Agriculture in Ethiopia - The Ethiopian American

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FEATURED STORIESsecond export commodity. It took over oilseeds’position earning $526 million in thepast 11 months (July 2012 – May, 2013)catching up fast on coffee, which generated$654 million.The latest geology survey shows thatEthiopia is endowed with natural resourcesranging from tantalum, which is used formanufacturing of mobile phones, laptopsand other electronic gadgets, to coal andpotash. The list includes, platinum, nickel,copper, silica, diatomite, bentonite, sodaash, gemstones, phosphorus, salt, geothermal,other industrial and constructionminerals, among others.Gold mineThe recent data from the Ministry of Mines(MoME) shows that out of the total earningsfrom mineral export $419 was earnedfrom one million traditional gold minersoperating in six regions of the country.The rest of this earning is attributed toMIDROC Gold Mining Company, whichthe government privatized in 1997 to theEthiopian born- Saudi tycoon, SheikhMohammed Hussein Ali Al-Amoudi, whoseMIDROC Ethiopia Group Investment hasover 40 companies and affiliates in Ethiopia.While the promising potash is expected totake over the lead role in the coming fewyears, gold is Ethiopia’s top hard currencyearner mineral generating an average ofhalf a billion US Dollars annually sincethe previous fiscal year.Potash is one natural resource from whichthe country expects huge revenue in thenear future. The Canadian firm, AllanaPotash and Fertilizer Company, co-foundedby an Ethiopian diaspora, has invested inthe Danakhil Depression of Afar Region.It has secured financing from two significantstrategic investors - the InternationalFinance Corporation (IFC), a privatesector financing arm of the World BankGroup, and Liberty Metals and Mining, amember of Liberty Mutual Group.Anticipating to start production of onemillion tons a year by mid-2015, Allanahas also got green light from Africa ExportImport Bank (Afrexim Bank), while offeringshares on the Toronto Stock Exchange,at the same time.The new Ethiopia- Djibouti railroad,which recently secured some $300 millionloan from the Indian Export Import Bank,is among the ingredients that are expectedto boost performance of mining and otherexport businesses in Ethiopia. This is alsoexpected to ease transportation of potashand fertilizer, indicating a promising futurefor the sector.“Had it not been for the decline of goldprices globally, mining could have generatedmore foreign currency to the countrythan coffee,” says Bacha Faji, PublicRelations Director at MoME.Estimations by the Ministry indicate thatthe western part of Ethiopia - aroundLega Dembi and Sakaro - alone has productionpotential of about five tons of goldper annum. In addition, gold productionhas recently started in Tigray, Gambella,southern parts of the country and Gujiand Borena zones of Oromia.Tullow-Africa Oil Corp.Oil exploration blocksin East AfricaMuch Anticipated Oil & GasFor the past two decades, there has beenaggressive exploration for oil and naturalgas in the four major sedimentary basinsof Ogaden, Gambella, Blue Nile andSouthern Rift Valley. Though none of thecompanies prospecting for oil and gas inEthiopia have announced the much anticipatedproduction news so far, there havebeen growing interests on the sub-sector.Most recent developments are elevatinghope of the people. The discoveries ofoil in neighbouring countries, Kenya andUganda, by Tullow Oil Company (partnerof Africa Oil), which Ethiopia has alsowelcomed to its territories, and recentnews from the company are boosting hopeof the country.“The most significant well results duringthe period were the Etuko-1 oil discoveryin Kenya and encountering an oil pronesystem in Ethiopia with the Sabisa-1 well,”Tullow stated in its 2013 half year reportreleased on July 2, 2013.Coal ProductionOne of the natural resources the countryhas started utilizing is coal. CurrentlyEthio-Pak Coal Mining firm, which was16 www.theethiopianamerican.com
Of the total 135 mining companies registered36 are owned by Ethiopians while 33 are jointventures between Ethiopians and foreigners.established as a joint venture by twoendowment companies (Ezana Miningwith 40% share and Mesobe CementFactory with 25% share) partnering witha Pakistani company with 35% share,seems to be on the lead. It has startedproducing coal since 2009 near Jimmaarea of Oromia Region, 300km west ofAddis Ababa. The area is said to have 14million tons coal reserve.In addition, to further utilize the huge coalpotential around Yayou area of OromiaRegion, the government has decided toinvest solo after its repeated attempt toattract private investors has failed.Yayou Coal Phosphate project is one of thelargest of about a dozen coal reserve sites inEthiopia. It is estimated to have a potentialof producing 300,000 tons of urea for fertilizerand 90 megawatts of electricity per year.The Big PictureThough Ethiopia has listed over 875 mineraloccurrences in SIG Afrique mineralresources database, the share of the miningsector to the country’s gross domesticProduct (GDP) is currently 1.5 percent.The Ministry of Mines envisages boostingthe current annual revenue earnings fromminerals export tenfold ($5-6 billion/year)by 2020 while at the same time producingmost of the currently imported industryinputs locally; hence, import substitute.To encourage investment in the sector,the government has recently reduced theincome tax from 35 to 25 percent. Lowerroyalty payment levels, exemption fromcustoms duty and taxes on mining equipment,guarantees in respect of the rightto sell minerals locally or abroad are alsoincluded in the new law.With no investment capital limits, governmentalso provides guarantees for openingof a local account in a foreign currency.“What we need from investors in the sectoris only detailed work plan with budgetbreakdown,” Bacha says.Out of the total of 135 mining companiescurrently operating in the country,55 are engaged in production of variousminerals ranging from gold, coal andtantalum to various gemstones such asopal. The remaining are at explorationlevel searching and analyzing economicviability of other natural resourcesincluding potash and crude oil.In addition, the country has also engagedRussian Geological Survey, Zaru Bezggeologia,and its Ethiopian counterpart toanalyze the major input for nuclear powerdevelopment - uranium deposit - found sixyears back in Bale zone of Oromia Region.Any Room for Diaspora?Recent statistics show that the engagementof the Ethiopian Diaspora in the miningsector is encouraging.Most of these investors are Ethiopian Diasporaslike Yegoraw, according to Bacha.The government is now encouraging bothforeign and Ethiopian Diaspora investorsto invest on areas where technology andvalue addition is need the most. Thisincludes improving traditional miners’performance investing on upgrading theirskills and equipments and engaging incutting and polishing gemstones businessbefore export.“Though there are challenges, this is thesector I am pushing my fellow Diasporasinto,” Yegoraw said while urging the authoritiesto decrease the week-long periodconsumed on paper works at customs justto clear duty free imported machineries.www.theethiopianamerican.com 17
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Agriculture in Ethiopia - The Ethiopian American

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