Thursday, July 25, 2024
BusinessGold rush: Tigray’s bullion driven to shadow market as central bank readies...

Gold rush: Tigray’s bullion driven to shadow market as central bank readies new trade offer

An estimated USD 100mln in annual gold exports subverted

The central bank’s supply of gold from mines in Tigray has dried up completely, but artisanal mining continues in the region, extracting an estimated 20 quintals of gold each year for supply to a clandestine market.

Tigray Regional State was one of the largest gold-producing regions in Ethiopia next to Oromia, supplying close to 26 quintals to the central bank in the year preceding the outbreak of war in November 2020. It was equivalent to 100 million dollars in export revenues, or close to a fifth of total gold export revenues in 2020/21.

The figure has since dropped to zero.

A little more than 20 percent of the gold supplied to the central bank from Tigray in 2020/21 came from Ezana Mining Development Plc – a subsidiary of the Endowment Fund for the Rehabilitation of Tigray (EFFORT) – whose Terakimti facility near Shire Town was damaged during the conflict.

- Advertisement -

Ezana Mining sold nine quintals of gold to the National Bank of Ethiopia (NBE) in the two years leading up to the war.

Nonetheless, the majority of gold in Tigray, as with elsewhere in Ethiopia, is extracted by artisanal miners, who are still operating in large numbers, according to officials of the Tigray Interim Administration.

There are 100,000 artisanal miners active in the region, producing an estimated 20 quintals of gold annually, according to Fiseha Meresa, director of licensing and administration at the Tigray Land and Mining Bureau.

“However, the volume of gold being supplied to the central bank is zero. The production is all going to the black market,” Fiseha told The Reporter.

Artisanal mining mainly goes on in northwestern Tigray, including in places like Chimbla, Asgede, Adi Daero, and Seyemt Adiabo. Rahma Adrbat, Nadier, Kola Tembien, and Hawazen are some of the gold-producing regions of central Tigray.

The contraband gold is supplied to a central market in Addis Ababa, according to Fiseha.

He told The Reporter the Tigray Interim Administration has been unable to rein in the parallel gold trade as the central bank’s buying price is not attractive to artisanal miners.

“The black market offers 1,000 birr more for each gram of gold than the central bank,” said Fiseha.

He disclosed the Administration has requested regulators at the central bank to review the buying price and is awaiting a response.

“We cannot force artisanal miners to supply to the central bank with the meager margins,” said Fisseha.

An agreement was reached last month between Ezana Mining and the NBE, designating the former as the official collector of all gold mined in Tigray, which it will then supply to the central bank.

Ezana Mining is in the process of opening gold trading floors in selected areas, according to Fiseha.

In return, regulators at the NBE have agreed to grant the Tigray Regional State priority status in foreign currency allocation.

“Discussions are still ongoing as to how much Ezana will offer artisanal miners for the gold, and how large its profit margin will be when it supplies it to the central bank,” said Fiseha.

Gold is not the only mineral that has seen its market distorted by two years of conflict. No less than 1,200 mining companies held licenses in Tigray before the war, and there were 30 large-scale mining firms licensed at the federal level for operations in Tigray.

Almost none of these large-scale firms have been able to resume operations since the Pretoria Agreement was signed more than a year ago.

In July 2023, the Interim Administration asked the Ministry of Mines to void the licenses of 27 large-scale mining companies that were inactive.

The firms mentioned in a letter to the Ministry include Sekota Mining, Sun Peak, Axum Metals, Newmont Ventures, National Mining Corporation, Tigray Resources, and Tigray Holdings, among others.

Most of these firms had their licenses expire before 2022, but have neither renewed them nor restarted mining operations in the region.

“The Ministry did not respond to the letter. Meanwhile, the region is unable to utilize its resources,” Fiseha told The Reporter.

[speaker]
- Advertisement -spot_img

Subscribe

- Advertisement -

Popular

More like this
Related

Eritrean Authority bars Ethiopian flights

The Ethiopian Airlines Group has confirmed that Eritrean aviation...

Ethiopian Chamber ends six year assembly hiatus, elects new president

The Ethiopian Chamber of Commerce and Sectoral Association (ECCSA)...

Administrative vacuum exposes Majang forest reserve to wide axes

The Majang Forest Biosphere Reserve, a UNESCO recognized and...

Ministry confirms Sudan war nearing Ethiopian border

Gedaref replaces Khartoum as center of operations The Ministry of...