention and mining licenses

Royalty: Precious minerals- 8%, Semi-precious minerals 6%, Metallic minerals 5%, Industrial minerals 4%, Construction minerals 3%, Salt 4%, Geothermal 2%

 

However  to ensure  the Mining Act encourages long-term investment a number of sustaining environments require development.  First is infrastructure.  As the mineral potential in the regions with relatively well developed infrastructure diminishes, governments and investors need to be prepared to expand mineral development in the remote but rewarding regions of the country.

There are many areas which are accessible only by helicopter or camel. I have been impressed by the substantial increase of road construction in the rural and urban areas of Ethiopia often following towns and socio-economic development plans. A mining-led infrastructure development including roads should be considered as part of mineral resources development strategy.

There is acute shortage of geologists in the country and this would soon be followed by shortage of mining engineers and other specialists needed to provide supporting services.  A strategic plan to increase the mining human resource capacity through government-led and other sources of funding to train specialists in the country and abroad would help in this area of capacity building.

There is however increasing awareness  of the role mining might play in a developing economy but in conversation with many local people mining is often misunderstood leading to over-expectation from the sector or conversely not giving it the right priority in development planning and investment allocation because of the inherent risk and long term nature of mine development. Ensuring that the planning and implementation of the mining sector is undertaking as part of the overall development strategy of a country is one way to make mining part of other sectors and gain recognition for its role.

One way to ameliorate this effective stakeholder engagement through collaborative working between exploration companies, government bodies and local communities to create sustainable environment for the operation of companies and local communities.  In returning to Ethiopia I was uneasy about personal safety and security.

My main observation is that there is often a gap between what you hear from the outside and the reality I found on the ground. I had anxieties  about travel to remote regions, mainly based on discouraging comments on the internet. Instead I found the places I visited had a stable, peaceful and welcoming environment.

Wondimu W.Yohannes, FIMMM and a mining engineer and senior consultant is originally from Ethiopia currently working on the ground in mineral exploration, project management and stakeholder engagement after many years of senior management role in the UK and European partnerships.

Contact Email wyohannes@mulwol.com

This article is an edited and updated version of one which first appeared, in Materials World- the magazine for the Institute of materials, Minerals and Mining – www.iom3.org