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Contraband threatens national gold supply
Ashenafi Bassa, head of Customs Compliance Division and Betru Haile, market development, linkage and forecast director

Contraband threatens national gold supply

The account of expanding contraband activities in various boarder areas of the country, the  amount of gold produced by artisanal miners in various regional states and being channeled to the National Bank of Ethiopia (NBE) keeps dwindling, The Reporter has learnt.

The Ministry of Mines and Petroleum has formed a market channel that enables artisanal miners to pan placer gold (alluvial gold) and sell it to the NBE which exports it to the international market. Five regional states—Tigrai, Oromiya, Gambella, Benishangul Gimuz and Southern regions—traditionally mine gold. The NBE buys gold from artisanal miners’ cooperatives and licensed individuals. The bank offers five percent more than the average international market price. However, to the dismay of the Ministry of Mines and Petroleum the amount of gold coming from the regional states to the central bank keeps dwindling.  

At a joint press conference held on Monday officials of the Ministry of Mines and Petroleum and the Customs Commission disclosed that contraband has posed a threat to the fledgling mining industry.

In its heydays, the sector earned more than 600 million dollars from mineral export, gold contributing the lions’ share. It has been nose diving in the past years and has hit a rock-bottom last year when mineral export fetched only 49 million dollars. Officials of the Ministry of Mines and Petroleum attributed the decline in mineral export for rampant contraband trade.

Betru Haile, market development, linkage and forecast director at the ministry stated that though the ministry planned to garner 265.82 million dollars from mineral export in the current fiscal year, the amount of gold supplied to the central bank in two months is minimal compared to the plan.

In the month of July and August Tigrai region planned to produce and supply 131 kg of gold to NBE but it actually supplied only 4.82 kg to the bank. Similarly Oromia planned to supply 131 kg of gold in the past two months but it managed to deliver only 1.48 kg. Benishangul Gumuz region planned to supply 51 kg of gold to NBE but it supplied a meager 0.74 kg of gold. Similarly, Gambella planned to sell 41 kg of gold to NBE but it brought in only 7.5 kg of gold to the central market. SNNP region which relatively demonstrated a better performance planned to supply 50 kg of gold to the bank and delivered 19.31 kg.

The five gold producing regions had planned to produce and supply more than 400 kg of gold but managed to supply only 33.84 kg of gold to the central bank. The regions attained only 8.3 percent of their plan. Ezana Mining Plc, the only large scale gold producer at the moment, planned to produce 111 kg of gold and produced 108 kg, 97.3 percent of the target.  

According to Betru, in the month of July and August a total of 150 kg of gold has been supplied to NBE and revenue of 5.42 dollars were earned from the gold export. Betru blamed the illegal mineral trade for the declining amount of gold forth coming to the central market. “The contraband trade is inflicting harm on the national economy,” Betru told journalists. “To control the growing contraband trade we are closely working with the NBE, the Ministry of Trade and Industry and the Customs Commission,” he added.

To curb the illegal mineral trade the Ministry of Mines and Petroleum in collaboration with the NBE opened gold procurement centers in the regional towns. Betru said that the bank will open more branches in the near future.

The Afar region is not known for gold production. But, recently the ministry noted that gold is traditionally produced in various localities in the region. “We have dispatched a team of experts to the region and undertook a study. The team has reported that gold is traditionally mined in four woredas in the Afar region,” Betru said. According to the report, on average 61 kg of gold is produced in the four woredas. Accordingly, work is underway to open a gold procurement center in one of the four woredas.  

Betru called up on the public to collaborate with the Ministry and the Customs Commission in the fight against illegal mineral trade. The ministry will soon launch a free call telephone line where citizens use to tip information about illegal mineral transactions.  

Ashenafi Bassa, head of Customs Compliance Division, revealed that based on information gathered from the public the commission’s check points are apprehending large amount of gold and other minerals. “We have apprehended 7 and 8 kg of gold which is being smuggled. We are talking about the amount of gold we seized but what about those which was not caught. We should think of the amount of gold which is being smuggled out of the country through various borders,” Ahenafi said.

Ashenafi said that the Customs Commission would reward whistle-blowers who tip information about illegal mineral traders. “We will investigate the information and if it is accurate we will compensate the whistle blower,” he said. He also mentioned that the information will be kept confidential to protect the wellbeing of whistle blowers.