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BusinessCentral bank propositions battered EFFORT mining co.

Central bank propositions battered EFFORT mining co.

Ezana Mining preparing to restart operations

Regulators at the central bank have proposed a gold-for-forex priority arrangement with a subsidiary of the Endowment Fund for the Rehabilitation of Tigray (EFFORT) in a bid to curb gold smuggling in Tigray and revive the operations of Ezana Mining Development Plc.

The National Bank of Ethiopia (NBE) has offered Ezana Mining Development, one of 15 subsidiaries under EFFORT, priority status in forex allocation in exchange for a steady supply of quality gold to its reserves.

Talks with Governor Mamo Mihretu are still ongoing, according to Tesfatsion Desta, general manager of Ezana Mining.

“The war has created a void in the gold export market that allows smugglers to dominate the NBE,” he told The Reporter. “We’re trying to push out these smugglers and discussing ways to do so at the Zone and Woreda levels.”

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Ezana Mining had sold nine quintals of gold to the NBE in the two years leading up to the outbreak of war in late 2020.

Ezana is one of the 61 enterprises in Tigray that are reported to have suffered serious damage as a result of the war, according to a recent study conducted by the Tigray Chamber of Commerce.

The company operates out of its Terakimti facility located near Shire Indaselassie town in northern Tigray.

Tesfatsion confirms the study’s findings.

“Our plant was almost completely damaged,” he said. “We have taken on huge debt for its maintenance.”

Tesfatsion refrained from disclosing the size of the loans taken on by Ezana Mining, nor did he say what commercial bank provided the credit.

He told The Reporter that Ezana Mining expects to restart operations in less than six months’ time.

“We’ve ordered the import of chemicals and spare parts. Waiting for the spare parts, in particular, is holding us back,” said Tesfatsion.

The General Manager disclosed that Ezana Mining has renewed its permits for production and export.

“We’re discussing the progress with the NBE and the Ministry of Mines,” he said.

Regulators and Mines officials have not set a figure for the volume of gold they expect from Ezana. Tesfatsion observes production at Ezana might not meet pre-war levels due to aging machinery and equipment.

“We can only see what happens,” he said.

Officials of the Ministry of Mines target half a billion USD from the export of minerals this year – notably lower than the USD 600 million in export revenues registered in 2021/22.

The Ministry’s first quarter report reveals earnings of less than USD 65 million, forecasting a shortfall in annual revenues.

Habtamu Tegegn, minister of Mines, told Parliament the central bank acquisitioned close to 720 kilograms of gold from miners over the first three months of the financial year. It is less than half of the volume government officials hoped to see.

Ezana Mining was established in 1994 as a subsidiary of EFFORT. The company is engaged in the exploration and production of gold, as well as other metals, and has previously worked jointly with Canadian, Chinese and American mining companies.

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