Wondaferash Alemu 04-20-16

The natural resources of Ethiopia are hardly exploited even if nature endowed Ethiopia with mineral resources. Geological researches and explorations have established the existence of deposits of gold, rare metals, gemstones, industrial minerals (kaolin, potash, phosphate, etc.), construction minerals, coal, iron, platinum, nickel, base metals, sulfur, etc.

According to researchers, modern mineral exploration commenced in the nineteenth century. Since then, exploration activities have been going on and off. Throughout the Italian occupation of Ethiopia, exploration for minerals accelerated significantly than ever before. It continued after the restoration of the independence.

Nevertheless, the mining industry is still not very significant in terms of its distribution, size, and its economic contribution. The discovery of economic mineral deposits have been limited to the Adola Gold deposit and other few industrial minerals, such as soda ash, rock salt, potash, ceramics and also construction materials, such as cement raw materials, dimension stones such as marble, granite, etc.

The major transformation with regard to the mining sector took place in 1991. The  government  embraced  a  market-led  economy, permitting  and encouraging  the  role  of private large investments, advanced technology and trained manpower.in the extraction of Minerals. The Liberalized Mining and Income Tax Proclamations of 1993 and supporting Mineral Operations Regulations of 1994 helped Ethiopia create an environment conductive to private capital investment by local and foreign companies in the mining sector.

Indeed, the government provided for mining investors a number of incentives; such as low royalties, exemption from customs duties and taxes on equipment, machinery, vehicles and spare parts necessary for mineral operations, and a ten year loss carry forward.

As a result, the sector expanded at double digit rate for consecutive years. Today about 265 domestics and international companies have hold prospecting, exploration and mining licenses for hard minerals.

The second major change in the mining sector was observed after 2010 under the five years Growth and transformation Plan. The GTP set ambitious targets for the mining sector in five aspects. As disclosed last year, under the five year Growth and Transformation Plan, the Ethiopian Geological Survey has been working to boost the country’s geological mapping coverage from 51 percent in 2009/10 to 80 percent by 2015. On the other hand, coverage of gravity survey, hydrogeological mapping and engineering geology reached 95 percent, 62.6 percent and 20.9 percent respectively. The other major program of the GTP's mineral sector development program is the Mineral and Petroleum Investment Expansion Program. Various activities were performed under this program.

The other major area of change under the GTP has been the supports provided for the artisanal mining subsector. The 2010 legislation has been hailed as a model legislation for other African countries as it provided clarity and formal recognition of artisanal mining.

The government provided technical assistance provided to traditional miners and legalization of the activities of gold miners, among others. More than 50,000 laborers have benefited from the mining activity.

Nevertheless, despite the fact that gold mining is a relatively better performing segment of the sector. Ethiopia earned only about USD 1.7 billion in 2012 from five tons of gold per year. This is despite the recent data that shows Ethiopia's gold reserves are estimated above five hundred tons. Efforts are underway to mine one quintal of gold valued at over 840 million birr in this Ethiopian fiscal year.

Development of these resources is a cornerstone of the government's export-oriented growth strategy and means there is less reliance on agriculture for diversifying the economy. New technologies and  working methodologies have been introduced; published documents and books have been collected  and distributed to all investors and potential participants of the sector.

One highly notable progress in that geological surveys have been given attention. Since such surveys help delineating areas where minerals are found, hence encourage investment from domestic and foreign companies. Indeed, collecting vital information on minerals, ground water, engineering geology and geo-hazards information enables to identify localities where natural disasters such as volcano, earthquake and landslide, are crucial for the sector's development.

The mining sector remains the priority of the government in the Second Growth and Transformation Plan. The main strategic directions of the mining sector during the GTP II are expanding the production of minerals for foreign exchange generation and import substitution for local industries.

The major objectives of the plan are: improving policy, legal-frameworks, regulatory and working systems; Adding value to minerals, producing minerals inputs for the manufacturing sector development; enabling the mining sector to meet national and international environmental standards and regulations, and expanding the geo-sciences mapping coverage of the country both in quality and accessibility.

Indeed, the government is determined to attain these strategic objectives and goals. In order to attain strategic objects and stated goals of the sector. The implementation strategies formulated to attain the objectives and goals underlined that:

"To effectively facilitate and integrate the mining exploration endeavors, Geo-Sciences mapping converge will be expanded. Moreover, data/information collection, selection and prioritization for potential minerals deposits’ estimation will be strengthened, using integrated Geology, Geo-chemistry, Geo-physics and deep wells drilling activities. For sustainable utilization of the mining sector, long-term master plan will be developed. International practices will be adopted and mainstreamed into the mining sector and due priority will be also given to production of essential minerals which intend to meet the demands of local manufacturing industries’ and international market. Besides, best practices of environmental protection and community development will be integrated and mainstreamed into local conditions."