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Minerals export fetches an all-time low USD 130 million
Despite huge reserves of mines Ethiopia fails to secure sizable returns

Minerals export fetches an all-time low USD 130 million

The minerals export earnings, which has been declining in the past consecutive years, fetched an all-time low revenue of USD 130 million in the 2017-2018 fiscal year that ended last June. 

The country exports gold, silver, tantalum, gemstones and marble. The country used to earn more than 600 million dollars from the mining sector. Gold export accounts for the lion’s share of the minerals export earnings. Back then minerals export has been the second largest foreign currency earner next to coffee.

Officials of the Ministry of Mines, Petroleum and Natural Gas on Wednesday deliberated on the poor performance of the sector with employees of the Ministry. The officials attributed the decline in the foreign currency earnings to soaring contraband minerals trade, falling commodity prices and political instability.

The Minister of Mines, Petroleum and Natural Gas, Meles Alemu, said that illicit gold trade has been the major factor affecting the legal minerals export. “We cannot achieve the targets set in the GTP unless we address the contraband trade issue. Our priority agenda should be controlling the contraband minerals trade,” Meles said.      

The government had planned to garner 800 million dollars from mineral exports yearly in first phase of the Growth and Transformation Plan (GTP-I) and a staggering two billion dollars in end of GTP-II. In a stark contrast, the mineral export is now fetching less than 200 million dollars.

Mineral export is one of Ethiopia’s major foreign currency earners. In the heydays, the country used to earn more than 600 million dollars from minerals export. A total of 170 companies are engaged in mineral exploration projects in the country.

In 2011-2012, the mining sector earned 618 million dollars from mineral exports – two-third of that coming from artisanal mining. Artisanal miners used to generate 400 million dollars from the export of nine tons of gold annually. There are more than one million artisanal miners in five regional states –Tigray, Oromia, Benishangul, Gambella and Southern regional states.

The minerals export revenue dropped to 340 million dollars in 2013 following the global gold market crash. This has further declined to 230 million dollars last year. The decline is mainly attributed to falling gold price in the international market. An ounce of gold, which was sold for 1,700 dollars, is now traded at 1,200 dollars in the global market. Contraband gold trade has worsened the situation.

MIDROC Gold, the major large scale gold producer, exports its pure gold and silver to Europe, mainly to Switzerland. While artisanal miners’ cooperatives supply their gold to the central bank, the National Bank of Ethiopia.

Industry sources told The Reporter that in addition to the increasing illegal minerals trade the public riots that rocked the Oromia Regional State, a region known for its mineral wealth has deteriorated the performance of the mining sector. “The major contributing factor for the declining performance is now the political instability that compelled mining firms to halt operation,” sources said.         

MIDROC Gold used to mine and export four tons of gold per annum from its Lega Dembi gold mine in the Oromia Regional State. Last May the Ministry of Mines, Petroleum and Natural Gas suspended MIDROC’s mining license following a fierce protest from the local community which accused the company of polluting the environment. The local people complained that chemical waste coming out of the gold mine is inflicting health hazard on children and their cattle. Executives of MIDRCO Gold denies the claim. MIDROC Gold used to fetch more than 60 million dollars annually.   

Similarly the Ethiopian Minerals, Petroleum and Bio-Fuel Cooperation, which runs the Kenticha tantalum mine in Borena, Zone, Seba Boru Wereda of the Oromia Regional State, was forced to suspend its operation in December 2017 by local authorities after the corporation wrangled with the local community in connection with environmental concerns. The corporation used to export more than 90 tons of tantalum concentrate valued at more than 20 million dollars per annum.    

“All these conflicts in the mining areas are instigated by the political tides. Unless the government addresses these issues the ministry cannot revive the minerals export earning,” sources said.