Complete Book PDF (4.12MB) - World Bank eLibrary

384 Diagnosing Corruption in Ethiopia
• Mining has a major, and potentially adverse, impact on local inhabitants.
Mining can take place over large areas of land and cause major environmental
degradation. This can affect the local inhabitants by requiring
them to be resettled and by polluting the air, land, and water. There can
be considerable corruption surrounding the calculation and payment of
compensation to inhabitants and in assessing, imposing, and policing
the necessary environmental controls.
Overview of the Ethiopian Mining Sector
Current mining activities in Ethiopia include the production of gold,
tantalite, soda ash, kaolin, limestone, marble, basalt, granite, gemstones,
salt, and other products. The Ethiopian government retains title to all
these minerals and the land that holds them. All mines were once publicly
owned. However, since 1993, Ethiopian mines have been privatized;
only three currently remain under public ownership.
Therefore, all new mining licenses are being issued to privately owned
mining companies. Foreign mining companies are entitled to obtain
licenses on the same terms as Ethiopian companies. Mining licenses can
be issued either to foreign or Ethiopian companies acting individually or
to joint ventures involving foreign or Ethiopian companies.
The Ethiopian mining sector is currently relatively small but growing.
The Ministry of Mines and Energy’s “National Report on Mining” (submitted
to the United Nations Commission on Sustainable Development
in November 2009) reveals the following (MOME 2009):
• The contribution of the mining sector to the Ethiopian economy is currently
6 percent of gross domestic product (GDP), compared with less
than 1 percent before 1990.
• The federal government has collected royalties of more than US$4
million from large-scale production of gold every year between 2006
and 2009.
• Regional and city administrations have also collected royalties of an
estimated US$3 million per year from small-scale and artisanal production
of precious minerals and industrial and construction materials.
• The total private sector investment is estimated at US$1.1 billion, of
which 95 percent comes from direct foreign investment for the mining
of precious and industrial minerals.
• Foreign currency earnings total US$135 million per year from the
export of minerals such as gold, tantalite, concentrate platinum,