Ethiopia is an up-and-coming mining location. Mining consultant Wondimu Yohannes gives a personal perspective.
Emerging mining frontiers are not new, but, for a variety of reasons, some have fallen from the mining company radar. It could be due to political instability, civil war, or that the taxation or legal code is not as attractive as other locations across the globe. In some cases they are simply forgotten.
My country, Ethiopia, has previously fallen into all these categories, yet it has considerable mineral deposits, including gold, industrial minerals and rare metals. Over the past year, I have been working back home and witnessed a sea change in mineral exploration, with a number of companies, particularly juniors, engaged in precious metals exploration. The rich geological potential, the relative political stability, and new competitive investment and taxation codes are considered to be the main drivers for the enhanced mining investment. However, this environment also has its challenges for investors, governments and local communities.
Wealth of resources
The geology of Ethiopia can be divided into three major terrains. Proterozoic crystalline basement underlies about 19% of the country, hosting nearly all of the known gold occurrences. Late Palaeozoic, Mesozoic and Tertiary continental and marine sediments occur mostly in the east and occupy about 25% of the land area of Ethiopia, with the remaining 56% underlain by Cenozoic volcanic and sedimentary rocks, including those of the East African Rift Valley, which transects the country in a north-easterly direction. This gives a wide variety of mineralising environments.
Historically, the international mining industry has paid relatively little attention to the gold potential of Ethiopia despite placer gold mining dating back at least 2,500 years. It is estimated that large tonnages of gold have been produced from deposits of this type. In terms of geological mapping, the Geological Survey of Ethiopia (GSE) has covered about 50% of Ethiopia’s Field workers in Ethiopia 1.2m km2, including the major greenstone belts, at 1:250,000 scale. Since then, potential economic gold resources, mainly in mesothermal or orogenic deposits, have been outlined at several localities. However, most investigations have been reconnaissance with extensive areas of prospective ground remaining under explored.
The first major exploration campaign for gold was the Adola Gold Exploration Project, led by the former Soviet Union in the early 1980s and concentrating on the Southern Greenstone Belt. This was followed by the GSE, working in collaboration with the United Nations Development Programme (UNDP), initially in western Ethiopia.
Subsequently, the focus shifted to southern Ethiopia, with an airborne geophysical survey over about 3,000km2 of the Adola Belt carried out in 1993. The next major initiative was the five-year Ethionor project, a Norwegian-GSE collaboration that started in 1996.
Over the years, a number of companies have carried out systematic exploration. These included Ashanti, Canyon Resources, Emerging Africa Gold, Golden Star, JCI, Rift Resources and Tan Range. According to a study funded by the UNDP, gold, tantalum, soda ash, potash, nickel and platinum minerals have the most potential for development.
Significant gold mineralisation is found in three regions – Southern Greenstone Belt (including the Adola, Ageremariam and Moyale areas), Western Greenstone Belt (including the Akobo area) and the Northern (or Tigray) Greenstone Belt. More than 60 shear-zone-hosted gold occurrences have been identified in the main greenstone belts, but no detailed information is available for most of these.
In recent years, the GSE has carried out regional and detailed surveys in several prospective sectors of the greenstone belts. The diverse geology of Ethiopia has potential for the occurrence of gold in a variety of deposit types in addition to mesothermal quartz-veins. These include epithermal gold in rift and other volcanic settings, porphyry copper-gold, ophiolite-associated, intrusion-related gold, iron-oxide copper gold (IOCG), gold-bearing massive sulphides, and placers.
In the past two years, the situation has changed dramatically with early and advanced explorations underway by international and local companies. In the northern and western greenstone belts are Canadian Aberdeen International Inc, targeting gold and associated metals; Ezana Mining Development plc, in joint venture with the Chinese company Donia Beijing; and UK Stratex International plc and Canadian Nyota plc are exploring gold and base metals in the northern greenstone belt. Midroc Gold Pvt Ltd is continuing exploration in the western belt in addition to operating the Legadembi mine, which produces c130,000oz annually.
Exploration for base metals and industrial minerals continues, including Canadian Allana Resources and Saink Potash of India in the Danakil depression.
The stimulus for this extensive exploration work is the revised legislation. In July 2010, the Government enacted new mining and mining income tax laws, entitled, ‘A Proclamation to Promote Sustainable Development of Mineral Resources’, to make the minerals sector more favourable for foreign investment. The main points are listed under "License to drill" (below). However, to ensure the Mining Act encourages long-term investment, a number of environments require development.
First is infrastructure. I have been impressed by the substantial increase of road construction in the rural and urban areas of Ethiopia, often following town and socio-economic development plans. However, there are many remote mining areas that are accessible only by helicopter or camel. A mining-led infrastructure development, including roads, should be considered as part of the mineral resources development strategy.
There is an acute shortage of geologists in the country and this will soon be followed by a shortage of mining engineers and other specialists needed to provide supporting services. A strategic plan to increase the mining human resource capacity through Government-led initiatives – and other sources of funding – would train specialists in the country and abroad and help in this area of capacity building.
There is an increasing awareness of the role mining might play in a developing economy. However, in conversation with many local people mining is often misunderstood, leading to over-expectation from the sector, or conversely, not giving it the right priority in development planning and investment allocation, because of the inherent risk and long-term nature of mine development. Ensuring that the planning and implementation of the mining sector is undertaken as part of the overall development strategy of a country, is one way to make mining part of other sectors and gain recognition for its role.
This can be achieved through effective stakeholder engagement between exploration companies, Government bodies and local communities to create a sustainable environment for the operation of companies and local communities.
On returning to Ethiopia, I was uneasy about personal safety and security, yet my main observation is that there is often a gap between what you hear from the outside and the reality on the ground. I had anxieties about travelling to remote regions, mainly based on discouraging comments on the internet. Instead, I found the places stable, peaceful and welcoming.
License to drill
The main points from Ethiopia's revised mining and mining income laws – A Proclamation to Promote Sustainable Development of Mineral Resources.
Four types of licenses are available – Reconnaissance, Exploration, Retention, and Artisanal Small Scale Mining and Large Scale Mining.
The Licensing Authority of the Ministry and the regional states issue artisanal mining licenses and reconnaissance, exploration and retention licenses with respect to construction and industrial minerals. The Ministry of Mines (MOM) has the power to issue reconnaissance, exploration, retention and mining licenses.
Royalties are paid as follows – precious minerals (8%), semi-precious minerals (6%), metallic minerals (5%), industrial minerals (4%), construction minerals (3%), salt (4%) and geothermal (2%).
Wondimu Yohannes MIMMM is a mining engineer and senior consultant. He has spent over a year in Ethiopia coordinating mineral exploration activities and also working on stakeholder engagement and resettlement of mining communities. Email: email@example.com