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BusinessAfar Mining Corp hits back at Industry Ministry’s salt monopoly allegations

Afar Mining Corp hits back at Industry Ministry’s salt monopoly allegations

  • “We are not operating” – Corporation head

The country’s industrial salt debacle takes another turn as the executives of the Afar Mining Development Corporation and Afar regional officials hit back at federal authorities who recently blamed a trade monopoly for the problems plaguing the supply chain.

A few weeks ago, senior officials from the Ministry of Industry told Parliament that manufacturers have been unable to source industrial salt as a result of “exclusive protectionism” and “restrictions on supply” by the Afar regional administration.

Industry Minister Melaku Alebel called for a policy intervention to break what officials describe as a monopoly on the industrial salt market.

“What monopoly?” asked Mohammed Ali (Eng.), head of the Corporation. “For anyone who claims our operations have taken over everything salt related and monopolized it: first, we need to work.”

Mohammed expressed incredulity at the problems in the industrial salt supply chain, which he blames on a new federal directive issued to regulate the trade.

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Mohammed told The Reporter the Corporation has halted all operations while it awaits solutions from federal institutions.

A directive from the Ministry of Trade and Regional Integration compels industrial salt suppliers to process their product with naphthalene to ensure the separation of edible salt and industrial salt in markets. The directive also compels suppliers to sell industrial salt only to approved distributors and industries.

Corporation execs say that although the directive was introduced in March 2022, it was not enforced until a letter from Teshale Belhu, then a state minister for Trade, instructed the Customs Commission and Food and Drugs Administration to bar the transportation of industrial salt not treated with naphthalene.

“Any industrial salt lacking the treatment and the accompanying labeling and packaging described in the directive cannot be transported across regional states and cities,” reads the letter.

It coincided with another major change in the industrial salt business: the Corporation had just taken over the industrial salt production and supply duties previously held by the state-owned Ethiopian Industrial Inputs Development Enterprise (EIIDE).

A week after the letter was issued, the Corporation wrote to the ministries of Mines, Trade, and Industry, as well as the Food and Drugs Administration, to inquire as to where it could source the compulsory naphthalene.

“We inquire how to access the chemicals and would like to know which institution is designated to supply us with the chemical,” reads the Corporation’s letter.

It also elaborates that the Corporation had entered an exclusive agreement to supply no less than 40,000 tons of industrial salt to manufacturers.

The ministries of Industry and Mines immediately notified Corporation execs the request for access to chemicals does not fall under their mandate. Talks with the Trade Ministry were ongoing, according to Mohammed.

On the final day of January, Industry Ministry officials presented their half-year report to Parliament’s Industry and Mining Affairs committee. They urged MPs for a policy intervention to end “regionalized protection” of industrial salt by the Afar Mining Development Corporation.

“A new directive that reserves the industrial salt trade solely for the region was introduced, now restricting the supply,” Tarekegn Bululta, a state minister of Industry, told Parliament.

He told MPs that repeated discussions with officials of the Afar regional administration to end the Corporation’s “exclusive protectionism” over salt has borne no fruit.

Until August 2022, salt mining and supply was controlled by a dozen private companies, involving 20 distributors and EIIDE.

“EIIDE was the only industrial salt provider,” said Mohammed.

He told The Reporter EIIDE shouldered the work because the Afar regional administration had yet to establish its own development enterprise.

“Now that the regional administration has brought the Corporation to life, we will carry out the salt mining and supply work,” said Mohammed. “Besides that, we do not understand the interest in making us onlookers where our resources are concerned, and not part of the benefits.”

Alemu Assefa is the director of industrial inputs procurement at EIIDE. He told The Reporter the Enterprise used to provide industrial salt mainly to tanneries, which use it to tan hides.

“Sometimes also to some factories that approached us with a permit from the Ministry of Industry,” said Alemu.

EIIDE has since been sidelined, but Mohammed argues transferring its duties to the Corporation was necessary.

He observes revenues from salt production will go to the regional administration, which operates the Corporation, and the opening of its head office and branch offices would create ample job opportunities for the residents of Afar.

Mohammed vehemently rejects any claims of a monopoly on the salt trade.

“I have no clue what angle they used to come up with ‘monopoly,’ or even how they describe the concept,” he told The Reporter.

Mohammed pointed out there could only be a monopoly if the corporation is operational and able to consolidate every aspect of the trade.

“We are not operating,” he said. “The system they placed on us has constrained us from doing so. We are alarmed that they took the side of EIIDE over us while we are simply waiting for solutions.”

Mohammed argues that although the Corporation is a regional development institution, it deserves the attention and respect afforded to its federal counterparts.

“We expect the Ministry [of Industry] to see that and treat us equally,” he told The Reporter.

Mohammed said the Corporation has repeatedly expressed its interest in holding business negotiations with EIIDE.

“For instance, EIIDE’s mandate is to supply industrial inputs, but it also distributes edible oil, sugar and even cement in regional states. We might ask to have an interest in that,” he told The Reporter. “If they agree to work with us on this, we might allow them to resume the industrial salt mine and supply work. But first we need to talk.” 

Mohammed denied claims the Corporation has issues with a lack of production capacity.

“We have no lack of capacity either in production or management. The problem is the system imposed on us,” he said.

Mohammed demands clarification from the federal government on where the Corporation can source naphthalene. If the chemical is unavailable, Mohammed and his team want to know if there are feasible options to substitute naphthalene.

The Corporation also awaits a remedy for the effects the salt transaction directive and subsequent instructions from the Trade Ministry have had on the industrial salt supply chain, according to Mohammed.

“The ministries might need to repeal the letter with another one, or change or amend sections of the directive. Either way, we are waiting for solutions,” he said.

[speaker]
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