Mining sector to support transition to industrialization
The Ministry of Mines, Petroleum and Natural Gas (MMPNG) and the Italy-Chinese Joint Venture Company, Sekota Mining, on Thursday signed a large scale mining agreement that would enable the company to develop the first iron ore mine in Ethiopia.
The agreement was signed by Motuma Mekassa, the Minister of Mines, Petroleum and Natural Gas and Luciano Frattolin, CEO and founder of Sekota Mining. The large scale mining license valid for 20 years allows Sekota Mining to mine the iron ore deposit found in the Amhara Regional State, Wag Humra Zone, Sekota, Ziquala and Abergelle Woredas.
The mining license area covers 16 sq.km of land in Debre Birhan, Ressaa-Genet and Debre Hiwot localities. According to the MMPNG, Sekota Mining has allocated 422.1 million birr for the iron ore development project and plans to produce 840,000 tons of iron ore in the coming ten years.
During the signing ceremony Motuma said that Sekota Mining has been conducting exploration work in the area covering 242 sq.km of land for the past five years and discovered a commercial iron ore deposit. Motuma said that at the first phase of the project Sekota Mining will develop iron ore extraction mine and supply raw materials to the local steel manufacturing plants. The company would eventually build its own steel manufacturing plant.
According to the minister, Sekota Mining will commence work in 60 working days and start production after two years. He urged the company to start work according to schedule.
Luciano Frattolin, Ethiopian born Italian businessman, assured the minister that his company will commence work according to the agreement. “Since iron is a strategic product for the country we will commence work on the project according to schedule. We have talked to foreign and local banks. There will be no obstacle to launch the project,” Frattolin told The Reporter.
The iron ore mining license was endorsed by the MMPNG and approved by Council of Ministers on August 4, 2017.
Motuma said that Sekota will be the first company to work on a large scale iron ore production project. “Since it is the first company to venture into large scale iron ore production it will be beneficial because our ministry will provide all the required support to the implementation of the project. The company will face some challenges as it is going to open the first iron ore mine. There is no previous experience in this sector,” he noted. However, the minister assured the company executives that the government will provide the required assistance the company.
A Chinese metallurgy firm, CBRF Group, has bought a stake in Sekota Mining to form the joint venture company. Sekota Mining Plc. has been undertaking the exploration work since 2012. The total iron ore deposit is estimated at 12 million tons.
The company plans to extract iron ore and produce sponge iron that would be supplied to local foundries. The first production of sponge iron is slated for mid 2019. Phase two of the project envisages to setup reinforcement bar production. In the third phase of the project the company plans to start producing prefabricated steel structures.
Ethiopia imports one million tons of steel products mainly from China and Turkey. Though the country is endowed with various industrial minerals they have not been utilized and it continues to spend the hard earned foreign currency on importing industrial inputs.
Motuma told The Reporter that his ministry now focuses on developing industrial minerals that could be used as industrial inputs by the local manufacturing sector. The minister said the government encourages foreign and local firms to engage in industrial minerals production. Efforts are underway to mine iron ore, silica sand and coal which are being imported at huge cost. “We anticipate both generating and saving foreign currency. We must generate additional foreign currency by exporting minerals and we have to also substitute the imported products with local products,” the minister said. “We have to be able to address the foreign currency crunch we are facing at the moment,” he concluded.
Ethiopia is on the path to industrialization and the mining sector is expected to play a key role by supplying industrial inputs to the thriving manufacturing sector.