invest in ethiopia mining

Mining_2010:18.02.08 29/10/10 15:55 Page 1INVEST IN ETHIOPIAMINING: INVESTMENT OPPORTUNITIESEthiopia’s mining sector is undergoing a hugetransformation as opportunities for investmenthave opened up. The development of Ethiopia’smineral wealth is one of the Government’s leadingeconomic objectives which serves as one of thecatalysts for the export-orientated developmentstrategy in place. Geological surveys indicate thatEthiopia is endowed with a variety of mineralresources.Metallic minerals include gold, which is the mostdeveloped with a huge potential of exploration. Aproven reserve of natural gas, in the amount of12.6 trillion CC, has been found which is ready forcommercial exploration, whilst deposits ofplatinum (and other PGE), tantalite, iron, copper,lead, zinc, nickel and other base metals do exist.Petroleum and gemstones have also beenidentified. Industrial and construction mineralssuch as quartz, feldspar, mica, kyanite, kaolin, talc,chromites, graphite, magnesite, industrial olivine,marble, and granite, potash, rock salt, soda ash,sulphur, silica sand, diatomite and bentonite havebeen identified and some are under production.Such mineral wealth, in combination with a skilledand highly motivated workforce guarantees athriving and profitable mining sector. The MiningProclamation recognises the significant role ofprivate investment in capital formation, technologyacquisition and marketing of minerals.Gambela, Benishangul and Suothern People’sregion. Export of gold provides more than US$360 million in 2010. Revenue from gold exports isexpected to increase as the price of gold isgrowing in the international market. Under thisbackground, foreign and local investment isexpected to grow.As a result of the conducive fiscal and legislativeenvironment, the country is now enjoying theparticipation of both foreign and local investors inexploration and mining. To date the Ministry ofMines and Energy hasgranted 119 explorationlicences of which 86 areforeign and 33 on jointventure basis and 52mining licences of which24 are foreign and 17 areon joint venture and 11locally owned. The total number of licences issuedhas reached 171 granted to 86 companies. Theseare for gold and base metals, platinum, industrialand construction minerals, notably, potash,diatomite and high quality ceramics raw materials.Intensive exploration programmes are also beingconducted for oil and gas, precious stones such asdiamonds and sapphires and other gemstones indifferent parts of the country.Foreign companies already investing in Ethiopia’smining sector come from all over the worldincluding the UK, China, South Africa, Canada,USA, Guyana, Italy and Norway. In 2009 foreigninvestment in the mining sector reached to US$1billion.Current mining operations andinvestmentsGold is considered to be the mineral with themost potential for mining investment and theGovernment estimates that production could riseto 40 tonnes a year given sufficient income.Legedembi primary gold mine, which has beentransferred from public to private ownership, isthe largest gold mine, while there are about 8mines in the Gambella, Somali, Tigray, Amhara,

Mining_2010:18.02.08 29/10/10 15:55 Page 2INVEST IN ETHIOPIAMINING: INVESTMENT OPPORTUNITIESInvestment guarantees• 10-year loss carry forward.• Remittance of profits and dividends, principaland interest payments on external loans,payments related to technology transfer,proceeds from the sale of share or liquidation ofan enterprise.Investment incentivesThe mineral sector, which is open to privateinvestors, attracts huge investment, advancedtechnology and trained manpower. The miningsector policy and strategy has created a conduciveenvironment for both local and foreign companiesin the development of the mineral sector. TheInvestment Code of 2002(as amended in 2003),Council of ministers Regulation 2003(as amendedin 2008), the Mining and Income Tax Proclamationsof 1993 (as amended in 1996 and 1998) as well asthe supporting Mineral Operations Regulations of1994 facilitate for enhanced private sectorinvestment. These laws and regulations provide thelicense holder with a number of incentives such us:• As the member of the World Bank MultilateralInvestment Guarantee Agency (MIGA), WorldIntellectual Property Organization (WIPO), theInternational Convention on Settlement ofInvestment Disputes between States andNations of other States (ICSID) and havingBilateral Investment Promotion and ProtectionAgreement with the UK, investors enjoy strongguarantees for their investment in the country.• Exemption from custom duties and taxes onequipment, machinery, vehicles and spare partsnecessary for mineral operations.• Low royalties.