Ethiopia: Encouraging Progress in Ethiopia’s Mineral Sector Development

The government’s focus on the mining sector has begun to show tangible changes. It has announced this on several occasions; producers involved in mining have also confirmed this. The revenue from minerals exported to foreign countries is increasing more than ever.

Among the reasons cited for this change, the macroeconomic reform implemented at the beginning of the 2024/25 fiscal year has contributed significantly to the increase in foreign exchange earnings from gold. The reform has not only enabled the gold production that has been subject to irregularities to be deposited in the National Bank, but also allowed gold producers to receive the appropriate price for their products.

The Ministry of Mines recently submitted its plan implementation report to the House of People’s Representatives’ Standing Committee on Industry and Mining regarding the activities carried out in the mining sector in the past eight months of the fiscal year. It is indicated in the report that encouraging changes are being seen in the activities carried out in the mining sector in the time under report. It was also indicated that the issues that need to be addressed in the future should be emphasized.

Minister of Mines, Engineer Habtamu Tegegn said that the mining sector has earned 1.8 billion Dollars from exports in the past eight months. The income earned from exports in the mining sector indicates that the country can do more by utilizing its mineral resources. The effectiveness of the implementation is an indication that it is possible to effectively move the country’s economy by changing policies.

The country is working to increase its income by producing its mineral resources in a quality manner. Gold occupies the largest share among the minerals being exported. In eight months, it was planned to export six tons of gold. However, 22.5 tons of gold were exported; this is a great achievement. There is a huge difference compared to the amount of gold exported since 2021. If the productivity continues at this rate, more than 33 tons of gold can be produced annually.

The Minister said that this could put the country among the African countries that export the highest gold production. Gold has a unique characteristic compared to other minerals, and that it is also in demand in the world and a source of foreign exchange. It is being produced by companies and in traditional ways; however, 95% is produced in traditional ways. Efforts should be made to replicate the success seen in gold in other minerals.

According to the Minister, following the macroeconomic reform at the beginning of the current fiscal year, supply of gold has increased significantly. This indicates that the country has lost much of the benefit it used to have from gold. After the reform, the National Bank of Ethiopia has provided additional incentives to small-scale gold producers, allowing 4.3 tons of gold to be deposited into the National Bank in one month. This result is very encouraging, but it also indicates that much more needs to be done.

The Minister also gave an explanation about the Kurmuk gold processing factory being built in Benishangul Gumuz region. The factory is the first of its kind in the country and that it will be inaugurated and put into operation next year. Three small-scale gold processing factories have started operation and gold production is moving to a reliable level.

The recently inaugurated Etno Mining small-scale gold processing factory meets the requirements of modern gold production, and although it has started its operation, it has not yet reached a reliable level. It will start producing gold in full capacity soon.

There were gold processing factories that had stopped working due to security problems; the small-scale gold production factories in Izana and Tulukapi have started trial production; they will enter full production next month, he indicated.

Midrok gold factory in Metekel is preparing to start full operation; when these new and existing gold processing plants are operational, gold production and productivity will increase, he said.

The Minister also mentioned the performance of coal; three modern coal processing plants are operating in the country. One of these is Etiminerals, which was inaugurated last year. National Mining is also ready to start operation and is producing to some extent. Another factory in the Gamo area will start production in two months. During the budget year, these factories are producing coal of processed quality and that factories can use.

The coal factories that were previously producing coal did not meet the required quality. When these factories are fully operational, they will save the country’s USD 300 million it spends on coal imports annually; and this year, the country will be able to meet its coal needs entirely through domestic production.

He mentioned that market linkage will be created where small-scale coal producers can supply their products to processing factories; raw and poor-quality coal will no longer be supplied to cement factories.

He noted that although not as much as gold, there has been a slight change in other mineral sectors compared to the same period last year; especially value-added minerals are showing a change.

Since minerals are mostly exported in raw form, they do not generate as much revenue as gold. “There is still a lot of work to be done in value addition; although the current start is encouraging, it shows that we can still do a lot in terms of the resources available,” he said.

The Minister stated that cement, one of import substitute products, was a product that has shown significant changes in the budget year. In the past, various cement factories, including Mesobo, were not producing at their full capacity for various reasons; there were shortages in the supply chain; and the market was also problematic. In general, these factors had a significant impact on both supply and price.

Factories that were under construction have now started operation; the cement factory has been implemented with great support from the government in less than two years; the inauguration of these factories has solved the major problems in the sector. This has led to a better change than in the past years, he said.

He mentioned that the country has a large amount of cement resources and that about 25% of the country’s land area is covered by cement resources; it is necessary to produce more and supply the surplus from domestic consumption to the foreign market.

Another resource of the mining sector is iron; factories that supply iron in finished or semi-finished form are supplying the product; there is no shortage of iron supply. This is because iron factories are working at their full capacity.

Mentioning that there are no less than 40 types of precious minerals in the country, the Minister explained that due to misconceptions and lack of an adequate incentive system for investors in the sector, as well as the distorted market system, the minerals are not being used much.

According to the Minister, since Wollo area is especially rich in opal and other minerals in the precious minerals sector, Wollo University also carries out many works related to precious metals; the sector will fully enter into implementation with the University soon. To solve the problem of the marketing system, it is being worked on to make it an export product like coffee and other products.