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Public Disclosure Authorized

Ministry  of  Mines  

Federal  Democratic  Republic  of  Ethiopia

STRATEGIC  ASSESSMENT  OF  THE    

ETHIOPIAN  MINERAL  SECTOR
Public Disclosure Authorized

FINAL  REPORT

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Public Disclosure Authorized
Public Disclosure Authorized
Disclaimer:
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ANDITSAFlLIATEDORGANIZATIONSORTHE%XECUTIVE$IRECTORSOF4HE7ORLD"ANKORTHEGOVERNMENTSTHEYREPRESENT4HE7ORLD"ANK&OREIGN
!FFAIRS4RADEAND$EVELOPMENT#ANADA$&!4$ THE'OVERNMENTOF!USTRALIAANDTHE$EPARTMENTFOR)NTERNATIONAL$EVELOPMENT5+
$&)$ DONOTGUARANTEETHEACCURACYOFTHEDATAINCLUDEDINTHISWORK4HEBOUNDARIESCOLORSDENOMINATIONSANDOTHERINFORMATION
SHOWNONANYMAPINTHISWORKDONOTIMPLYANYJUDGMENTONTHEPARTOF4HE7ORLD"ANKCONCERNINGTHELEGALSTATUSOFANYTERRITORYORTHE
ENDORSEMENTORACCEPTANCEOFSUCHBOUNDARIES
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4HEMATERIALINTHISPUBLICATIONISCOPYRIGHTED#OPYINGANDORTRANSMITTINGPORTIONSORALLOFTHISWORKWITHOUTPERMISSIONMAYBEAVIOLATION
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&ORPERMISSIONTOPHOTOCOPYORREPRINTANYPARTOFTHISWORKPLEASESENDAREQUESTWITHCOMPLETEINFORMATIONTOTHE#OPYRIGHT#LEARANCE
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!LLOTHERQUERIESONRIGHTSANDLICENSESINCLUDINGSUBSIDIARYRIGHTSSHOULDBEADDRESSEDTOTHE/FlCEOFTHE0UBLISHER4HE7ORLD"ANK

(3TREET.77ASHINGTON$#53!FAX  E MAILPUBRIGHTS WORLDBANKORG

Cover  pictures  courtesy  of:  Allana  Potash  Afar  Plc.,  PACT  Ethiopia,  The  Swedish  Geological  AB  and  Yara  Dallol  BV.
STRATEGIC  ASSESSMENT  OF  THE    
ETHIOPIAN  MINERAL  SECTOR
FINAL  REPORT

ՙpÛĜØΎÕÃáŒΎÅ0ij
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Ministry  of  Mines  

Federal  Democratic  Republic  of  Ethiopia
ACKNOWLEDGEMENTS
4HISECONOMICSECTORWORK%37 ISPARTOFTHEANALYTICALSUPPORTPROVIDEDBYTHE7ORLD"ANK'ROUPTOTHE
DEVELOPMENTOF%THIOPIASMININGSECTOR4HEREPORTISAJOINTEFFORTBYTHE%THIOPIA-INISTRYOF-INESANDTHE7ORLD
"ANK'ROUPANDITHASBEENPREPAREDBYTHE3WEDISH'EOLOGICAL!")NTIERRA2-'AND)2)3#ONSULTUNDERTHE
DIRECTIONOFTHE7ORLD"ANK'ROUP4HESTUDYHASBEENSUPPORTEDBYTHE!USTRALIAN'OVERNMENTTHE#ANADIAN
$EPARTMENTOF&OREIGN!FFAIRS4RADEAND$EVELOPMENT$&!4$ 5+$EPARTMENTFOR)NTERNATIONAL$EVELOPMENT
$&)$ ANDTHE)NTERNATIONAL&INANCE#ORPORATION

4HE7ORLD"ANKTEAMINCLUDED+IRSTEN(UND44, AND!NTIA0ORTILLO'ARCIA!GROUPOFEXPERTSFROMTHE7ORLD
"ANK'ROUPINCLUDING"RYAN,AND2EMI0ELON!DRIANA%FTIMIE!SFERACHEW!BATE!BEBEAND-ESlN'IRMA
"EZAWAGAWPEERREVIEWEDMAJOROUTPUTSOFTHESTUDY/THERPROJECTDONORSREPRESENTATIVESINCLUDING3UE
-OORE!USTRALIA %LISE.ALBANDIAN!USTRALIA #ORRY6AN'AAL#ANADA AND3HEWIT%MMANUEL$&I$ PROVIDED
INSIGHTFULCOMMENTSANDGUIDANCEINlNALIZINGTHISREPORT

4HE7ORLD"ANK'ROUPISGRATEFULTOTHE%THIOPIA-INISTRYOF-INES-O- UNDERTHESTEWARDSHIPOFTHE-INISTER
(%!TO4OLESA3HAGIFORHISLEADERSHIPANDCOMMITMENT4HETEAMISALSOGRATEFULTO-O-AND2EGIONAL-INING
"UREAUSSTAFFASWELLASMININGCOMPANIESCOMMUNITIESANDARTISANALMINERSFORTHEIRINPUTSANDSUPPORTIN
GATHERINGINFORMATION3PECIALTHANKSGOTO-O-SSTAFF!LMAZ"ELAYNEH(UNDIE-ELKAAND!BAYNEH4ILAHUN

/THER7ORLD"ANK'ROUPPUBLICATIONSANDRESEARCHONEXTRACTIVEINDUSTRIESAREAVAILABLEFORDOWNLOADFROMHTTP
WWWWORLDBANKORGENTOPICEXTRACTIVEINDUSTRIES
FOREWORD  
Ethiopia  Mineral  Sector  Assessment  |  July  2014  
#AN%THIOPIASMINERALRESOURCESBEUSEDFORGROWTHANDTRANSFORMATION

%THIOPIASMININGSECTORSHOWSSTRONGPOTENTIALFORLONGTERMDEVELOPMENT!LTHOUGHLARGESCALEMININGHASUP
TONOWBEENMINIMALSEVERALLARGEPROJECTSAREINDEVELOPMENT)NADDITIONTHECOUNTRYHASGEOLOGICALPOTENTIAL
FORTHEDISCOVERYOFNEWSIZEABLEMINERALDEPOSITS%THIOPIAALSOHASANEXTENSIVEANDUNIQUEARTISANALMINING
SECTORWHICHMAKESITANIMPORTANTSOURCEOFJOBCREATIONINADDITIONTOITSPOTENTIALASANIMPORTANTSOURCEOF
FOREIGNCURRENCYANDGOVERNMENTREVENUE)FEFFECTIVELYMANAGEDTHEMININGSECTORCANPLAYATRANSFORMATIVE
ROLEFORSOCIALANDECONOMICDEVELOPMENTOF%THIOPIA-ININGISANEXPORT ORIENTEDSECTORTHATSATISlESINCREASING
DEMANDFROMINDUSTRIALPRODUCTIONAGRICULTUREANDHIGH TECHSECTORSANDHAVETHEPOTENTIALTOCREATELOCAL
LINKAGESFORSOCIALANDECONOMICDEVELOPMENT

4HISREPORTISTHElRSTCOMPREHENSIVEASSESSMENTOFTHE%THIOPIAN-INING3ECTOR)TEXAMINESTHESECTORSPRIMARY
OPPORTUNITIESANDCHALLENGESFORGROWTHANDTRANSFORMATIONWHILEALSOPROVIDINGANINITIALANALYSISOFPOLICYOPTIONS
FOR%THIOPIANDECISIONMAKERS"UILDINGONTHEIRPOLITICALCOMMITMENTTOTHISSECTORTHE'OVERNMENTOF%THIOPIA
'O% NEEDSTODEVELOPABROADVISIONFORREALIZINGITSPOTENTIALINCLUDINGSOCIO ECONOMICBENElTS4HEINTERESTS
OFANARRAYOFSTAKEHOLDERSNEEDTOBEBALANCEDANDSOCIALENVIRONMENTALANDECONOMICIMPACTSHAVETOBE
MANAGED)NADDITIONTO'O%SFACILITATINGANDLEADINGROLETHEREPORTHIGHLIGHTSTHENEEDFORTWOIMPORTANTSTEPS
TOBETAKEN

  THECOLLECTIONANDMARKETINGOFHIGH QUALITYGEOLOGICALGEOPHYSICALDATATOCLEARLYIDENTIFY%THIOPIAS
MININGPOTENTIALAND

  THEESTABLISHMENTOFANEFFECTIVEMINERALMANAGEMENTSYSTEMANDINSTITUTIONSTOENSURETHEDEVELOPMENT
OFARESPONSIBLEMININGSECTOR

!BROAD BASEDGROUPOFSTAKEHOLDERSINCLUDINGREGIONALGOVERNMENTSLARGE SCALECOMPANIESARTISANALMINERS

ANDCOMMUNITIESWERECONSULTEDTHROUGHOUTTHISREPORTSPREPARATION4HE%THIOPIA-INISTRYOF-INESTHE7ORLD
"ANK'ROUPANDFUNDINGPARTNERSWOULDLIKETOACKNOWLEDGEANDTHANKALLOFTHEMFORTHEIRCOMMITMENTAND
IMPORTANTCONTRIBUTIONSTOTHESTUDY

4HISREPORTISONLYAlRSTSTEPINANEXPANDINGPROCESSOFDIALOGUEANDCOLLABORATION7ELOOKFORWARDTOENGAGING
WITHPUBLICANDPRIVATESECTORPARTNERSTOADVANCETHEDISCUSSIONANDACCELERATEACTIONTOREALIZETHEBENElTSOF
THEEXTRACTIVEINDUSTRIESFORALL%THIOPIANS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR III

 CONTENT
&INAL2EPORT  
&INAL2EPORT  I
!CKNOWLEDGEMENTS II
&OREWORD   III
!CRONYMSANDABBREVIATIONS VI
%XECUTIVESUMMARY 
)NTRODUCTION  
 4HECURRENTSTATEOFTHE%THIOPIANMINERALSECTOR 
 0OTENTIALMININGDEVELOPMENT 
 #ONSIDERATIONSFORSECTORDEVELOPMENTANDSUSTAINABILITY 
 3UMMARYOFRECOMMENDATIONS 
Õ-ļ0lΎćFØΎ6` 
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CĊڇpΎ¼ΎpΎ ŒΎÜ+ùΎ—[p 
ćFØΎ ¤+Ύ6axΎ3UMMARYOF2ECOMMENDATION  
 )NTRODUCTION 
  "ACKGROUNDANDREPORTSTRUCTURE 
  4HE%THIOPIANECONOMYANDCONTRIBUTIONFROMMINING 
  -INERALSECTORCHARACTERISTICSANDDEVELOPMENTINGENERAL 
 'EOLOGYMININGANDEXPLORATIONACTIVITIES 
  2EGIONALGEOLOGYANDMINERALOCCURRENCES 
  'EOLOGICALDATAANDINFORMATION 
  -ININGANDMINEPROSPECTSIN%THIOPIAANDTHEREGION 
  %XPLORATIONACTIVITIES 
  2ECOMMENDATIONS 
 3CENARIOSFORMININGDEVELOPMENTANDECONOMICIMPLICATIONS 
  &UNDAMENTALGEOLOGICALEXPLORATIONANDMININGFACTORSTOCONSIDER 
  0ROPOSEDSCENARIOS 
  2EVENUEANDEMPLOYMENTPOTENTIAL 
  #URRENTANDPROJECTEDECONOMICLINKAGES 
  2ECOMMENDATIONS 
 (UMANRESOURCESANDEDUCATION 
  #URRENTEMPLOYMENTANDNEEDSFORTHEFUTURE 
  %DUCATIONANDVOCATIONALTRAININGIN%THIOPIA 
  2ECOMMENDATIONS 

IV FINAL  REPORT
 3TAKEHOLDEROVERVIEW 
  3TAKEHOLDERSANDKEYSECTORINVOLVEMENT 
  2ECOMMENDATIONS 
 -INERALPOLICYANDLEGISLATION 
  )NTRODUCTION 
  %THIOPIANMINERALPOLICY 
  -INERALLEGISLATIONANDMODELMININGAGREEMENT 
  2ECOMMENDATIONS 
 )NSTITUTIONALFRAMEWORK 
  -INISTRYOF-INES 
  'EOLOGICAL3URVEYOF%THIOPIA 
  /THERINSTITUTIONS 
  2ECOMMENDATIONS 
 &ISCALREGIME 
  &ISCALREGULATIONS 
  2EVENUECOLLECTION 
  4RANSPARENCYINITIATIVESINTHEEXTRACTIVESECTOR 
  2ECOMMENDATIONS 
 -INERALLICENSINGMANAGEMENT 
  "ACKGROUND 
  !DMINISTRATIVEPROCEDURES 
  2ECOMMENDATIONS 
 !RTISANALMININGMANAGEMENT 
 'OVERNANCEOF!3- 
 +EYlNDINGS 
 2ECOMMENDATIONS 
 %NVIRONMENTALANDSOCIOECONOMICMANAGEMENT 
 ,EGISLATIONANDREGULATION 
 %NVIRONMENTALANDSOCIALBASELINE 
 0OTENTIALIMPACTSFROMMINING 
 2ECOMMENDATIONS 
 )NFRASTRUCTUREANDDEVELOPMENTPLANS 
 )NFRASTRUCTUREDEVELOPMENT 
 2ECOMMENDATIONS 
 2ECOMMENDATIONS 
 2EFERENCES 
 )NDEX 

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR V

ACRONYMS  AND  ABBREVIATIONS
 !!3 !TOMIC!BSORPTION3PECTROSCOPY
 !!5 !DDIS!BABA5NIVERSITY
 !)#$ !FRICA)NFRASTRUCTURE#OUNTRY$IAGNOSTIC
 !-$ !CID-INE$RAINAGE
 !-6 !FRICAN-INING6ISION
 !3- !RTISANALAND3MALL3CALE-INING
 !4! !GRICULTURAL4RANSFORMATION!GENCY
 #!3- #OMMUNITIESAND3MALL 3CALE-INING
 #3/ #IVIL3OCIETY/RGANISATION
 #32 #ORPORATE3OCIAL2ESPONSIBILITY
 $&!4 $EPARTMENTOF&OREIGN!FFAIRSAND4RADE!USTRALIA
 $&!4$ #ANADIAN$EPARTMENTOF&OREIGN!FFAIRS4RADEAND$EVELOPMENT
 $F)$ $EPARTMENTFOR)NTERNATIONAL$EVELOPMENT
 %$& %UROPEAN$EVELOPMENT&UND
 %%0#/ %THIOPIAN%LECTRIC0OWER#ORPORATION
 %&!0 %THIOPIAN&ORESTRY!CTION0ROGRAM
 %)! %NVIRONMENTAL)MPACT!SSESSMENT
 %)4) %XTRACTIVE)NDUSTRIES4RANSPARENCY)NITIATIVE
 %0! %NVIRONMENTAL0ROTECTION!UTHORITY
 &$) &OREIGN$IRECT)NVESTMENT
 'O% 'OVERNMENTOF%THIOPIA
 '3% 'EOLOGICAL3URVEYOF%THIOPIA
 '40 'ROWTHAND4RANSFORMATION0LAN
 )"! )MPORTANT"IRD!REAS
 )#-- )NTERNATIONAL#OUNCILON-ININGAND-ETALS
 )#0 /%3 )NDUCTIVELY#OUPLED0LASMA /PTICAL%MISSION3PECTROSCOPY
 )#4: )NTER TROPICAL#ONVERGENCE:ONE
 )&# )NTERNATIONAL&INANCE#ORPORATION
 *3$& *APANESE3OCIAL$EVELOPMENT&UND
 -O&%$ -INISTRYOF&INANCEAND%CONOMIC$EVELOPMENT
 --! -ODEL-INING!GREEMENT
 -O- -INISTRYOF-INES
 .'/ .ON 'OVERNMENTAL/RGANISATION
 .0&! .ATIONAL0RIORITY&OREST!REA
 0!3$%0 0LANFOR!CCELERATEDAND3USTAINED$EVELOPMENTTO%ND0OVERTY
 00! 0OWER0URCHASE!GREEMENT
 000 0UBLIC0RIVATE0ARTNERSHIP
 3!-3 3TRATEGIC!SSESSMENTOF-INERAL3ECTOR
 3'!" 3WEDISH'EOLOGICAL!"
 3IDA 3WEDISH)NTERNATIONAL$EVELOPMENT#OOPERATION!GENCY
 3..0 3OUTHERN.ATIONS.ATIONALITIESAND0EOPLES2EGION
 393-). 3YSTEMOF3TABILIZATIONOF%XPORT%ARNINGSFROM-INING0RODUCTS
 46%4 4ECHNICALAND6OCATIONAL%DUCATIONAND4RAINING
 82& 8 RAY&LUORESCENCE

VI FINAL  REPORT
 ©  Allana  Potash  Afar  Plc.

EXECUTIVE  SUMMARY
Introduction
 4HISREPORTPROVIDESAREVIEWOFTHE%THIOPIANMININGSECTORANDASSESSESITSPOTENTIALTOCONTRIBUTETO
SUSTAINABLEECONOMICGROWTHANDDEVELOPMENT)TFURTHERPROVIDESRECOMMENDATIONSFORTHEINITIATIVESAND
ACTIONSTHATWILLBEREQUIREDFORSUCHDEVELOPMENTTOTAKEPLACEANDIDENTIlESTHERISKANDOPPORTUNITIES
THATTHISENTAILS4HENEEDFORTHISTYPEOFSTRATEGICANALYSISFOLLOWSFROMTHE'OVERNMENTOF%THIOPIAS'O% 
AMBITIONTOASPARTOFTHE'ROWTHAND4RANSFORMATION0LAN'40 DEVELOPTHEMININGSECTORTOBECOMEA
MAINPILLAROFTHEECONOMY

 4HEBASISFORTHEREVIEWISPROVIDEDINTHEFORMOFTWOMAINANALYSESI ANANALYSISOFTHEGEOLOGICALAND

MINERALOGICALPOTENTIALOF%THIOPIATOSUPPORTMININGPROJECTSANDII ASCENARIOBASEDMODELLINGAND
ANALYSISBASEDONMININGSECTORDATAANDASSOCIATEDFORECASTSOFTHEREVENUESTHATMAYBEGENERATED
THROUGHTHEDEVELOPMENTOFALREADYEXISTINGMINESANDMININGACTIVITIESASWELLASIDENTIlEDANDPROMISING
MINERALRELATEDPROJECTSINAYEARPERSPECTIVE4HESESCENARIOSARETHENCONSIDEREDINTERMSOFTHEIR
IMPLICATIONSFORARANGEOFISSUESTHATRELATETOSUSTAINABLEDEVELOPMENTSUCHASECONOMICANDSOCIAL
IMPACTSENVIRONMENTALCONCERNSINSTITUTIONALDEVELOPMENTINFRASTRUCTURENEEDSANDREQUIREMENTS
LEGISLATIVEDEVELOPMENTlNANCIALANDlSCALCONCERNSETC

 4HEREPORTWASPRODUCEDINTHEPERIOD-AYTO-ARCH)TWASCOMMISSIONEDBYTHE7ORLD"ANK
ANDITSPARTNERS)&#$&!4$THE!USTRALIAN'OVERNMENTAND$F)$ WITHTHEAIMTOASSISTTHE'O%INITS
EFFORTSTODEVELOPTHEMININGSECTOR4HUSTHEREPORTHASBEENPRODUCEDINCLOSECOOPERATIONWITHSTAFFATTHE
%THIOPIAN-INISTRYOF-INES-O- )TSlNDINGSAREMOSTLYBASEDONDESKTOPREVIEWSOFEXISTINGDOCUMENTS
ONALARGENUMBEROFMEETINGSANDINTERVIEWSWITHAFFECTEDANDINTERESTEDSTAKEHOLDERSANDALSOONSOME
lELDWORKPERFORMEDINTHESOUTHERNANDWESTERNPARTSOFTHECOUNTRY2EGULAROVERSIGHTANDFEEDBACKHAS
BEENPROVIDEDBYREPRESENTATIVESFROMTHE7ORLD"ANKANDITSPARTNERS

The  current  state  of  the  Ethiopian  mineral  sector  

 0LACERGOLDHASBEENMINEDIN%THIOPIAFORMORETHANYEARSBUTASIGNIlCANTLARGESCALEMININGSECTOR
has  not  yet  developed.!RTISANALMININGISEXTENSIVEANDPRIMARILYFOCUSSEDONGOLD4HEGOLDISMINED
MOSTLYFROMALLUVIALDEPOSITSINTHE0ROTEROZOICTERRAINSINTHESOUTHWESTANDNORTHOFTHECOUNTRYSEEMAP
BELOW ANDISBEINGMINEDBYNUMEROUSARTISANALANDSMALLSCALEMINERS!3- )NTHESOUTHTHEREISALSO
ASMALLSTATEOWNEDMINECALLED!DOLAWHEREALLUVIALGOLDHASBEENMINEDFOROVERHALFACENTURY4HERE
ISCONSIDERABLEGEMMININGANDSOMEBYVALUEOFTHISDERIVESFROMOPALMININGATONELOCALITYINTHE
.ORTH7OLLO:ONE#ONCERNINGTHELARGESCALESECTORTHEREISONLYONEOPERATINGMINEIN%THIOPIA-IDROCS
,EGA$EMBIGOLDMINERANKEDNUMBERINTHEWORLDINTERMSOFVALUEOFPRODUCTIONIN!FAIRLY
MATUREGOLDPROJECTAT4ULU+APIWHICHHAS)&#INVOLVEMENTWASONHOLDDURINGTHESECONDHALFOF
BUTCHANGESINOWNERSHIPANDADDITIONALlNANCINGHASNOWALLOWEDFOREXPLORATIONACTIVITIESTOCONTINUE
4HESTATE OWNED+ENTICHATANTALUMMINEISASIZEABLEPROJECTHOWEVERPRODUCTIONWASONHOLDIN
ASTHESTATEATTEMPTSTOPRIVATIZETHEMINE

 Ethiopia  is  also  endowed  with  a  range  of  industrial  minerals  deposits.#EMENTRAWMATERIALSANDDIMENSION
STONEAREMINEDATASMALLINDUSTRIALSCALEWHILEOTHERINDUSTRIALMINERALSAREORHAVEBEENMINEDATA
SMALLEROFTENARTISANALSCALE-OSTENCOURAGINGLYFORSECTORDEVELOPMENTTHEREISALARGESCALEPROJECTFOR
POTASH!LLANA0OTASH WHICHHAS)&#INVOLVEMENTANDWHICHISEXPECTEDTOSTARTPRODUCTIONBYMIDTO
LATE4HECURRENTPLANFORTHE!LLANAMINEISTOPRODUCE-TYEARDURINGALIFEOFMINEOFSOME
YEARSANDTOEMPLOYSOMEPEOPLE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 1

  Despite  the  fact  that  large  scale  mining  is  still  virtually  non-­existent,  Ethiopia  does  have  the  geological  
potential  for  the  discovery  of  new  and  sizeable  economic  deposits.4HEAREASWHICHAREIDENTIlEDASBEING
PROMISINGARETHE0ROTEROZOICBASEMENTAREASINTHENORTHWESTANDSOUTHOFTHECOUNTRYANDTHEYARE
GEOGRAPHICALLYRATHEREXTENSIVECOMPAREDTOPROSPECTIVEAREASINMANYOTHER!FRICANCOUNTRIES%XPLORATION
ACTIVITIESINTHESEAREASHAVEINCREASEDOVERTHELASTCOUPLEOFYEARSWHILETHEYARESTILLATARELATIVELYMODEST
LEVEL)NADDITIONTHEPOTASHOCCURRENCESINTHE$ANAKILDEPRESSIONINNORTHEASTERNPARTOFTHE2IFT6ALLEY
ARESIZEABLEANDCANSUPPORTLARGESCALEPRODUCTIONASEVIDENTFROM!LLANA0OTASHSPROJECT

Figure  i.  Geological  map  showing  Proterozoic  terrains,  the  oldest  rocks  in  Ethiopia,  in  dark  green,  black  and  grey.  These  areas  
are  prospective  for  a  variety  of  metallic  minerals.

Potential  mining  development

 )NTHElSCALYEARTHE%THIOPIANMININGSECTORCONTRIBUTEDABOUTTO'$0TOT53$BILLION 
4HESECTORACCOUNTEDFOR53$MILLION OFTHECOUNTRYSEXPORTSWITHGOLDMAKINGUPCLOSETO
OFTHEMININGSECTOREXPORTS)NCOMPARISONAGRICULTURECONTRIBUTEDINDUSTRYAND
MANUFACTURINGTO'$0ANDTHELARGESTEXPORTCOMMODITYCOFFEEGENERATED53$MILLION 
INEXPORTREVENUES

 Based  on  an  assessment  of  Ethiopia’s  geological  endowment,  the  current  status  of  the  exploration  industry,  
and  general  success  rates  in  exploration  globally,  this  report  presents  three  scenarios  for  future  development  
OFTHESECTORGRAPHBELOW 'IVENTHElFTEENTOTWENTYYEARSTHATWILLBENEEDEDFORTHEMINERALSECTORIN
%THIOPIATOGENERATECRITICALMASSTHEECONOMICPOTENTIALFROMTHESECTORISCLEARLYDIFlCULTTOPREDICT
(OWEVERTHREESCENARIOSCONSERVATIVEPOSSIBLEANDPROBABLEAREGENERATEDANDTHESEARECONCERNED
WITHGOLDPOTASHTANTALUMANDCOPPERTHESEBEINGTHECOMMODITIESPRIMARILYEXPLOREDNOW 

 )NAPROBABLESCENARIOITISPROPOSEDTHATTHEMINERALSECTORCOULDGENERATEREVENUEUPTO53$BILLIONBY

2024  and  in  an  optimistic  scenario  some  USD  2  million.)NTHEPROBABLESCENARIOTHEREVENUECORRESPONDSTO
ABOUTOFTHECURRENTEXPORTVALUEOFGOLDIN4ANZANIA53$IN ANEMERGINGMININGECONOMY
DOMINATEDBYGOLDPRODUCTION)N'HANAWHICHHASALONGMININGHISTORYWHEREGOLDACCOUNTSFORMORE
THANOFTHETOTALMINEDVALUEGOLDEXPORTSWEREWORTHALMOST53$BILLIONIN

2 FINAL  REPORT
 )NTOTALSALESFROMTHEMININGSECTORIN!FRICAWHEREVALUEDAT53$BILLIONTHISDOESNOTINCLUDE
MININGFORINDUSTRIALMINERALS REPRESENTINGNEARLYOFTHECONTINENTS'ROSS0RODUCT)N!FRICAMETAL
MININGANDCOALMININGAREABOUTTHESAMEMAGNITUDEINTERMSOFVALUE!MONGTHEMETALSGOLDCOPPERAND
IRONOREMAKEUPMORETHANHALFOFTHEVALUE)FONEASSUMESTHATTHEGEOLOGYOF%THIOPIAISASPROSPECTIVE
ASTHE!FRICANhAVERAGEvTHENTHESENUMBERSWOULDIMPLYTHATTHEPRESENTDAYECONOMICPOTENTIALFORTHE
DEVELOPMENTOFTHE%THIOPIANMININGSECTORWOULDBETOACHIEVEANANNUALTURNOVEROFNEARLY53$BILLION
WITH%THIOPIACOVERINGKMÜOF!FRICASSURFACE 

3000

2500

2000
USD Millions

1500

1000

500

0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Conservative Probable Possible

#ONSERVATIVE$UETOTHEMANYPOSSIBLERISKSFACINGMINERALSECTORINVESTMENTEXPLORATIONIN%THIOPIAISNOTINTENSIlED
0ROBABLE/NLYSMALLINCREASEINMININGPRIMARILYDUETOTHECURRENTLYLOWNUMBEROFADVANCEDPROJECTSANDRATHERLOW
INTENSITYOFEXPLORATION
0OSSIBLE7ILLREQUIRESTRONGINTENSIlCATIONOFEXPLORATIONACTIVITIES
Figure  ii.  Estimated  total  sales  revenues  based  on  mining  development  scenarios  for  gold,  copper,  tantalum  and  potash.

4HROUGHCORPORATEINCOMETAXANDROYALTYPAYMENTSTHESCENARIOSGRAPHABOVE GIVETHATTHE3TATECAN
GAINBETWEEN53$AND53$MILLIONBY&URTHERDIRECTEMPLOYMENTFROMTHEMININGSECTOR
CANRANGEFROMTODEPENDINGONWHICHSCENARIOISFULlLLED

4ABLEI%STIMATIONOFECONOMICIMPACTCORPORATETAXANDROYALTIES ANDEMPLOYMENTBASEDON
development  scenarios  for  gold,  copper,  tantalum  and  potash  mining.
%CONOMIC)MPACT53$MILLION   2024  
#ONSERVATIVE     
0ROBABLE     
0OSSIBLE     
$IRECT%MPLOYMENT0OTENTIAL.UMBER
#ONSERVATIVE     
0ROBABLE     
0OSSIBLE     

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 3

Considerations  for  sector  development  and  sustainability
Ethiopia  aims  to  build  and  develop  an  essentially  new  economic  sector-­-­-­  the  large-­scale  mineral  sector.  The  
LEADTIMESFROMEXPLORATIONTOALARGE SCALEMINEBEINGCOMMISSIONEDARELONGOFTEN YEARS ANDTHUS
a  similarly  long-­term  perspective  is  necessary  when  supporting  and  managing  the  sector.4HECURRENTPOLICY
FRAMEWORKENVISIONSTHEMINERALSECTORTOBETHE@BACKBONEOFTHEINDUSTRYBY WITHANINCREASE
INTHECONTRIBUTIONTOTHE'$0FROMTHECURRENTTOANDA FOLDINCREASEINITSCONTRIBUTIONTO
FOREIGNCURRENCYEARNINGS4HERAPIDDEVELOPMENTENVISIONEDINTHEPOLICYFRAMEWORKMAYNOTBEREALIZED
CPDEVELOPMENTSCENARIOSABOVE ANDTHEDEVELOPMENTOFTHEMINERALSECTORCOULDBENElTFROMADOPTING
ALONGERTERMVIEWBASEDONASLOWERGROWTHRATE!SLOWERGROWTHRATECANINSOMEWAYSBEVIEWEDAS
BEINGPOSITIVEASITPROVIDESTIMEFORNEEDEDGOVERNANCESTRUCTURESTODEVELOPWHICHINTURNWILLMAKE
ITMORELIKELYTHATTHESECTORDEVELOPSINASUSTAINABLEMANNER!LONGTERMVIEWNEEDSINGENERALTOBE
BASEDONTHESECTORSPARTICULARCHARACTERISTICSSUCHASTHEINHERENTGEOLOGICALANDlNANCIALUNCERTAINTIES
THEINDUSTRYSCYCLICALNATUREANDTECHNICALREQUIREMENTSFORADVANCEDEXPLORATION

The  draft  Mining  Policy,  which  is  currently  under  review,  is  comprehensive  in  its  scope  and  provides  a  good  
basis  for  the  future  development  of  the  sector  and  its  contribution  to  wider  sustainable  economic  development.  
4HESCOPEOFTHEPOLICYISBROADREQUIRINGAWIDERANGEOFGOVERNMENTALINSTITUTIONSTOBEINVOLVEDINTHE
FURTHERREVISIONOFTHEPOLICYINTHEFORMULATIONOFMOREDETAILEDPOLICYACTIONSANDINITSIMPLEMENTATION

!POLICYANDLEGALFRAMEWORKWHICHCLEARLYDElNESTHEROLEOFTHESTATE WHENOTHERTHANREGULATORYnIS
important  for  the  orderly  and  successful  development  of  any  mineral  sector.&URTHERMOREITISBENElCIAL
TOBOTHINVESTMENTANDGOVERNANCETHATTHISROLEISCLEARLYCOMMUNICATEDTOSTAKEHOLDERSANDINVESTORS
ANDTHATITISREmECTEDINALLACTIONSTHATRELATETOSTATEINVOLVEMENTINTHESECTOR4HE%THIOPIANPOLICY
ENVIRONMENTEXPLICITLYENVISIONSMINERALSECTORDEVELOPMENTTOBEDRIVENBYPRIVATESECTORINVESTMENTAND
RECENTATTEMPTSTOPRIVATIZESTATE OWNEDMINESLENDSSUPPORTTOTHISINTENTION!TTHESAMETIMETHEPOLICY
ANDLEGALFRAMEWORKDOESPROVIDEFORSTATEINVOLVEMENTINMINING@BYITSELFORINPARTNERSHIPWITHPRIVATE
INVESTORS4HE%THIOPIANGOVERNMENTCOULDCONSIDERTHELESSONSLEARNEDFROMELSEWHEREANDDEVELOPAND
IMPLEMENTPOLICIESTHATAREINLINEWITHTHEWEALTHOFEXPERIENCESTHANEXISTWITHREGARDSTOSTATEINVOLVEMENT
INMINING4HEREAREEXAMPLESOFPARTLYORFULLYSTATE OWNEDMININGCOMPANIESSUCCESSFULLYCOEXISTING
WITHTHEPRIVATESECTOR3UCHSUCCESSESAREGENERALLYBASEDONLONGHISTORIESANDSIGNIlCANTCONTRIBUTIONS
FROMTHERESPECTIVECOMPANIESTONATIONALDEVELOPMENTBUTALSOONCLEARPOLICIESANDRULESFORHOWSUCH
COMPANIESSHOULDBEMANAGEDANDRUNASWELLASTHETRANSPARENTIMPLEMENTATIONOFTHESERULES

In  a  mineral  sector  driven  by  the  private  sector,  investments  in  exploration  are  mainly  made  on  the  basis  of  
geological  prospectivity.)NTHEABSENCEOFRECENThSUCCESSSTORIESvAPARTFROM!LLANA0OTASHINTHECASE
OFTHEINDUSTRIALMINERALSSECTOR ANDWITHLIMITEDGEOLOGICALGEOPHYSICALDATAPERTINENTTOEXPLORATIONTHE
COLLECTIONOFNEWHIGH QUALITYDATAANDTHESUBSEQUENTMARKETINGOFTHESEDATATHROUGHALONGTERMSTRATEGY
FORINVESTMENTPROMOTIONASSUMEVITALIMPORTANCE4HEFACTTHATINVESTORSAREMAINLYDRAWNBYGEOLOGICAL
PROSPECTIVITYISEXEMPLIlEDBYLARGEINVESTMENTSBEINGMADEINCOUNTRIESWITHWHATISREGARDEDASUNSTABLE
ANDORCOMPARATIVELYLESSATTRACTIVEMININGREGULATORYREGIMES'IVENTHELARGECAPITALTHATISNEEDEDTO
STARTANYSIZEABLEMODERNMINETHEINVESTMENTNEEDEDWILLBYNECESSITYHAVETOCOMEFROMINTERNATIONAL
SOURCESANDCOMPANIES

The  existence  of  a  modern  and  well-­functioning  Mining  Cadastre  and  Registry  System  and  clear  rules  for  the  
award  of  licenses  are  key  features  for  the  promotion  of  investments  in  the  mining  sector.0OTENTIALINVESTORS
AREMORELIKELYTOINVESTINACOUNTRYWHERETHEMININGCADASTREISOFAHIGHQUALITYANDTRANSPARENTNATURE
.OTONLYISITIMPORTANTTHATTHE-INING,AWITSELFGUARANTEETHISSECURITYOFLICENSESANDTENUREBUTTHE
ADMINISTRATIONOFTHE,AWNEEDSTOBETRANSPARENTDECISIVEANDEFlCIENT!NUMBEROFPROVISIONSINTHE
-INING0ROCLAMATIONHAVERESULTEDINRULESWHICHNEGATETHEPOLICYOBJECTIVEOFALEGALREGIMETHATIS
ATTRACTIVETOINVESTORSANDTHATCANBEPERCEIVEDASCONTRADICTORY4HUSDIFFERENTARTICLESPROVIDEFORI THE
DEALINGWITHEXPLORATIONLICENSEAPPLICATIONSINORDEROFRECEIPTWHICHMAYBEUNDERSTOODTOIMPLYA@lRST
COME lRST SERVEDSYSTEM II PRIORITYTOBEDETERMINEDBYTHEAUTHORITIESONTHEBASISOFTHECOMPANIES
TECHNICALANDlNANCIALABILITIESACCORDINGTODElNEDCRITERIA ADIRECTIVETHATBECAMEEFFECTIVEIN/CTOBER
PROVIDESFORTHECOLLECTIONANDASSESSMENTOFEXPLORATIONLICENSEAPPLICATIONSONAMONTHLYBASISIII 
DISREGARDOFAPPLICATIONSALTOGETHERANDTHESUBSEQUENTBIDDINGFORTHEAREAINQUESTION4HEPROCESSAND
CRITERIAINVOLVEDINCOMPETITIVEBIDDINGARENOTYETESTABLISHED4HEREISCURRENTLYACONSIDERABLEBACK LOGIN
THEASSESSMENTOFEXPLORATIONLICENSEAPPLICATIONSWHILETHEINTENTIONISTOASSESSTHESEONAMONTHLYBASIS
4HISMAYINPARTBEDUETOEFFORTSTODISCOURAGESPECULATIVEAPPLICATIONSANDORCOMPANIESTHATDONOTHAVE
THENECESSARYKNOW HOWORRESOURCES)TISHOWEVERALSOCLEARTHATTHEREEXISTSOMECRITICALCAPACITYCONSTRAINTS
THATPREVENTTHELICENSINGAUTHORITYTOASSESSAPPLICATIONSONTIME)NADDITIONTOTHEABOVETHEREHAVEBEEN
CASESWHENTHESTATEDOESNOTRELINQUISHGROUNDINCASEOFCOMPANIESNOTCONFORMINGTOLEGALREQUIREMENTSOR
WHENACOMPANYLEAVESANAREAFOROTHERREASONSANDTHEAREATHENBECOMESRESERVESFORPOTENTIALBIDDING
)NALLTHEREMAYEXISTCONSEQUENTLYSCOPEFORBIASEDORCOMPROMISEDHANDLINGOFEXPLORATIONLICENSING

4 FINAL  REPORT
!COMPUTERIZEDMININGCADASTRESYSTEMWASCOMMISSIONEDINBUTSINCETHENITHASPARTLYFALLENINTO
DISUSEANDDURINGPARTOFITHASNOTBEENFUNCTIONING4HEREASONSFORTHEPARTIALNON FUNCTIONINGOFTHE
EXISTINGSYSTEMISPARTLYREPORTEDTOBEDUETOSOFTWAREPROBLEMSANDTHEABSENCEOFABUDGETTOPERFORM
NECESSARYUPDATESANDPERFORMhBUGlXESvANDPARTLYDUETOTHEGOVERNMENTSCHANGEINPOLICIESWITH
REGARDSTOHOWLICENCESFORMININGANDEXPLORATIONSHOULDBEAWARDED

A  clear  legal  framework  is  important  both  to  attract  investors  and  to  facilitate  regulation  of  the  industry.  The  
KEYLEGISLATIONGOVERNINGTHEMINERALSECTORISTHE-INING/PERATIONS0ROCLAMATION.OAND
ARECENT AMENDMENTTOTHEPROCLAMATIONWHILETHEREGULATIONTHATISCURRENTLYINUSEWASDRAFTED
PURSUANTTOTHEOLDMININGPROCLAMATIONFROM4HEREISALSOA-ODEL-INING!GREEMENT--! THAT
WASDRAFTEDPURSUANTTOTHEOLDMININGPROCLAMATION)NPRACTICEEXPLORATIONLICENSEHOLDERSMUSTNEGOTIATE
ANDENTERINTOA-INING!GREEMENTWITHTHE'OVERNMENTTOGETGRANTEDALARGE SCALEMININGLICENSEAND
THE--!ESTABLISHESTERMSINARATHERGENERALMANNERWITHOUTELABORATINGMUCHONIMPORTANTlNANCIAL
ENVIRONMENTALANDCOMMUNITYASPECTSANDLEAVINGAFEWPROVISIONSOPENFORNEGOTIATION4HUSDRAFTINGOF
NEWREGULATIONSTOPROVIDEFURTHEREFFECTTOTHENEWMININGPROCLAMATIONANDREVISINGTHE--!TOMAKEIT
CONSISTENTWITHTHENEWMININGPROCLAMATIONWILLMAKETHELEGALFRAMEWORKMORECOMPLETE!COMPREHENSIVE
REVISIONOFTHE--!INTHELIGHTOFNEWLAWSANDREGULATIONSINCOMINGTRANSPARENCYREQUIREMENTSAND
SUSTAINABLEDEVELOPMENTCOMMITMENTSWOULDALSOMAKEITAUSEFULTOOLFORCOORDINATINGTHEWORKOFDIFFERENT
REGULATORYAGENCIESWITHAROLEINMINING

'OVERNMENTALINVOLVEMENTTHEMINERALSECTORISCENTREDTO-O-ANDTHE'EOLOGICAL3URVEYOF%THIOPIA'3% 
with  other  institutions  having  rather  weak  knowledge  about,  and  little  involvement  in  mineral  sector  governance  
and  development.7HILECONSIDERABLECOMPETENCEEXISTSINPARTICULARAMONGMANY-O-AND'3%LONG TERM
EMPLOYEESTHEOVERALLCAPACITYAT-O-AND'3%FORPROPERPROMOTIONSUPERVISIONANDREGULATIONOFTHE
SECTORISLIMITED4HEMAINREASONSFORTHISINCLUDETHEHISTORICALLYNON EXISTENTLARGESCALEMININGSECTOR
WHICHHASNOTPROVIDEDTHEOPPORTUNITYFORCONSISTENTCAPACITYDEVELOPMENTTHEHIGHNUMBEROFSTAFFAT-O-
ANDTHE'3%TOTALLYACCORDINGTOTHESTRUCTURALPLANSWITHCURRENTNUMBEROFEMPLOYEESBEINGABOUT
 OFWHICHTHEMAJORITYAREWORKINGINADMINISTRATIONORSUPPORTPROCESSESRATHERTHANCOREPROCESS
AHIGHTURNOVEROFSTAFFANDADECREASEINTHENUMBEROFLONG TERMEXPERIENCEDSTAFFPREVENTSCONSISTENT
CAPACITYBUILDINGANDWHICHISRELATEDTOCIVILSECTORSALARIESBEINGSIGNIlCANTLYLOWERTHANTHOSEOFFEREDBY
THEPRIVATESECTORANDNON mEXIBLEBUDGETINGANDPROCUREMENTPROCEDURESWHICHINPARTICULARHAMPER
WORKATTHEDRILLINGANDLABORATORYUNITSOFTHE'3%)MPORTANTAREASAFFECTEDINCLUDEMAINLYTHEPROVISION
OFGEOLOGICALINFORMATIONMINERALRIGHTSADMINISTRATIONANDREGULATIONENVIRONMENTALANDSOCIALREGULATION
WHICHWASRECENTLYTRANSFERREDFROMTHE%0!TO-O- ANDMININGCONTRACTNEGOTIATIONS)NSTITUTIONAL
RESTRUCTURINGTOFACILITATEINCREASEDSALARIESANDMOREEFlCIENTPROCESSESANDCAPACITYBUILDINGPLANSCOULD
BECONSIDERED

The  regional  states,  following  the  general  organizational  set-­up  of  the  Ethiopian  state,  have  a  governmental  
structure  related  to  mining  that  parallels  the  federal  level  structure.  4HISSTRUCTUREEXTENDSDOWNTOTHEZONE
WOREDAANDKEBELESUB REGIONALLEVELS3OMETYPESOFMINERALLICENSESANDASSOCIATEDREGULATIONAREUNDER
CONTROLOFTHEREGIONSANDWOREDASARESIGNIlCANTLYINVOLVEDIN!3-MANAGEMENT,ACKOFCAPACITYISALSO
ANISSUEATTHEREGIONALANDSUB REGIONALLEVELSOFGOVERNANCEANDTHEDEGREEANDSUCCESSOFCOORDINATION
BETWEENFEDERALREGIONALANDSUB REGIONALLEVELSSEEMTOVARY

The  development  of  local  skills  is  important  for  job  creation  as  well  as  to  attract  investors  and  it  is  possible  
that  the  industry  may  require  between  a  few  hundred  and  possibly  up  to  a  couple  of  thousand  skilled  staff  over  
THENEXT YEARS(UMANRESOURCESWITHSKILLSOFDIRECTRELEVANCETOMINERALSECTORWORKARETOALARGE
DEGREELACKINGIN%THIOPIA&URTHERMORETHEQUALITYOFHIGHEREDUCATIONSPECIALIZEDTOWARDSEXPLORATION
MININGANDMINERALPROCESSINGISLOWASTHEREISASERIOUSLACKOFQUALIlEDTEACHERSANDTECHNICALRESOURCES
ATEDUCATIONALINSTITUTIONS7HILETHEDEVELOPMENTOFMININGRELATEDTRAININGAT46%4INSTITUTIONSISPARTOF
THEGOVERNMENTSSTRATEGYTHEREAREASYETNOCURRICULADEVELOPED!SARESULTMANYEXPLORATIONCOMPANIES
SOURCESKILLEDSTAFFFROMOUTSIDE%THIOPIA%VENTHOUGHMININGISNOTLABOURINTENSIVECOMPAREDTOFOR
EXAMPLETHEMANUFACTURINGINDUSTRYTHEPRESENCEOFALOCALSKILLEDWORKFORCEISIMPORTANTINATTRACTING
INVESTMENTANDTHEPRESENCEOFWELL TRAINEDNATIONALSWILLENSURETHATTHELARGERSCALEMININGPROJECTSDO
NOTTURNINTOhENCLAVEECONOMIESvWHEREEXPATRIATEWORKERSmYINANDOUTTOCONDUCTTHESPECIALISEDWORK
REQUIRED

Ethiopia  has  a  sizeable  ASM  sector  for  gold,  although  its  exact  size  and  characteristics  remain  poorly  
understood.  The  priority  here  is  therefore  to  provide  a  better  understanding  of  the  sector,  and  to  tailor  measures  
that  enable  the  sector  to  be  better  managed  and  controlled.!3-ACTIVITIESARESEENASAPOSSIBLEVEHICLEFOR
INDUSTRIALDEVELOPMENTANDMAYBEANIMPORTANTLIVELIHOODFORWHATAREUSUALLYRURALCOMMUNITIESWHO
HAVELIMITEDALTERNATIVEECONOMICOPPORTUNITIES)TALSOCONSTITUTESASIZEABLESOURCEOFEMPLOYMENTWITH
THE-O-ESTIMATINGTHATUPTOMILLIONPEOPLEMAYTOSOMEEXTENTBEINVOLVEDIN!3-ACTIVITIES!3-GOLD
MININGISASIGNIlCANTECONOMICSECTORIN%THIOPIABUTITISHOWEVERALSOASSOCIATEDWITHSOMETROUBLESOME
CHARACTERISTICSTHATINCLUDEINFORMALITYNOTBEINGLEGAL SOCIALANDENVIRONMENTALIMPACTSANDTHATTHESE
ACTIVITIESMAYHINDERTHEDEVELOPMENTOFLARGESCALEMININGOPERATIONS4HE-O-ISHEAVILYINVOLVEDIN

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 5

 ATTEMPTINGTOBETTERORGANISEANDDEVELOPTHESECTORANDTOMAKEITPARTOFTHEFORMALECONOMY7ITHREGARDS
TOTHEGOLDSECTORTHE.ATIONAL"ANKOF%THIOPIAHASBEENIMPLEMENTINGAPROGRAMMEWHEREGOLDISBOUGHT
FROM!3-MINERSATAINCREMENTTOTHEPREVAILINGGOLDPRICE4HISMECHANISMHASBEENSUCCESSFULAND
INATOTALOFAROUNDTONOFGOLDWASREPORTEDTOHAVEBOUGHTTHISWAY(OWEVERlNDINGSFROMlELDWORK
PERFORMEDTHEPRESENTPROJECTSUGGESTTHATTHEPRODUCTIVITYOFTHE!3-GOLDMINERSISRATHERLOWANDTHAT
MUCHOFTHEGOLDPRODUCEDISSOLDNOTTOTHE.ATIONAL"ANKBUTTHROUGHILLICITCHANNELS)TISFURTHERCLEAR
THATTHEREAREOCCURRENCESOFLANDUSECONmICTMOSTCOMMONLYWITHFARMERSBUTPERHAPSMOSTIMPORTANTLY
WITHLARGERSCALEEXPLORATIONPROJECTSANDMINES4HELATTERMAYCONSTITUTEASIGNIlCANTDETERRENTFORFUTURE
INVESTMENTSINTHE%THIOPIANMININGSECTOR4HEREEXISTSANEEDTOPERFORMPROPERBASELINESTUDIESSOTHAT
ABETTERUNDERSTANDINGOFTHESECTORCANBEOBTAINEDWHICHINTURNCANFORMTHEBASISFORINFORMEDPOLICY
ANDMANAGEMENTDECISIONS

Gender  inequalities  are  apparent  in  many  areas  of  the  Ethiopian  mineral  sector,  and  related  education.4HUS
THENUMBEROFMENEMPLOYEDBYTHECURRENTLYACTIVEEXPLORATIONANDMININGCOMPANIESFAREXCEEDSTHE
NUMBEROFWOMEN#ONCERNING!3-THEMALEPOPULATIONINMOST!3-AREASCOMMONLYEXCEEDSTHATOF
FEMALEWIDELYTHEIRRESPECTIVEDUTIESOFTENDIFFERANDSURVEYSFURTHERSUGGESTTHATAMANEARNSNEARLYTWICE
OFWHATISBEINGEARNEDBYAWOMAN!TUNIVERSITIESALTHOUGHTHEEXACTlGUREISNOTKNOWNLESSTHAN
POSSIBLYMUCHLOWER OFTHESTUDENTSPURSUINGMININGRELATEDEDUCATIONAREFEMALEANDONLYOFTHE
ACADEMICSTAFFTEACHINGMINERALSECTORRELATEDSUBJECTSAREFEMALE&OR46%4SWHILETHEREISNODATAFOR
MINERALSECTORPROFESSIONALSTRAININGINOFALLTHESTUDENTSENROLLEDAT46%4INSTITUTIONS
WEREFEMALE!MONG46%4TRAINERSHOWEVERONLYSOME WEREFEMALE!T-O-OFTHESTAFF
AREWOMENANDTHEGENDERDISTRIBUTIONVARIESWITHDIFFERENTUNITSDIRECTORATESHAVINGTOFEMALE
STAFF3EVERALSENIORANDEXECUTIVEPOSITIONSHAVEBEENORAREHELDBYWOMEN

Ethiopia  is  a  diverse  country,  with  a  long  and  unique  history  and  with  numerous  cultures  and  languages  
existing  side  by  side.  It  is  also  a  very  rich  country  in  terms  of  biodiversity  and  natural  heritage.&ORTUITOUSLY
THEGEOLOGICALLYMOSTPROSPECTIVEAREASDONOTINTERSECTWITHAREASTHATAREEITHERVERYDENSELYPOPULATED
NORWHERETHEREAREASIGNIlCANTAMOUNTOFPROTECTEDOROTHERWISEUNIQUEAREAS(OWEVERSOMEAREASOF
POTENTIALCONmICTEXISTANDTHESENEEDTOBEACKNOWLEDGEDANDMANAGED)FNOTMININGITSELFMAYWELL
LOOSETHESUPPORTOFLOCALCOMMUNITIESASWELLASATTRACTOPPOSITIONFROMBOTHNATIONALANDINTERNATIONAL
ORGANISATIONS)NTERMSOFENVIRONMENTALLEGISLATIONTHEREISONLYTHE%)!0ROCLAMATIONANDAFEWGENERAL
PROVISIONSOFTHE-INING0ROCLAMATION4HUSTHELEGISLATIONISQUITEGENERALINNATUREANDGOVERNANCECOULD
BENElTFROMTHEDEVELOPMENTOFFURTHERMOREDETAILEDREGULATIONSASWELLASGUIDELINESTOSUPPORTBOTHTHE
AUTHORITIESANDTHEINDUSTRY7ITHEXISTINGLEGISLATIONPROVIDINGRATHERSIGNIlCANTROOMFORINTERPRETATIONTHE
REQUIREMENTFORCOMPANIESTOBEPROACTIVEANDTOBEHAVERESPONSIBLYISPARAMOUNT4HISINTURNMEANS
THATEFFORTSTOENCOURAGECOMPANIESTOUNDERTAKESERIOUSANDWELLTHOUGHTOUTCORPORATESOCIALRESPONSIBILITY
#32 RELATEDACTIVITIESAREIMPORTANT)NTHISLINEFURTHERWORKTODEVELOPAMORECOMPREHENSIVE--!
THANTHEONEINEXISTENCECOULDBEUSEFUL!LSOIMPACTEDCOMMUNITIESABILITYTOUNDERSTANDANDhMONITORv
MININGANDEXPLORATIONACTIVITIESNEEDTOBESTRENGTHENED

4HEREARELANDUSERELATEDCONmICTSANDORDISAGREEMENTSINMININGAREASEXAMPLESINCLUDETRESPASSINGOF
!3-MINERSONTOLARGESCALEPROJECTSAT!DOLAAND4ULU+APIANDCONmICTBETWEENFARMERSANDEXPLORATION
ACTIVITIESAT,EGA$EMBI!SALLLANDISESSENTIALLYCONTROLLEDBYTHEPROVINCIALSTATESONEMAYCONCLUDE
THATSUCHISSUESSHOULDBEFAIRLYREADILYHANDLEDANDRESOLVED(OWEVERTOACHIEVESUCHRESOLUTIONSTHERE
NEEDSTOEXISTCLARITYONHOWLANDMAYBEALLOCATEDTOMININGPROJECTSANDTHISISNOTALWAYSTHECASE&OR
EXAMPLETHEREAREEXAMPLESWHEREPROVINCIALSTATEPOLICYONAGRICULTUREISNOTINLINEWITH&EDERALSTATE
POLICYONMININGWITHTHERESULTTHATITISUNCLEARWHICHACTIVITYMAYTAKEPRECEDENCE

4HEREAREARANGEOFFORESTRYANDWILDLIFEAREASPROTECTEDBYLAWBUTINMANYOFTHESEMININGANDEXPLORATION

MAYBEALLOWEDIFDEEMEDTOBEAPRIORITYBYTHE3TATE)TISUNCLEARUNDERWHATCIRCUMSTANCESTHESEACTIVITIES
MAYBEALLOWEDWHICHCAUSESOVERALLUNCERTAINTYANDALSOTHERISKTHATANADVENTUROUSEXPLORATIONCOMPANY
UNDERTAKESWORKINAREASWHEREOTHERSTAKEHOLDERSMAYSEETHISTOBEUNACCEPTABLEWHICHINTURNMAY
AFFECTTHEREPUTATIONOFTHEWHOLESECTOR

4HE'O%SDIRECTINCOMESTHATRELATETOMINERALPROJECTSTEMFROMEQUITYPARTICIPATIONMINING INCOMETAX

and  royalties.4HE--!PROVIDESFORTHEACQUISITIONOFAPARTICIPATIONINTERESTBYTHE'OVERNMENTWITHOUT
ACOSTWHICHISALSOPARTOFTHERECENTAMENDMENTTOTHE-INING0ROCLAMATIONWHERETHE3TATEIS
GIVENASHAREFREECARRY INALLLARGEANDSMALL SCALEMININGPROJECTSWITHTHEPOSSIBILITYTONEGOTIATE
ADDITIONALEQUITYPARTICIPATIONBYAGREEMENT!TPRESENTTHEINCOMETAXFORLARGE SCALEMININGWHICHISlXED
ANDSETATTHEFEDERALLEVELWASRECENTLYLOWEREDFROMTOPAYABLETOTHEFEDERALSTATE WHILETHE
REGIONALSTATESHAVETHEMANDATETOSETTHEINCOMETAXFORSMALL SCALEMININGATTHEREGIONALLEVELSOTHERE
ISNOlXEDRATEFORSMALL SCALEMINING2OYALTIESARECALCULATEDINADVALOREMBASISANDARECHARGEDAT
FORPRECIOUSMINERALSFORMETALLICMINERALSANDFORINDUSTRIALMINERALS4HEROYALTYRATEISRATHER
SIMILARTOOTHER!FRICANCOUNTRIESWHEREASTHECORPORATETAXRATEANDTHEPERCENTAGEOFEQUITYPARTICIPATION
ISLOWERTHANWHATISTHECASEINMANY!FRICANMININGCOUNTRIES

6 FINAL  REPORT
4HECURRENTEXPORTREVENUEFROMTHEMINERALSECTORISSMALLDUETOTHELIMITEDSIZEOFTHESECTORALTHOUGH
STILLIMPORTANTFOR%THIOPIAANDASOURCEOFFOREIGNEXCHANGE OFTOTALINTHELASTFEWYEARS 4HEREIS
NOSPECIALFUNDFORCOLLECTINGSAVINGORINVESTINGMINERALRELATEDREVENUES3UCHAFUNDWOULDBEUSEFULIF
THEREWASASUDDENhSURGEOFCAPITALvRELATEDTOMININGANDWHEREARGUMENTSCOULDBEMADETHATSUCH
REVENUESWOULDRISKCAUSINGhDUTCHDISEASEvINmATIONAPPRECIATIONOFDOMESTICCURRENCYOUTCOMPETITION
OFOTHERSECTORSETC ORWHEREONEARGUESTHATTHEINCOMESARESOLARGETHATTHESESHOULDALSOBESHARED
WITHFUTUREGENERATIONS

)NTHELEGISLATIONTHEREISAREVENUESHARINGMECHANISMINPLACEWHEREPERCENTOFTHEROYALTIESCOLLECTED

FROMLARGESCALEOPERATIONSAREALLOCATEDTOTHEFEDERALGOVERNMENTANDTHEREMAINEDISALLOCATEDTOTHE
PROVINCIALSTATEWHERETHEMINEINQUESTIONISLOCATED3IMILARLYFORSMALLSCALEMINESPERCENTOFTHE
ROYALTIESREMAININTHESTATEWHERETHEMINEISLOCATEDWHEREASPERCENTISALLOCATEDTOTHEFEDERAL
GOVERNMENT

%THIOPIAAPPLIEDFOR%XTRACTIVE)NDUSTRIES4RANSPARENCY)NITIATIVE%)4) CANDIDACYFORTHESECONDTIMEIN/CTOBER
THElRSTAPPLICATIONWASDECLINEDDUETOCONTROVERSIESOVERTHECOUNTRYSCIVILSOCIETYLEGISLATION  
!CHIEVING%)4)CANDIDATESTATUSWOULDBECONDUCIVETOCURTAILINGPOSSIBLECORRUPTIONINTHESECTORASWELL
ASSENDAPOSITIVESIGNALTOFOREIGNINVESTORSANDLOCALSTAKEHOLDERS4HELEGISLATIONRELATEDTO#3/.'/
REMAINSTHEMAINSTUMBLINGBLOCKINACHIEVINGFULLYCOMPLIANT%)4)STATUSANDITWOULDPOSSIBLYNEEDTOBE
REVIEWEDIF%)4)COMPLIANTSTATUSISTOBEACHIEVED

4HELINKSFROMMININGTOTHEMANUFACTURINGSECTORANDTOBENElCIATIONOFMINERALSARERATHERLIMITEDASA
direct  result  of  the  paucity  of  sizeable  projects.4HECURRENTSTATEOFECONOMICLINKAGESBETWEENTHEMINERAL
SECTORANDTHERESTOFTHEECONOMYARESTRONGESTFORTHECEMENTSECTOR/NCEPOTASHPRODUCTIONSTARTS
LINKAGESTOTHEAGRICULTURALSECTORAREEXPECTEDTODEVELOPTHROUGHPROVISIONOFFERTILISER 4HELINKAGES
BETWEENTHE,EGA$EMBIOPERATIONASWELLASTHELARGEREXPLORATIONPROJECTS!LLANA0OTASHAND.YOTA
-INERALS4ULU +APIPROJECT WITHTHERESTOFTHEECONOMYBEINGRATHERWEAKASTHECURRENTCAPACITYOFTHE
DOMESTIClRMSTOPROVIDEINPUTSANDSERVICESFORINTERNATIONALMININGlRMSREMAINSLIMITED)TISCLEARTHAT
lSCALCONSUMPTIONANDPRODUCTIONLINKAGESFROMTHEMININGSECTORCANBEFURTHERDEVELOPEDWITHBOTH
THEINDUSTRIALSECTORASWELLASTHEECONOMYATLARGE

7HILETHERATHERAMBITIOUSPOLICYTARGETSPARAGRAPH MAYNOTBEMETINTHENEXTDECADETHESECTOR

DEVELOPMENTTHATISACHIEVEDSHOULDBESUPPORTEDBYCOMPREHENSIVEWORKONESTABLISHINGVALUECHAINS
4HISISINORDERTOGAINTHEECONOMICBENElTSOFFORWARDANDBACKWARDLINKAGES7ITHREGARDSTOINDUSTRIAL
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8 FINAL  REPORT
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STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 9

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՛¤8ļ0pΎ 0pΎ\ŠΎ5
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Á Ύ—CijΎÕù”pΎ¼ċpΎ Ċ‹ŒΎ#+pΎ[á+ùΎÚ Ύ-ļ0pΎ)8pΎŠo½xŒΎ̚ɁȱȳȼȯɀȷȽɁ̛Ύ·ÜİpΎÕÅ0įΎpΎØC0^Ύ̚ù.įŒΎ
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Õô¼ŒΎœ HΎÕ™¥ΎČH ΎkŒ[ÚΎ—8s÷-Ύ‡¼ŁŁΎØ Ύ
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ŒŃΎœáΎØ¼Ύ̚ƨɀȽȰȯȰȺȳ̛ΎœŠΎ
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k!¤2ŁŁ

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kô rŁŁΎ[k8ıΎ3đΎ̚ȽȾɂȷȻȷɁɂȷơ̇̄Ύ¡ØΎÜù!Ύ̱Ύ] یΎâ0Ύô]Ύ ô”ΎÚxŁŁΎ[Ç ΎÕ
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] یΎâ0Ύ[̛̱̯̰̱ΎÚ
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Ÿ— õ-lΎ—ćFÚΎ 0pΎ̱̯Ύ[qΎÚ
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ŁΎŸ`+pΎÃáxΎ¢ŸΎ·0HŃΎß`ΎœŠΎ̂—Ú+ŒΎ0̃Ύ̚ơɀȽȼΎȽɀȳ̛ΎŸ`+pΎ—ŒĪ0Ύ[ćŒΎÜ+ïΎŸù@Ύ[ÚΎÕº÷Ύá0>Ύ—s¼ŁŁ

Ύ ՙpÛĜØΎŸ03Ύ á.¹Ύ‹nΎœŒÜΎxΎ—ij-¢Ύ—ô1xΎ—ºĔΎ‡¼Ύ[Ύù pΎ—¢”Ύô]¼Ύ]3ΎÕ™pÛĜØΎ™¥ΎŸÃáŒΎÅ0ijΎ

œ HΎÕpΎ`pΎ̴Ύ] یΎâ0Ύô]Ύ[ÁpΎùpΎÚvŁŁΎ̚ՙpÛĜØΎ8ıpΎ̰˴̶̱̱˴̶̰̱Ύ¢/Ύ¡Ύp0Ύ·Ú Ύ̳Ύ[qΎÕ—ij-¢Ύ
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ô]Ύœ8ŸΎ̱̯̱̳ΎùpΎpxxŁŁΎ[kď- ΎÕÃáŒΎpΎÅ0ijΎŸ̰̳̯̯Ύœ8ŸΎ̷̯̯̯ΎCČnΎÕ8.ΎœáΎijć0ΎÚvŁŁΎ

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CĊڇpΎ¼ΎpΎ ŒΎÜ+ùΎ—[p

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öÉΎœHáΎ5C+ĤΎ‡¼ŁŁΎ

Ύ ÊHk’ΎÕÃáôpΎ Ċ‹Ύ—ŒßŒàΎ[¢ ΎúˆΎnÕpΎ—[pńΎ ¤ŒØl Ύ—8ĮöΎÕ

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Œ’¼ ΎÕŒù(pΎœ0 ïΎÕŒħ^+HΎÚ
ŠŁŁΎÕ™pÛĜØΎļ 5Ύá^`ΎÕÃáŒΎÅ0ijΎpΎ[ùΎÅ0ijΎœŒÞΎÕnΎ
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ļ 5¼ŠΎÕùΎÃCįΎ[Å0įΎŒù(pΎk6pĴΎœŒÞ+¼ΎÃáΎÚ3ĊŁŁΎ[.4Ύ—Ø ΎŸùΎÅ0ijΎ÷0Ύ—÷0Ύ[
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‡¼ΎŸùΎÅ0ijΎ÷0ΎúŒΎúŒΎÕ݊Ύ

10 FINAL  REPORT
 ¼ċnΎÕ
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ŠŁŁ

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12 FINAL  REPORT
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ôŒ^pΎÚô^Ύ`ΎÕpΎ[—ˆΎ·HpΎ—8s÷-Ύ‡¼ŁŁΎ‡ô0ΎùŒΎŸ08 á.¹Ύ̚îî¢̛Ύ—Hs¼ŒΎ[ċŒΎ—ºĔΎŠs¼ΎÕk^pŒΎ
—¢^]½xŠΎí\mΎ·Ü`Ύ tΎÕ
ˆpŒΎÕpΎÚvŁŁ

Ύ ÕÃáŒΎ¥-Ü0Ύ5n3`ΎŌ÷pΎÕÚô^¼Ύ#+kΎpŠΎ[ÃáŒΎÅ0ijΎÕˆı¤s-ŒùΎ—H Ύ`vΎ—ÚÜ ŁŁΎÕkL¹Ύ—H ΎùŒ^nΎ

̚Õ¤ppŠΎDČČ0ΎkLpŒ̛ŃΎ5eΎ€[.pΎŸÃáŒΎ—Ύ ^ŒØ½xΎ÷0Ύ6kijΎÕx[pŒΎ—H ΎôŒ^pŃΎ[kď- ΎÕ3¼Ύ
~ÚΎpŠΎÕ(.ΎHČ0ΎŸùŒÈ_Ύ¼8ČΎ8ô^pΎćFΎ‡¼ŁŁΎÚ ŒŒΎÕÃáŒΎ¥-Ü0ΎĤŒ3Ύ6`Ύ·ÜΎkù^0Ύ·ČΎÕØ8xΎ
Õì0ØΎÃHáΎ[—ŠΎļn@ΎĻ1ì¤pΎkÅ÷ñrŁŁΎÚ ΎkØØÒΎ#+kΎqxŒΎ[Å0÷pŃΎ—ôùpΎ3đΎ™ŒÝ8p-½xŒΎ
[LL ŠΎÕIĊć0Ύ—H ŒΎ[6ÜùΎ[ Ύõ ΎÕ
ˆΎœáxŒΎÚĮČ.ŁŁ

ćFØΎ ¤+Ύ6axΎ̚ƫɃȻȻȯɀɇΎȽȴΎƪȳȱȽȻȻȳȼȲȯɂȷȽȼ̛
̷̲˷Ύ-ļ0lΎÕØćF¼ΎÕ™pÛĜØΎÕÃáŒΎÅ0ijΎpŒΎÕÜùijŠΎÕØ护,ΎÕkØÖΎ ¤+Ύ6axŒΎ[H+`Ύ‡¼Ύ̚—ŒCĤΎ̛̰̲ŁŁΎ
Ÿijk’ΎÕ
‡Ύá÷ijΎ™pÛĜØΎÕÃáŒΎÅ0ijΎá+ùΎÕ—¼8p. ØΎŒù(pŃΎÕ¢ŠßΎ¼ĔΎõßÚΎŒùáŠΎpΎ‰8o0Ύ̚ƜƞƙƬƜ̛ΎŃΎ
ÕÁ Ύ^Œ¤ΎœŠΎvڊ¼ØŒΎ̂™‰?mh8̃ΎœŒÜCßs¼ΎćŒΎÕkØÖΎĻ1ì¤qxΎ[ȌFGΎ CŠíŠŃΎŒΎ ŒΎÚ#.ΎÕ¼Ύ[ùĤΎ
]CČΎáùù!@ŒŠΎ`¤‡pŒΎØ8C.ŁŁΎÕC+\Ύ ¤+Ύ6axΎ·ÜΎpù[.ΎœŒÞ·ĈΎ[—Ĕ0ΎöÉΎ̚Ÿ̵Ύœ8ŸΎ̰̱Ύ·.p̛ŃΎ[¢Ÿ’Ύ
öÉΎ̚Ÿ̰̱Ύœ8ŸΎ̵̲Ύ·.p̛ΎœŠΎ[+Ò ΎöÉΎ̚Ÿ̵̲Ύ·.qxΎ[ỨΎ—.ĕxΎC0[ºŁŁΎÕĭnΎœ ‡pΎ—0Ύ[ÃáŒΎÅ0ijΎÕkŒ#.ıΎ
œŒÜ
ˆΎćŒΎÕ(0ÁkΎĭnΎõßÛxΎp +pΎ ØôŠΎ[ Ύ[ÃጊΎŸÃáŒΎ÷0ΎùŒ‡pΎ^s¼ΎÅ0ĴxΎÚΎp +pΎk3Čq[pΎ
[º‡’‡pΎ 3.ΎÚô^ŁŁΎ[Ç Ύ+ôáΎÃáŒΎÅ0ijΎ^ؽxΎp 0pŃΎČFHŠŠΎ—‡8k’Ύ^ ¹ΎÃáŒΎ— .yxΎœŒÞ ΎÕÃáŒΎ
Å0ijΎpΎ[7qxΎÚΎØÜ03¼ΎkĬÍΎÖΎp +pΎ 3ČΎÚô^ŁŁ

̸̲˷Ύ[—ˆΎ·HpΎÕÃáŒΎÅ0ijΎpΎÚΎØΎkùß1xŒΎH+ijΎœŒÞvΎÕ—Ĕ0ΎöÉΎÕijpΎ6`ΎœŒÞkô[0ΎC0bŁŁΎœ‡Ç ΎŁ˹Ύ

̛̰̚ΎÕÃáŒΎij÷ΎœŠΎÕÃáŒΎ¼ĊpΎÕ(.ΎĮFáΎÕ3Č[p[pŒΎ‹nΎ[kŸkΎùĤΎÕ
‡ΎÕļ 5Ύ—HĊĒΎ̚kØØ҇pΎØs¼Ύ
úxŠΎÜŒaxŒΎď 1̛ΎœŒÞCČṈ̛́̚ΎÕÃáŒΎ‰8o0ΎkL¹ΎºH0ŠΎÕ—H ΎùŒ^nΎČØGŒΎ8ŃΎ̛̲̚ΎÕkIĊĊ-ΎkLpΎ
¼8ŒΎ—H ŒΎŸù pΎ[8ô^pΎÕÃáŒΎ—Ύ ^ŒØ½xŒΎÅEΎÕÅ0ijΎpΎŒDΎk6nİΎœŒÞ
ˆΎ[+nnpŃΎ̛̳̚Ύ—ŒΎØ¼ŒΎ
+ïΎœŠΎœ¼CpΎ[ćC Ύîî¢ Ύ—ºĔΎ8^Ύ—¢^]½xΎ[EΎ+ïΎH+`ŃΎ̴̛̚Ύ™pÛĜØΎÕÃáŒΎ™‡Ý8p-ΎùĤ‡pΎ
™‰=ÙmhΎ̚ƝƬƬơ̛ΎœĐΎ—^ΎœŒáp
ŒΎÜôijΎ[Ç Ύk^^-Ύ—¢pΎÕĮõpŒΎ+ïΎH+`ΎœŠΎÕÊ`ΎùŒ‡pΎ—H ŒΎôŒ^pńΎ
̵̛̚ΎÕÃáŒΎô]Ύ¤ijijΎ(0ÁpŒΎH+ĤŃΎ̶̛̚Ύ#+n¹ΎČŠpΎ[¢áΎ[^ ¹ΎŒôáΎÕØ0lΎČFHŒŠΎ—‡8k’Ύ— .yxΎ̚ƙƫƥ̛Ύ
Ø[pŒΎ‹nΎœŠΎ¼8`8`‡pΎ+ßpΎ~݇pΎØs¼ΎkLpΎÚ ŒŒΎÕÃáŒΎÅ0ijΎ—¢ΎœŒàpΎÜôijΎœŒÜxΎØùÈŁŁ

̳¾˷Ύ[¢Ÿ’ΎÅŒΎ ¤+Ύ6`Ύ̚ƪȳȱȽȻȻȳȼȲȯɂȷȽȼ̛ΎÅ0įŒΎ[k>Ύ‹nΎÕØ护,ŠΎÕØıȈΎ6axΎC0[ºŁŁΎœ‡Ç

ơ˷ —ßÞ8Ύîî¢Ύ+ï½xŒΎ3`3`ŠΎ3.ďpŃ

ơơ˷ —ô.¹ΎÕ3¼Ύ~ÚΎpΎ[¢áΎ[·Œá Ύ[7qx ΎÕÅŠ¹ΎÕÃáŒΎij÷ŠΎ—ćFÚΎÕÃáŒΎĻ1ì¤qxΎŸĮČ,pΎÕ(.Ύ

ÃáxΎkćFΎœŒÞ
ˆΎá+ùŃΎ

ơơơ˷ ÃáŒΎpΎœŒÞ ΎÕÃáŒΎpΎ ŒΎœŒÜ

‡ΎÕØ8ô‡Ê\ΎÕ—H ΎùŒ^n½xŒΎ[5eΎ€[.pŠΎ€[+3^¹ΎkLpΎ
ÚΎijć0ŁŁΎÚ¯ŒŒΎá+ùΎkIĊĊ-ΎkLpΎ؟Š¼ˆpΎ¤ppŠΎDČČ0ΎÚćHŁŁ

ơƮ˷ [™ŒÝ8p-ΎÃáŒΎ 0pΎ 0 0ŠΎ(0ħpΎŸ—ô0Ύ¼8ČΎ™ŒÝ8p-½xΎ÷0Ύ[k660Ύkù^.¹Ύ Ü+ùΎÕx[pŒΎČŠpΎ

ŸŠ·ŒΎŠs¼ŁŁ

̳̰˷Ύ[+Ò ΎöÉΎœŠΎŸijk’ΎÕÃáŒΎÅ0ijΎŸijć0Ύ÷0ΎkCŠñqΎļ 5Ύ—¼đ½xΎŸÅ0įΎÕô”ŒΎČH Ύ[[ćΎ6ÜùΎÕx[pŒΎÃHáΎ

œŒÞØćˆΎ ¤+Ύ6`ΎC0bŁŁΎÚ¯ŒŒΎŸØ+÷ùĈ^s¼ΎŒôâxΎ¢ŸŸΎ̈̈ÕÃáŒΎ¥-Ü0̉̉ΎÕpŃΎp880ŒΎ[+npΎœŠΎ[+Ò Ύ
öÉΎÜpΎČ/ΎÃF½xŒŠΎ 0lŒΎÕÕpΎ̚›¤8p.¤p̛ΎÕá+ùΎ(.Ύ[—ô0Ύ¼8ČΎœŒÞŸŠ·ŒŠΎ™¥¼ŒΎœŒÞćH Ύá+ùΎ
kćF@ΎŠs¼ŁΎ[ď+> Ύ·6”ŠΎ—8s¨ÚΎÕpΎČØG½xΎŸk4Ύ[„ΎŸÅ0įΎÕô”Ύ`pŒΎÕØ8kßá0ŠΎ™Œc8pŒpΎ
œŒÞ¼Ύ~݇pΎÕ+¼Ύ̄9c/ڌΎ»ÊΎĮŒá̅ΎLL ΎÕv[pŒΎ‹nΎkù[0ΎØ8Į÷ŁŁΎÚ¯ŒΎĮŒáΎ[—ù^\Ύ8kßÜ0Ύ
ÕvΎŸ
‡ΎćŒ¢.ŠΎ—8k”ΎÕ™¥ΎÃáôpΎ+÷ôČΎÕvΎŸ
ˆ Ύ^>ô0ΎŸÅ0įΎÕô”ŒΎ`pΎijp¹ŠΎùĤΎ[
‡ΎŒôáΎ
œŒÞŸıĮŠΎCĊÚΎp¼áΎœŒÞkijΎá+ùΎØ8xŁŁ

14 FINAL  REPORT
 ©  Yara  Dallol  BV

 ).42/$5#4)/.
1.1.  Background  and  report  structure
 4HISREPORTPROVIDESAREVIEWOFTHE%THIOPIANMININGSECTORANDASSESSESITSPOTENTIALTOCONTRIBUTETO
SUSTAINABLEECONOMICGROWTHANDDEVELOPMENT)TFURTHERPROVIDESRECOMMENDATIONSFORTHEINITIATIVESAND
ACTIONSTHATWILLBEREQUIREDFORSUCHDEVELOPMENTTOTAKEPLACEANDITIDENTIlESTHERISKANDOPPORTUNITIES
THATTHISENTAILS4HENEEDFORTHISTYPEOFSTRATEGICANALYSISFOLLOWSFROMTHE'OVERNMENTOF%THIOPIAS'O% 
AMBITIONTOASPARTOFTHE'ROWTHAND4RANSFORMATION0LAN'40 DEVELOPTHEMININGSECTORTOBEAMAIN
PILLAROFTHEECONOMY

 4HEREPORTWASPRODUCEDINTHEPERIOD-AYTO&EBRUARY)TWASCOMMISSIONEDBYTHE7ORLD
"ANKANDITSPARTNERS)&#$&!4$THE!USTRALIAN'OVERNMENTAND$F)$ WITHTHEAIMTOASSISTTHE'O%
INITSEFFORTSTODEVELOPTHEMININGSECTOR4HUSTHEREPORTHASBEENPRODUCEDINCLOSECOOPERATIONWITH
STAFFATTHE%THIOPIAN-INISTRYOF-INES-O- )TSlNDINGSAREMOSTLYBASEDONDESKTOPREVIEWSOFEXISTING
DOCUMENTSONALARGENUMBEROFMEETINGSANDINTERVIEWSWITHAFFECTEDANDINTERESTEDSTAKEHOLDERSAND
ALSOONSOMElELDWORKPERFORMEDINTHESOUTHERNANDWESTERNPARTSOFTHECOUNTRY2EGULAROVERSIGHTAND
FEEDBACKHASBEENPROVIDEDBYREPRESENTATIVESFROMTHE7ORLD"ANKANDITSPARTNERS

 4HISCHAPTERPROVIDESANINTRODUCTIONTOTHE%THIOPIANECONOMYANDTHECURRENTCONTRIBUTIONFROMMINING
ANDDESCRIBESGENERALASPECTSOFMINERALSECTORDEVELOPMENTANDHOWITMAYCONTRIBUTETOECONOMIC
DEVELOPMENT#HAPTERPRESENTSTHEGEOLOGICALPOTENTIALOFTHECOUNTRYMINERALOCCURRENCESANDMINING
ANDEXPLORATIONPROJECTS"UILDINGON#HAPTER#HAPTERPRESENTSPOSSIBLESCENARIOSFORFUTUREMINERAL
SECTORGROWTHWITHECONOMICIMPLICATIONSANDFURTHERDISCUSSESINDUSTRYLINKAGES#HAPTERS INCLUDE
ASSESSMENTSOFDIFFERENTMINERALSECTORFRAMEWORKAREASANDRECOMMENDATIONSAREPROVIDEDINTHEEND
OFEACHCHAPTER#HAPTERPRESENTSCURRENTINFRASTRUCTUREANDDEVELOPMENTPLANSANDlNALLY#HAPTER
PRESENTSASUMMARYANDPRIORITIZATIONOFRECOMMENDATIONS

1.2.  The  Ethiopian  economy  and  contribution  from  mining

 %THIOPIAHASAVERAGEDAECONOMICGROWTHRATEOVERTHELASTTENYEARSANDWASCITEDASTHETH
FASTESTGROWINGECONOMYBYTHE7ORLD"ANKIN!CCORDINGTOTHE7ORLD"ANK%THIOPIA%CONOMIC
5PDATE WITHTHEPROVISIONTHATITCANCONTINUEITSHISTORICGROWTHPERFORMANCEITCOULDPOTENTIALLY
REACHMIDDLEINCOMESTATUSBY

 4HEMAJORDRIVEROFTHE%THIOPIANECONOMYISITSAGRICULTURALSERVICESACCOUNTINGFOROFTHEVALUE

ADDEDTO'$0IN4ABLE FOLLOWEDBYTHESERVICESSECTORWITH%XPORTSACCOUNTFOROF
'$0WHILEIMPORTSARE4HEMANUFACTURINGSECTORREMAINSSMALLALTHOUGHEFFORTSAREBEINGMADETO
INCREASEITSSIZE

 4HE'ROWTHAND4RANSFORMATION0LANISTHEMAINNATIONALDEVELOPMENTROADMAPFOR%THIOPIAFORTHE
PERIOD FOCUSINGONSTRUCTURALTRANSFORMATIONANDSECTORTARGETINGTOACHIEVEBROADBASEDAND
EQUITABLEGROWTH4HEMAINFEATUREOFTHEPLANISTOENSURE'$0GROWTHRATESOF PERYEARANDTO
CREATEINVESTMENTOPPORTUNITIESINAGRICULTURALANDINDUSTRIALSECTORS4HEECONOMICSECTORPERFORMANCE
CREATESSPECIlCTARGETSFORTHEAGRICULTURALINDUSTRIALANDMININGSECTORS&INANCINGFROMBOTHTHEPUBLIC
ANDPRIVATESECTORISENVISIONED4HEOTHERMAJORSUB HEADINGSFORTHEPROGRAMINCLUDEIMPROVEMENTSIN
THECOUNTRYSINFRASTRUCTUREASWELLASSOCIALDEVELOPMENTINDICATORSEDUCATIONANDTRAININGANDHEALTH 
4HElNALSEGMENTFOCUSESONCAPACITYBUILDINGINFORMATIONANDCOMMUNICATIONSTECHNOLOGYDEVELOPMENT
DEMOCRACYANDGOODGOVERNANCE4HEPLANTAKESINTOCONSIDERATIONCROSSCUTTINGISSUESSUCHASGENDER
ANDYOUTHDEVELOPMENT()6!)$SPREVENTIONANDCONTROLLABOURAFFAIRSENVIRONMENTANDCLIMATECHANGE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 15

4ABLE %CONOMICPROlLEFOR%THIOPIA
2000  
GDP  Indicators
'.)PERCAPITA000CURRENTINTERNATIONAL   
'$0CURRENT53MILLION   
'$0GROWTHANNUAL   
Sectoral  Distribution  of  GDP
!GRICULTUREVALUEADDEDOF'$0   
)NDUSTRYVALUEADDEDOF'$0   
-ANUFACTURINGVALUEADDEDOF'$0   
3ERVICESETCVALUEADDEDOF'$0   
'ROSSCAPITALFORMATIONOF'$0   
Trade  Indicators
4RADEOF'$0   
-ERCHANDISETRADEOF'$0   
%XPORTSOFGOODSANDSERVICESOF'$0   
)MPORTSOFGOODSANDSERVICESOF'$0   
Natural  Resource  Rents
4OTALNATURALRESOURCESRENTSOF'$0   
-INERALRENTSOF'$0   
&ORESTRENTSOF'$0   
3OURCE7ORLD$EVELOPMENT)NDICATORSACCESSEDRD/CTOBERHTTPDATABANKWORLDBANKORG

 )NTHElSCALYEARTHE%THIOPIANMININGSECTORCONTRIBUTEDABOUTTO'$0WITHMINERALRENTS

THEDIFFERENCEBETWEENCOSTOFPRODUCTIONANDITSREVENUEVALUE ACCOUNTINGFOROF'$04HESECTOR
ACCOUNTEDFOR53$MILLION OFTHECOUNTRYSEXPORTSWITHGOLDMAKINGUPCLOSETOOFTHE
MININGSECTOREXPORTSANDWITHMOSTOFTHISGOLDABOUT COMINGFROMARTISANALMINING)NCOMPARISON
%THIOPIASLARGESTEXPORTCOMMODITYCOFFEEGENERATED53$MILLION INEXPORTREVENUES4HE
CONTRIBUTIONFROMMININGTOEMPLOYMENTIN%THIOPIAISTODAYSMALLAFEWTHOUSAND ASTHESECTORISSMALL
ANDMININGISNOTALABOURINTENSIVEINDUSTRY!RTISANALMININGONTHEOTHERHANDISLIKELYTOINVOLVESEVERAL
HUNDREDTHOUSANDWORKERS

 !TTHESTARTOFTHE'40 ONEOFTHEMAINOBJECTIVESOFTHEGOVERNMENTWASFORTHEMINING

SECTORTOCONTRIBUTETOEXPORTREVENUESANDTOPROVIDEINPUTSTOTHEAGRICULTURALSECTORANDADDTOLOCAL
MANUFACTURINGCAPABILITIES/VERACOUPLEOFYEARSBEFOREEXPORTREVENUESFROMTHEMINERALSECTOR
AVERAGEDAROUND53$MILLIONANDACCOUNTEDFORTOOFTHEFOREIGNEXCHANGEEARNINGSFORTHE
COUNTRY)NTHEYEARTHE'40REVIEWREPORTSTHATTHEMINERALSECTORSECURED53$MILLION
INFOREIGNEXCHANGEEARNINGS

 "ETWEENANDPRIVATEINVESTMENTWASNOTALLOWEDINTHEMINERALSECTORWHILEGOVERNMENT

INSTITUTIONSWEREMANDATEDTODEVELOPTHEMINERALWEALTHOFTHECOUNTRY!SARESULTOFTHEPOLITICALCHANGE
THATTOOKPLACEINANEWMOREMARKETORIENTEDECONOMICPOLICYWASINTRODUCEDINTHECOUNTRY)NTHE
MININGSECTORTHEGOVERNMENTPROMULGATEDANEWMININGPROCLAMATIONANDMININGINCOMETAXPROCLAMATIONS
TOENCOURAGETHEPARTICIPATIONOFPRIVATECAPITALINMINERALSECTORDEVELOPMENT4HISHASNOTYETLEDTOA
SIGNIlCANTEXPANSIONOFTHECOUNTRYSMININGSECTORANDTHE%THIOPIANMININGSECTORCANBEVIEWEDTOBE
INITSINFANCYSTAGEBUTWITHGOODPOTENTIALFORFUTUREDEVELOPMENT

#URRENTLYTHELARGESTFOREIGNINVESTMENTINTHEMININGSECTORISBY!LLANA0OTASHFORA0OTASHPROJECTWHICH

PLANSTOSTARTPRODUCTIONBYMIDTOLATE.YOTA-INERALS4ULU+APIPROJECTWHICHWASONHOLDDURING
THESECONDHALFOFBUTWHEREACTIVITIESHAVENOWCONTINUEDAFTEROWNERSHIPCHANGESANDADDITIONAL
lNANCINGHASREACHEDANADVANCEDSTAGE!PARTFROMTHESETWOADVANCEDPROJECTSTHEREAREANUMBER
OFEXPLORATIONPROJECTSATVARIOUSDEVELOPMENTSTAGESSEEFURTHER#HAPTER 

)NTHEFRAMEWORKOFTHE-INING6ALUE#HAIN&IGURE %THIOPIACANBEVIEWEDASBEINGATTHESTAGEOF
DEVELOPINGANDIMPROVINGGOVERNANCERELATEDTOTHElRSTTHREESTEPS!CCESSTORESOURCES-ONITORINGOF
OPERATIONSAND#OLLECTIONOFROYALTYANDTAXES%THIOPIARECENTLYSUBMITTEDITSAPPLICATIONTOBECOMEA
CANDIDATE%)4)COUNTRY 

16 FINAL  REPORT
 Collection   Revenue   %FlCIENT Inclusive  &  
Non–renewable   Access  to   Monitoring  of  
of  taxes  and   management,   sustainable   Sustainable  
resources resources operations
royalties allocation utilization Development

Cross  cutting  issues  (e.g.,  institutional  arrangements,  capacity,  accountability  mechanisms)

Sector  policy,  law  and  basic  regulations,  including  social/environmental  aspects  

Promotion  of  mineral,  petroleum  and  gas  resources
Cadastres  and  mineral  rights  procedures
2OLElSCALREGIMEOFOPERATORSINCLUDINGPRICERISKSHARING

Regulatory  authority  (approval/monitoring/enforcement)

Monitoring  and  evaluation  of  environmental  and  social  impacts  
Accounting  and  audit  procedures

Revenue  collection
$ISCLOSUREOFREVENUEmOWS

Macroeconomic  framework
Savings  (volatility/future  generations)
Public  investment  decisions

%FlCIENTUSE0&-PROCUREMENT
Recommendations  of  environmental  impacts  
%CONOMICDIVERSIlCATIONANDGROWTH
Figure  1.1.    The  Mining  Value  Chain  (source:  World  Bank). Community  development  linkages

1.3.  Mineral  sector  characteristics  and  development  in  general

4HEMININGSECTORINGENERALMAYBEDIVIDEDINTOTHREEMAINSUBSECTORSI METALSANDPRECIOUSMINERALS
MININGII COALMININGANDIII INDUSTRIALMINERALSMINING#OALMININGHASANECONOMICWORTHANDGLOBAL
TURNOVERTHATISONPARWITHALLMETALSANDPRECIOUSMINERALSMININGCOMBINED)NDUSTRIALMINERALSMINING
MAINLYQUARRYING ISSOMETIMESOVERLOOKEDWHENTHEMININGSECTORISBEINGCONSIDEREDINSPITEOFITBEING
ASUBSECTORWHICHISVITALFORTHEFUNCTIONINGOFSOCIETYANDWHICHHASACONSIDERABLEECONOMICVALUETOTHE
DOMESTICECONOMY7ITHREGARDSTOINDUSTRIALMINERALSTHEVALUETOBULKRATIOISOFTENSMALLANDTHEREFORE
THEPOTENTIALFOREXPORTISLIMITEDASTHEINTERNATIONALTRANSPORTCOSTSWILLOFTENFAROUTWEIGHTHEVALUEOFTHE
MATERIALITSELF

-INERALPROJECTDEVELOPMENTFROMEARLYEXPLORATIONTOTHESTARTOFINDUSTRIAL SCALEPRODUCTIONUSUALLYTAKES

 YEARSORMORE4ABLE ANDITMAYEVENTAKESOME YEARSFROMTHEINITIALESTIMATIONOFMINERAL
RESOURCESUNDERTAKENDURINGTHEEXPLORATIONPHASEBEFOREAMINEISCOMMISSIONED4HISTIMEISUSEDTOCARRY
OUTDETAILEDRESOURCEESTIMATESTODOTHEVARIOUSMETALLURGICALGEOTECHNICALlNANCIALANDENVIRONMENTAL
STUDIESNECESSARYFORABANKABLEFEASIBILITYSTUDYANDTOARRANGElNANCINGANDMINERALANDENVIRONMENTAL
PERMITTING4HEMANAGEMENTOFTHESECTORNEEDSTOBECHARACTERISEDBYASIMILARLYLONG TERMVIEW4HESE
ESTIMATESMAYBESOMEWHATLOWERFORTECHNICALLYSIMPLESMALLERGOLDMINESANDFORINDUSTRIALMINERALS
PROJECTSBUTCANBESUBSTANTIALLYHIGHERFORLARGEANDCOMPLEXPOLYMETALLICMINES0OST PRODUCTIONMINE
CLOSUREANDREHABILITATIONUSUALLYTAKESACOUPLEOFYEARSORMOREANDTHISISSOMETIMESFOLLOWEDBYA
PROLONGEDPERIODOFENVIRONMENTALMONITORINGDEPENDINGONTHETYPEOFMINE

)TALSOIMPORTANTTOKEEPINMINDTHATFEWEXPLORATIONPROJECTSACTUALLYLEADTOMINEDEVELOPMENT&OR
EXAMPLELOOKINGATMAJORMETALSOVERARECENT YEARPERIODOUTOF GREENlELDDISCOVERIES
IN#ANADAREACHEDFEASIBILITYSTAGE&OR!USTRALIATHENUMBERSWEREOUTOFOR&ARFEWER
PROJECTSWOULDSURVIVEALLTHEWAYTOTHEMINECONSTRUCTIONSTAGE

Table  1.2.     Common  time  periods  (years)  for  the  different  phases  of  mineral  development  projects.
%XPLORATIONFEASIBILITYSTUDY  
-INECONSTRUCTION  
0RODUCTION  
-INECLOSURERECLAMATION  
-ONITORING 

 2AW-ATERIALS'ROUP
 2AW-ATERIALS'ROUP 

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 17

 4HENEEDSANDREQUIREMENTSFORESTABLISHINGAMINEAREDEPENDENTUPONWHICHCOMMODITYISBEING
CONSIDERED(IGHBULKCOMMODITIESSUCHASIRONOREANDCOALARECRUCIALLYDEPENDENTUPONTHEAVAILABILITY
OFINFRASTRUCTUREFORTRANSPORTRAILROADSHARBOURS ANDOTHERSUPPORTINGINDUSTRIESANDACTIVITIESOFTEN
REFERREDTOAShLINKAGESv #ONVERSELYMINESFORLOWBULKCOMMODITIESEGGOLDANDDIAMONDS MAYBE
INITIATEDWITHACOMPARATIVELYLESSERNEEDFORASSOCIATEDLINKAGESANDINFRASTRUCTURE

-ININGISACYCLICALBUSINESSWITHCOMMODITYPRICESVARYINGINWHATISSOMETIMESREFERREDTOAShSUPER
CYCLESvWHICHINTURNMAYSPANOVERONEORSEVERALDECADES4HUSTHEDECADEPRECEDINGANDTHE
RISEOFDEMANDOF#HINA WASCHARACTERISEDBYLOWCOMMODITYPRICES&IGURE ANDLIMITEDEXPLORATION
)NCONTRASTSINCETHEWORLDHASSEENABOOMINTHEMININGSECTORFUELLEDTOAGREATEXTENTBY#HINESE
DEMANDLEADINGTOWHATATTIMESHASBEENNEARFRANTICACTIVITYANDINTERESTINTHESECTOR4HELASTYEAR
SINCEHASSEENASLOWINGDOWNANDDECREASESINCOMMODITYPRICES4HEMANAGEMENTOFTHESECTOR
NEEDSTOTAKETHESEFUNDAMENTALCHARACTERISTICSINTOACCOUNT

7HENCONSIDERINGTHE@DEVELOPMENTOFTHEMININGSECTORPARTICULARLYITSCONTRIBUTIONTOECONOMICGROWTH
ANDEXPORTREVENUESTHEGENERATIONOFLARGEECONOMICRENTSISMORELIKELYTOCOMEFROMMEDIUMTOLARGE
SCALEMININGPROJECTSRELATIVETOTHOSEFROMARTISANALANDSMALLSCALEPROJECTS&URTHERMOREECONOMIES
OFSCALEAREMORELIKELYTORESULTWITHINCREASEDMINESIZEANDWHENTHEREAREAFEWLARGESCALEMINESIN
PRODUCTION

4HEMININGSECTORHOLDSSUBSTANTIALPROSPECTSFORFOSTERINGDEVELOPMENTANDECONOMICGROWTH4HESECTOR
ISHOWEVERALSOSEENTOBEASSOCIATEDWITHANUMBEROFLESSDESIRABLECHARACTERISTICSSUCHASENVIRONMENTAL
IMPACTSSOCIO ECONOMICUNRESTLAND USECONmICTlNANCIALINSTABILITYEG$UTCHDISEASE ANDDUETOTHE
LARGEAMOUNTSOFMONEYINVOLVEDTOBEPRONETOCORRUPTIONANDILLICITlNANCIALTRANSACTIONS-EASURESARE
NEEDEDTOADDRESSTHESEPROBLEMAREASSUCHASTHEDEVELOPMENTOFASUITABLEREGULATORYREGIMEASWELL
ASTHEBUILDINGOFINSTITUTIONALCAPACITYTOIMPLEMENTSUCHAREGIME

Figure  1.2.    Variations  in  “metal  price  index”  since  2000  (with  2000  given  an  index  of  100).  Source:  Raw  Materials  Group,  
Stockholm  (2013).

 .OTETHENUMBEROFMINESWILLDIFFERDEPENDENTONTHEMETALBEINGMINEDANDTHEVOLUMEOFOREINCLUDINGWASTEROCK THATISBEING
PRODUCED

18 FINAL  REPORT
 ©  PACT  Ethiopia

2.   GEOLOGY,  MINING  AND  EXPLORATION  ACTIVITIES

2.1.  Regional  geology  and  mineral  occurrences
 4HEOLDESTROCKSIN%THIOPIAAREOFLATE0ROTEROZOICAGE -A ANDCOVERSOMEWHATLESSTHANAQUARTER
OFTHECOUNTRY4HESEROCKSDISPLAYEDINDARKGREENGREYANDBLACKIN&IGURE AREMAINLYEXPOSEDIN
THREEAREASOFTHECOUNTRYTOTHENORTHWESTANDSOUTHANDTOALESSEREXTENTAROUND(ARARINTHEEAST4HE
0ROTEROZOICBASEMENTOF%THIOPIAISLOCATEDATTHEINTERPHASEOFTHE!RABIAN .UBIAN3HIELDTHATCONTINUES
TOTHENORTHINTO3UDAN%GYPTAND3AUDI!RABIAANDTHE-OZAMBIQUE"ELTWHICHMAKESUPMUCHOFTHE
GEOLOGICALBASEMENTTHROUGHOUTEASTERN!FRICA

 4HE0ROTEROZOICBASEMENTINCLUDESAVARIETYOFVARIOUSLYDEFORMEDANDMETAMORPHOSEDSEDIMENTARY
VOLCANICANDINTRUSIVEROCKS)NGENERALGNEISSESAREMORECOMMONANDTHEMETAMORPHICGRADEHIGHERIN
THESOUTHERNANDWESTERNTERRAINSCOMPAREDTOTHENORTHERNTERRAIN4HENORTHERNTERRAINISPREDOMINANTLY
MADEUPOFVOLCANICANDSEDIMENTARYROCKSOFLOWERMETAMORPHICGRADE3OCALLEDGREENSTONEBELTSOCCUR
INALLTHREEAREAS

&IGURE3IMPLIlEDGEOLOGICALMAPOF%THIOPIASOURCE'3% 

 'REENSTONEBELTSMAYHOSTAVARIETYOFMINERALSDEPOSITSESPECIALLYGOLD4HEYARETHOUGHTTOHAVEFORMEDALONGTHEMARGINSOF
!RCHAEANCRATONSnMILLIONYEARS BUTTHETERMISSOMETIMESALSOUSEDFORSIMILARGEOLOGICALENVIRONMENTSOFYOUNGER
AGE4HEYCONSISTOFAMIXOFMETAMORPHOSEDMAlCTOULTRAMAlCVOLCANICSEQUENCESWITHASSOCIATEDSEDIMENTARYROCKS4HENAME
GREENSTONECOMESFROMTHEGREENHUEOFSOMEOFTHEMETAMORPHICMINERALSPRESENT

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 19

  $OMINANTLY-ESOZOIC -A ANDSOMESLIGHTLYOLDERMARINEANDCONTINENTALSEDIMENTARYROCKSCOVER
ABOUTOF%THIOPIA4HEYOCCURACROSSLARGEAREASOFEASTERN%THIOPIATHE/GADENBASIN ANDALSOIN
TWOSEDIMENTARYBASINSINTHECENTREANDTOTHENORTHOFTHECOUNTRYBLUEIN&IGURE 4HE-ESOZOIC
FORMATIONSINCLUDEROCKSSUCHASSANDSTONESHALELIMESTONEANDGYPSUM

 !BOUTOFTHECOUNTRYISCOVEREDBY4ERTIARY -A AND1UATERNARY-AnPRESENTTIME VOLCANIC

ANDSEDIMENTARYROCKSRELATEDTOTHEFORMATIONOFTHE%THIOPIANRIFT4HERIFTRUNSFROMNORTHEASTTOSOUTHWEST
ACROSS%THIOPIAANDISPARTOFTHEGREATER%AST!FRICAN2IFT4HUSTHE%THIOPIANHIGHLANDSAREUNDERLAIN
MAINLYBYTHICKSEQUENCESOFmOODBASALTTHATERUPTED MILLIONYEARSAGOOLIVECOLOUR&IGURE WHILE
THERIFTVALLEYITSELFISCOVEREDMAINLYBY1UATERNARY-A VOLCANICROCKSANDASSOCIATEDSEDIMENTARY
ROCKSGREEN&IGURE 1UATERNARYSEDIMENTSALSOOCCURINOTHERPARTSOFTHECOUNTRYYELLOW AND4ERTIARY
SEDIMENTSINTHEFAREASTORANGE 

 4HEDIFFERENTGEOLOGICALTERRAINSDESCRIBEDABOVEAREPROSPECTIVEFORDIFFERENTTYPESOFROCKSANDMINERALS
!PARTFROMEXTENSIVEARTISANALMININGTHEREAREANDHAVEBEENVERYFEWMINESIN%THIOPIAANDCOMPARATIVELY
LITTLEDETAILEDEXPLORATIONHASBEENUNDERTAKEN-INERALROCKOCCURRENCES4ABLE INTHEDIFFERENTTERRAINS
AREHOWEVERREASONABLYWELLKNOWNMAINLYFROMTHEWORKUNDERTAKENBYTHE'EOLOGICAL3URVEYOF%THIOPIA
'3% OVERTHEPASTYEARS

Table  2.1.     Mineral  and  rock  occurrences  in  main  geological  environments  of  Ethiopia.
Geological  terrain Commodity Deposit  types  and  key  areas
'OLD 0RIMARILYLODEGOLDINGREENSTONEBELTS
!U !G #U :N 6-3 TYPEINTHENORTHERNTERRAIN
Late  Proterozoic   4ANTALUM 0EGMATITEINSOUTHERNTERRAIN
BASEMENTBLACK
grey,  green  in  Figure   )RON "ASICINTRUSIONSINWESTERNANDSOUTHERNTERRAINS1UARTZ
 BANDEDSEDIMENTARYIRONINWESTERNTERRAIN
0'%GOLD 5LTRAMAlCINTRUSIONSANDRELATEDALLUVIAL ELUVIALPLACERSINTHE
-OSTIMPORTANT WESTERNTERRAIN
TERRAINFORMETALLIC
MINERALS 0HOSPHATE "ASICINTRUSIONSTOGETHERWITH&E
$IMENSIONSTONE 3EVERALAREASINTHE0ROTEROZOICTERRAINS
!LSODIMENSION
STONEREFRACTORY 2EFRACTORYRAW 3OUTHERNTERRAIN
MINERALSAND MATERIALSKYANITE
CERAMICRAW GRAPHITETALC
MATERIALS +AOLIN 3OUTHERNTERRAINANDINTHE(ARARAREAALSOINSOMEAREASWITH
1UATERNARYVOLCANICS
&ELDSPARQUARTZ 0EGMATITEINSOUTHERNTERRAINANDINTHE(ARARAREA
Mesozoic  sediments   ,IMESTONE !NUMBEROFDEPOSITSINALLTHREE-ESOZOICSEDIMENTARYBASINS
BLUEIN&IGURE GYPSUM
3ILICASAND 3EVERALDEPOSITSINTHE-ESOZOICBASINS
)MPORTANTFORTHE
MAINCEMENTRAW
MATERIALS
0OTASH %VAPORITESINTHECENTRALPARTSOFTHE$ANAKHILDEPRESSION
Tertiary-­Quaternary   0UMICE !NUMBEROFAREASINTHEFELSICVOLCANICSOFTHE2IFT6ALLEY
volcanics  and   Diatomite !NUMBEROFAREASINLACUSTRINESEDIMENTSOFTHE2IFT6ALLEY
SEDIMENTSOLIVE
"ENTONITE !NUMBEROFAREASINLACUSTRINESEDIMENTSOFTHE2IFT6ALLEY
GREENIN&IGURE
2OCKSALT /CCURSINSOMELAKESINTHECENTRAL SOUTHERNPARTOFTHE2IFT6ALLEY
)MPORTANTFORA 3ODAASH /PALOCCURSINTHEAREASSURROUNDINGTHENORTHERNCENTRALAND
NUMBEROFINDUSTRIAL SOUTHERNPARTSOFTHERIFTVALLEYIN4ERTIARYVOLCANICS
MINERALSAND
GEMSTONES 'EMSTONES /THERGEMSTONESSUCHASBERYLEMERALDSAPPHIRETOURMALINE
ANDGARNETAREFOUNDMAINLYINTHESOUTHERNPARTSOFTHERIFT
!LSOCOALAND #OAL ,IGNITETOBITUMINOUSDEPOSITSINSEDIMENTSMOSTLYWITHIN4ERTIARY
EPITHERMALGOLD VOLCANICFORMATIONSINSOUTHWESTERNANDNORTHERN%THIOPIA
%PITHERMALGOLD ,OW GRADEGOLDOCCURRENCESINTHERIFTVALLEYNORTHERNPARTS
3OURCES 4ADESSE VARIOUSPROMOTIONALDOCUMENTSAVAILABLEATTHE'3%WWWGSEGOVETACCESSED.OVEMBER 
DISCUSSIONSWITH-O-STAFF

20 FINAL  REPORT
2.2.  Geological  data  and  information
 4HE'EOLOGICAL3URVEYOF%THIOPIAWASESTABLISHEDINWITHTHEPRIMARYAIMTOCONDUCTSYSTEMATIC
GEOLOGICALMAPPINGANDMINERALEXPLORATION0RIORTOTHESVERYLITTLEGEOLOGICALMAPPINGWORKHAD
BEENUNDERTAKEN!BROADDESCRIPTIONOFAVAILABLEGEOSCIENTIlCINFORMATIONISPROVIDEDBELOW

  Geological  mapping:!NATIONALGEOLOGICALMAPATTHESCALEOFWASlRSTPUBLISHEDIN

ANDREVISEDIN4HESEMAPSHOWEVERDElNEDMUCHOFTHEBASEMENTASBEINGOF!RCHEANAGE
-A 3TUDIESUNDERTAKENDURINGTHESBYTHE'3%INCOLLABORATIONWITHOTHERINSTITUTIONS
ANDMORERECENTGEOLOGICALMAPPINGINDICATESTHATTHEBASEMENTISOFLATE0ROTEROZOICAGE-A 

 2EGIONALMAPSATTHESCALEOFHAVEBEENPRODUCEDSINCETHEEARLY MIDSANDTODAY

COVERALMOSTOFTHECOUNTRYINCLUDINGMOSTAREASOFTHECOUNTRYAPARTFROMTHE/GADENBASININ
THEEAST.OREGIONALGEOLOGICALMAPPINGHASBEENUNDERTAKENATSCALESlNERTHAN

  Geochemical  mapping:  'EOCHEMICALSURVEYSHAVEBEENUNDERTAKENATDIFFERENTSCALESOVERTHEYEARS

WITHFOCUSONTHE0ROTEROZOICAREAS!BOUTOFTHECOUNTRYHASBEENMAPPEDATTHEOR
lNERSCALES)NSYSTEMATICSURVEYSATTHESCALEOFWEREINITIATEDINPARALLELWITHTHE
GEOLOGICALMAPPING

  Airborne  geophysical  surveys:!IRBORNEGEOPHYSICALSURVEYSFOCUSEDONMINERALEXPLORATIONHAVEBEEN

UNDERTAKENOVERSOMEPARTSOFTHE0ROTEROZOICTERRAINS(OWEVERTHESURVEYSWEREMAINLYDONEINTHE
EARLYSANDTOALESSEREXTENTIN WITHALINESPACINGOF KMANDTHEDATAISOFLOWQUALITY
COMPAREDTOWHATCANBEACHIEVEDTODAYWITHMODERNMETHODSANDTIGHTERLINESPACING!HELICOPTER
BORNEELECTROMAGNETICMAGNETICANDSPECTROMETRYSURVEYWASALSOCARRIEDOUTININTHE!DOLA
'OLDAREAWITHALINESPACINGOFM

  Ground  gravity  surveys:'ROUNDGRAVITYMEASUREMENTSHAVEBEENPERFORMEDINTERMITTENTLYSINCETHE

S4HEGRAVITYNETWORKWASSIGNIlCANTLYEXPANDEDDURINGTHECOUNTRYWIDEGRAVITYSURVEY 
4HEGRAVITYSTATIONSARELOCATEDMAINLYALONGPRIMARYANDSECONDARYROADSIENOGRIDSYSTEM WITHA
SPACINGOFKMANDTHE0ROTEROZOICAREASARENOTWELLCOVERED

  Mineral  potential  studies:4HE'3%HASOVERTHEYEARSINVESTIGATEDANUMBEROFDEPOSITSTHROUGHPETROGRAPHIC

ANDGEOCHEMICALSTUDIESANDTOALESSEREXTENTTHROUGHDRILLINGANDASSAYING-INERALRESOURCEESTIMATES
HAVEBEENREPORTEDFORANUMBEROFDEPOSITSWHILETHEMETHODOLOGIESARENOTCOMPLIANTWITHMODERN
PROCEDURESMETHODS

  Geoscience  data  and  information  management:  4HE'3%HOUSESBIBLIOGRAPHYANDMINERALOCCURRENCES

META DATADATABASESATTHE'EOSCIENCE$ATA#ENTREWHICHAREALSOAVAILABLEON LINEATWWWGSEGOV
ET ANDAGEOCHEMICALDATABASEATTHE'3%,ABORATORIES4HEREISHOWEVERALARGEAMOUNTOFDATAAND
INFORMATIONATTHE'3%THATISNOTYETENTEREDINTODATABASES

  Promotion  of  the  mineral  sector:4HE-O-HASBEENPRESENTATTHE-INING)NDABA&AIRIN#APE4OWN

HASANACTIVEANDFAIRLYINFORMATIVEWEB PAGEANDHASPRODUCEDSPECIALIZEDPROMOTIONALBROCHURES;A
NUMBEROFGOODPROMOTIONALDOCUMENTSWEREPRODUCEDIN INPARTWITHSUPPORTFROMEXTERNAL
DEVELOPMENTPARTNERS'%53 =AVAILABLEATTHE'3%WEBSITE-ININGPROMOTIONLITERATUREISALSOINCLUDED
ASACHAPTERINTHEBOOKLETSISSUESBYTHE)NVESTMENT0ROMOTION!GENCY

 $UETOALACKOFCAPACITYMUCHOFTHE'3%SWORKISNOWFOCUSEDONCOMPLETINGTHEGEOLOGICAL

MAPPINGANDLITTLERESOURCESAREGIVENTOGEOCHEMICALANDGEOPHYSICALSURVEYSSEEFURTHER3ECTION 
3OMEOFTHEOLDMAPSSHEETSFROMTHE  WOULDPROBABLYHAVETOBEREVISITEDANDREVISEDINLIGHT
OFSTRATIGRAPHICREVISIONNEEDEDASTHEREISVERYLIKELYNO!RCHEANBASEMENTIN%THIOPIA

2.3.  Mining  and  mine  prospects  in  Ethiopia  and  the  region
4HEPURPOSEOFTHISSECTIONISTOPROVIDEABROADVIEWOFTHEGEOLOGICALPOTENTIALBYDESCRIBINGON GOINGMINING
ASWELLASMINEPROSPECTSIN%THIOPIAANDTHESURROUNDINGREGIONS

1.    Gold
4HEREISCURRENTLYONEOPERATINGLARGESCALEGOLDMINEIN%THIOPIATHE,EGA$EMBIOPENPITMINEINTHESOUTHERN
0ROTEROZOICTERRAINOWNEDBY-IDROC'OLD-INE0LC,EGA$EMBIOPENEDINANDHASATANAVERAGE
PRODUCEDSOMETYRTONNESOROZIN )NSOMETWOYEARSTIMETHEOPERATIONWILLCONTINUE
UNDERGROUNDANDALSOINCLUDETHE3AKARODEPOSITLOCATEDRIGHTNEXTTO,EGA$EMBI.EARBYTHEREISALSOTHESTATE
OWNED!DOLAMINEWHEREALLUVIALGOLDATLEASTINPARTDERIVEDFROMTHE,EGA$EMBIDEPOSITS HASBEENMINED
FOROVERHALFACENTURY

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 21

%XTENSIVEARTISANALANDSOMESMALL SCALE GOLDMININGSHOWSTHEPOTENTIALFORGOLDINALLTHE0ROTEROZOICAREAS
OF%THIOPIA4HETOTALARTISANALPRODUCTIONINLATERYEARSISREPORTEDTOHAVEBEENABOUTTWICETHATOF,EGA$EMBI
WITHSOMETONNESOFGOLDABOUTOZ REPORTEDBY-O-TOHAVEBEENPRODUCEDIN

)N3UDANKMNORTHOFTHE3OUTH3UDANESEBORDERTHEREISTHE YEAROLD(ASSAIGOLDMINEWHICHIS

OPERATEDBY,A-ANCHAANDITHASSOFARPRODUCEDSOMEABOUTMILLIONOZOFGOLD4HEREISALSOARTISANAL
GOLDMININGBEINGUNDERTAKENAROUNDTHE(ASSAIMINEASWELLASACROSSTHEBORDERFROMWESTERN%THIOPIAAND
FURTHERINLANDTOTHEWEST

/NEGOLDPROSPECTIN%THIOPIAHASREACHEDANADVANCEDEXPLORATIONSTAGE.YOTA-INERALS,TDS4ULU+APIPROJECT
4HEPROJECTHASESTABLISHEDPROBABLERESERVESOF-T GTTOTALLYOZ ANDINDICATEDANDINFERRED
RESOURCESOF-T GTTOTALLYOZ ASOFMID 4HEPROJECTWASONHOLDDURINGTHESECOND
PARTOFBUTRECENTOWNERSHIPCHANGESANDADDITIONALlNANCINGHASALLOWEDFOREXPLORATIONACTIVITIESTO
CONTINUE4HEPROJECTSHOWSTHEPOTENTIALFORGOLDDEPOSITSINTHEWESTERN0ROTEROZOICTERRAIN

2.    Polymetallic  deposits
4HE!RABIAN .UBIANSHIELDIN%RITREA3UDAN%GYPTAND3AUDI!RABIAHOSTSANUMBEROF6-3 TYPEPOLYMETALLIC
DEPOSITS4HEREARETHREEADVANCEDGOLDPROJECTSIN%RITREAONEOFWHICHHASREACHEDTHEMININGSTAGE4HE
"ISHAMINECOMMENCEDPRODUCTIONINANDITISAHIGH GRADEDEPOSITWITHGOLDANDSILVEROXIDESATSURFACE
UNDERLAINBYCOPPERANDZINCSULPHIDES4HERESOURCESTATEMENTOF-AYESTIMATESCONTAINEDMETALOF
TONNESOF#UTONNESOF:NOZ!UANDOZ!GINTHE)NDICATEDAND
)NFERRED2ESOURCECATEGORIES

3.  Potash
4HEREISASYETNOPOTASHMININGIN%THIOPIABUTTHE$ANAKHILDEPRESSIONINTHEFARNORTHEASTOFTHECOUNTRYHOLDS
SIGNIlCANTPOTASHRESERVES!LLANA0OTASHHASBEENGRANTEDAFULLMININGLICENSEANDISPLANNINGTOCOMMENCE
CONSTRUCTIONDURINGTHElRSTHALFOFANDSTART UPPRODUCTIONINTHELATTERHALFOF0ROVENANDPROBABLE
SYLVINITERESERVESAMOUNTTO-T  +#L-EASUREDINDICATEDANDINFERREDSYLVINITERESOURCESAMOUNT
TO-T  +#L4HECURRENTMINEPLANISFOR-TYROVERYEARS4HESYLVINITEOCCURSINTHEUPPERMOST
SEDIMENTHORIZON,ARGECARNALLITEANDKAINITITERESOURCESAREPRESENTINLOWERHORIZONSWHICHMAYBEEXTRACTED
INTHEFUTURE/THERCOMPANIESAREPURSUINGEXPLORATIONATNEARBYLOCALITIES

4.  Tantalite
4HESTATE OWNED;%THIOPIAN-INERALS$EVELOPMENT%NTERPRISE%-$% =+ENTICHATANTALUMMINELOCATEDIN
SOUTHERN%THIOPIAHASBEENPRODUCINGTANTALUMINTHERECENTPASTANDSHOWSTHEPOTENTIALFORPEGMATITE HOSTED
TANTALUMINTHEAREA4HEPRODUCTIONISCURRENTLYONHOLDDUETOATTEMPTSTOPRIVATIZETHEOPERATION4HISSEEMS
TOHAVEFAILEDANDTHECURRENTPLANSAREFOR%-$%TOCONTINUEPRODUCTIONIN4HEURANIUMCONTENTOFTHE
OREISQUITEHIGH ANDLOCALPROCESSINGTOREMOVETHEURANIUMWOULDBEREQUIREDFORMANYEXPORTMARKETS

5.  Cement  raw  materials

4HE%THIOPIANCEMENTPRODUCTIONCAPACITYHASINCREASEDFROM -TTOSOME -TYROVERTHEPASTCOUPLEOF
YEARS2AWMATERIALSFORCEMENTLIMESTONEGYPSUMCLAYANDPUMICE AREPLENTIFULINTHE-ESOZOICFORMATIONS
OF%THIOPIAANDMINEDLOCALLYOFTENINCLOSEVICINITYTOTHECEMENTFACTORIES

6.  Other  industrial  minerals

Rock  saltHASBEENMINEDFORALONGTIMEINTHE$ANAKHILDEPRESSIONTHROUGHNON MECHANISEDARTISANALMINING
)NTHERECENTPASTTHEREHAVEBEENATTEMPTSTOCOMMENCELARGERSCALEINDUSTRIALPRODUCTIONOFSALTINTHEAREA
Kaolin,  silica  sand,  soda  ash  quartz  and  feldspar,AREORHAVEBEENMINEDTHROUGHARTISANALANDSMALL SCALEMINING

7.  Dimension  stone
4HEMOSTIMPORTANTPRODUCEROFdimension  stoneIN%THIOPIAISTHE.ATIONAL-INING#OMPANY-IDROCGROUP 
-ARBLEFROMTHE"ENISHANGUL 'UMUZAREAINTHEWESTANDGRANITEANDLIMESTONEFROMAROUND(ARARINTHEEAST
ARETURNEDINTOlNISHEDPRODUCTSATTHEMANUFACTURINGFACILITYIN!WASHCENTRAL%THIOPIA3ANDSTONEANDVOLCANIC
ROCKSSUCHASIGNIMBRITEANDBASALTHAVEALSOBEENQUARRIEDMOSTLYONASMALLSCALEFORLOCALDIMENSIONSTONEUSE

 -INERALRESOURCESINFERREDINDICATEDANDMEASURED ANDMINERALRESERVESPROBABLEORPROVEN AREESTABLISHEDINACCORDANCEWITH

INTERNATIONALSTANDARDSSUCHASTHE*ORC#ODEANDTHE.) 4HEYINCLUDEESTIMATIONSOFTHEAMOUNTOFORECONTAINEDWITHINA
MINERALDEPOSITANDFORMACENTRALPARTOFFEASIBILITYSTUDIES

22 FINAL  REPORT
 8.  Coal
#OALWASMINEDONASMALLSCALEIN INTHE$ELBI -OYEAREAMAINLYINATTEMPTSTOSUBSTITUTEFORIMPORT
TOPROVIDECEMENTINDUSTRYWITHENERGY4HEREHASRECENTLYBEENRENEWEDINTERESTINTHISDEPOSIT

9.  Gemstones
'EMSTONESAREPRODUCEDTHROUGHARTISANALMININGANDTHEMAJORTYPESOFGEMSTONESFOUNDIN%THIOPIAINCLUDE
GARNETSEMERALDSRUBIESANDOPALS/PALSACCOUNTFORNEARLYOFPRECIOUSSTONEEXPORTSOFTHECOUNTRY

/PALSFROMDEPOSITSIN-EZEZO3HEWAPROVINCE WEREMINEDFROMBUTWEREOFLOWQUALITYANDUNSTABLE

OPALSARESENSITIVETOHEATANDWATERANDCANCRACKEASILY ANDTHEREFOREDIDNOTGAINTRACTIONASANEXPORTABLE
PRODUCT/PALSWEREALLOWEDONTHEEXPORTABLEITEMSLISTINBUTITWASNOTUNTILTHATTHEOPALPOTENTIAL
FOR%THIOPIAWASMOREFULLYREALISEDWITHTHEDISCOVERYOFOPALFROMTHE.ORTH7OLLO:ONEIN!MHARAREGION
4HESEOPALSWEREOFMUCHHIGHERQUALITYANDCONSIDEREDMORESTABLETHANTHOSEOFOTHERAREASIN%THIOPIA4HE
7OLLO/PALALSOKNOWNAS7ELO WASPRESENTEDATTHE4UCSON'EMAND-INERAL3HOWINANDHASGAINED
POPULARITYINTHEWIDERGLOBALMARKETSSINCETHEN

2.4.  Exploration  activities

 4HEISSUINGOFMINERALEXPLORATIONLICENCESIN%THIOPIAHASINCREASEDINPARTICULAROVERTHELAST YEARS
&IGURE 4HEREARECURRENTLYABOUTISSUEDEXPLORATIONLICENCESREGISTEREDATTHECENTRALLICENSING
OFlCE-INISTRYOF-INESANDTHEMAJORITYOFTHESEAREFORPRECIOUSANDBASEMETALS4HENUMBEROFEXPLORATION
LICENSESISLOWCOMPAREDTOOTHERMOREACTIVEMININGCOUNTRIESWITHCOMPARABLESIZEOFPROSPECTIVETERRAINS
WHERETHENUMBEROFLICENSESCANREACHSEVERALHUNDREDOREVENTHOUSANDSASFOREXAMPLEIN4ANZANIA 

Figure  2.2.  Licenses  (mainly  exploration)  issued  in  2005-­2007  (left)  and  in  2010-­2011  (right).

 4WOEXPLORATIONPROJECTSHAVEREACHEDANADVANCEDSTAGEWHEREMINERALRESERVESHAVEBEENESTABLISHED
INACCORDANCEWITHINTERNATIONALSTANDARDSSUCHASTHE*/2#CODEORTHE.) 4HESEINCLUDE!LLANA
0OTASHS$ALLOLPOTASHPROJECTAND.YOTA-INERALSS4ULU+APIGOLDPROJECT)TSHOULDBENOTEDTHATEVENAT
THISADVANCEDEXPLORATIONSTAGEVARIOUSFACTORSSUCHASTECHNICALISSUESCOMMODITYPRICElNANCINGETC
MAYMAKEANYPROJECTUNECONOMICORDELAYPROGRESS!SMENTIONEDABOVE!LLANA0OTASHPLANSTOSTART
PRODUCTIONBYMIDTOLATEWHILETHE4ULU+APIPROJECTHASBEENONHOLDDURINGTHESECONDPARTOF
BUTNEWlNANCINGHASRECENTLYPROVIDEDFORACONTINUATIONOFEXPLORATIONACTIVITIES

.INETEENCOMPANIESAREUNDERTAKINGMOREORLESSADVANCEDEXPLORATIONACROSSATOTALOFTWENTY EIGHT
LICENSES4ABLE BUTNONEOFTHESEPROJECTSHAVEPROGRESSEDFARENOUGHFORMINERALRESOURCESORRESERVES
ESTIMATESTOBEESTABLISHEDAPARTFROM4ULU+API4HEMAJORITYAREEXPLORINGFORGOLDANDBASEMETALSINTHE
NORTHERNWESTERNANDSOUTHERN0ROTEROZOICTERRAINSONEFORIRONOREINTHE!MHARAREGIONANDTWOAPART
FROM!LLANA FORPOTASHINTHE$ANAKHILDEPRESSION

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 23

Table  2.2.     More  or  less  advanced  exploration  projects  in  Ethiopia.  Mineral  reserves  or  resources  (see  footnote,  page  22)  
have  not  as  yet  been  established  in  accordance  with  internationally  recognized  standards  for  any  of  these  
projects,  except  for  Tulu  Kapi.
License  
Licensee  Name 2EGION,OCALITY Mineral  type Exploration  activities
Number
"ENSHANGUL'UMUZ
3TREAM3OIL2OCK#HIP
"ARUDA "ULEN!BLARUS 0RECIOUS
-/-< 3AMPLING4RENCHING
"AHU !NJAKOYA "ASE2ARE
< 0ITTING'ROUND'EOPHYSICS
9ABANJA7EST4ANGOY -ETALS
)NTENSIVE$RILLING
-IDROC'OLD ,OCALITIES-ETEKEL:ONE
-INE0LC "ENSHANGUL'UMUZAND
3TREAM3OIL2OCK#HIP
!MHARA-ENTAWEHA "ASE-ETALS
-/-< 3AMPLING4RENCHING
,OCALITY'UANGUA 'OLD)RONAND
%,<< 0ITTING'ROUND'EOPHYSICS
$IBATE7EREDA!GEW 2ARE-ETALS
)NTENSIVE$RILLING
!WIAND-ETEKEL:ONES
3TREAM3OIL2OCK#HIP
3AMPLING4RENCHING!STER
!SCOM-INING -/-< "ENISHANGUL'UMUZ 'OLDAND
IMAGEINTERPRETATION'ROUND
0LC < 3HUNGUAND.AZALI "ASE-ETALS
!IRBORNE'EOPHYSICS
)NTENSIVE$RILLING
$ONIA'ONDA "ENESHANGUL'UMUZ 3TREAM3OIL2OCK#HIP
-/- 'OLD"ASE
-INERAL2ESOURCE 3HERKOLE,OCALITY 3AMPLING4RENCHING'ROUND
%, -ETALS
#ORPORATION,TD !SOSSA:ONE 'EOPHYSICS$RILLING
"ENISHANGUL 'UMUZ
/DA'ODERE,OCALITY 3TREAM3OIL2OCK#HIP
2AYAN -/-< 'OLD"ASE
-ENGI/DA'ODERE 3AMPLING4RENCHING'ROUND
)NVESTMENT0LC %,<< -ETALS
7EREDAS!SSOSA 'EOPHYSICS$RILLING
+AMASHI:ONES
3TREAM3OIL2OCK#HIP
"ENSHANGUL'UMUZ 'OLD"ASE
  3AMPLING4RENCHING!IRBORNE
!SOSAAND+URMUK -ETALS
'EOPHYSICS)NITIAL$RILLING
"ENZU'OLD /ROMIA'IRJA
-INING%TH 0LC (ARAMFAMAAND'ENALE
'OLD 3TREAM3OIL2OCK#HIP
-/-< +ORCHA-EDA7ELLABU
!SSOCIATED 3AMPLING4RENCHING!IRBORNE
%,<< !DOLANA/DDO3HAKISO
-INERALS 'EOPHYSICS)NITIAL$RILLING
7EREDA"ALEAND'UJI
:ONE
4IGRAY4ERAKEMTI 3TREAM3OIL2OCK#HIP
(ARVEST-INING 'OLD"ASE
  .EFASIT(AMLO)GUB 3AMPLING4RENCHING0ITTING
0LC -ETALS
!DI .EBRID 'ROUND'EOPHYSICS$RILLING
4IGRAY2AHWA,OCALITY
3TREAM3OIL2OCK#HIP
%ZANA-INING 4)'< !SEGDE4SIMBELAAND 'OLD"ASE
3AMPLING4RENCHING0ITTING
$EVELOPMRNT0,# %,<< 4SILEMTI7EREDAS7EST -ETALS
$RILLING
4IGRAT:ONE

3TREAM3OIL2OCK#HIP
3HEBA  4IGRAY5NA$ERIAM 'OLD"ASE
3AMPLING4RENCHINGN
%XPLORATION,TD -/- ,OCALITY -ETALS
$RILLING
%,
4IGRAY!DI$AIRO
3TREAM3OIL2OCK#HIP
,OCALITY,AELAY!DIYABO
0RECIOUSAND 3AMPLING4RENCHING'ROUND
 < AND4AHTAY!DIYABO
"ASE-ETALS !IRBORNE'EOPHYSICS
7EREDAS7ESTERN
)NTENSIVE$RILLING
4IGRAY2ESOURCES 4IGRAY
)NCORPORATED0LC 4IGRAY7EST3HIRE
3TREAM3OIL2OCK#HIP
,OCALITY!DIYABO
-/-< 0RECIOUSAND 3AMPLING4RENCHING'ROUND
AND4AHTAY!DIYABO
< "ASE-ETALS !IRBORNE'EOPHYSICS
7EREDAS7ESTERN
)NTENSIVE$RILLING
4IGRAY

24 FINAL  REPORT
 4IGRAY%NTICHO,OCALITY
+OLA4EMBEN7ERIE
3TREAM3OIL2OCK#HIP
-/-< ,EHE'ANTA!FESHUM 0RECIOUSAND
3AMPLING)NTENSIVE4RENCHING
%,<< AND(AWZEN7EREDAS "ASE-ETALS
!IRBORNE'EOPHYSICS
#ENTRALAND%ASTERN
4IGRAY:ONES
/ROMIA9UBDO,OCALITY 'OLD3ILVER
/RECORP-INERALS 3TREAM3OIL2OCK#HIP
-/-< 9UBDO$ILE,ALOAND #OPPER,EAD
0LC 3AMPLING4RENCHING!IRBORNE
%,<< .OLE+ABA7EREDAS :INCAND
'EOPHYSICS$RILLING
7ESTERN7ELLEGA:ONES .ICKEL
/ROMIA'ENJI,OCALITY
'OLD3ILVER
"OJI'IMBI(ARU,ALO 3TREAM3OIL2OCK#HIP
-/-< #OPPER,EAD
!SABI.OLE+ABAAND 3AMPLING)NTENSIVE4RENCHING
%,<< :INCAND
9UBDO7EREDAS7EST !IRBORNE'EOPHYSICS
NICKEL
7ELLEGA:ONE
'OLD 3TREAM3OIL2OCK#HIP
-/-< 4IGRAY#HINI7ORK
!SSOCIATED 3AMPLING4RENCHING0ITTING
< Amba
.ATIONAL-INING -INERALS 'ROUND'EOPHYSICS$RILLING
#ORPORATION0LC -/-< 3TREAM3OIL2OCK#HIP
/ROMIA/KOTE"ORENA 'OLD"ASE
%,< 3AMPLING4RENCHING0ITTING
'UJI:ONE -ETALS
< 'ROUND'EOPHYSICS$RILLING
3TREAM3OIL2OCK#HIP
'OLD
.YOTA-INERALS /ROMIA4ULU+API 3AMPLING4RENCHING'ROUND
  0LATINUM
%TH ,TD !NCHORE77ELLEGA !IRBORNE'EOPHYSICS
'ROUP-ETALS
'EOPHYSICS)NTENSIVE$RILLING
3TREAM3OIL2OCK#HIP
-/- /ROMIA'UJI!NKORE 'OLD"ASE 3AMPLING4RENCHING'ROUND
%, 9UBDO77ELLEGA -ETALS !IRBORNE'EOPHYSICS
'EOPHYSICS)NTENSIVE$RILLING
/ROMIA3IYO(AWI7ELE
'OLD 3TREAM3OIL2OCK#HIP
 -ETU$ARIMUAND
%L-INING0LC !SSOCIATED 3AMPLING)NTENSIVE4RENCHING
 'AWA,OCALITY7ESTERN
-INERALS 'ROUND'EOPHYSICS
7ELLEGA:ONE
3TREAM3OIL2OCK#HIP
3OMALI(ARAMSAMAND 3AMPLING4RENCHING,ANDSAT
-'-'OLD-INES -/-<
(ASAMITE,OCALITY,IBEN 'OLD )MAGE)NTERPRETATION!IRBORNE
0,# <
:ONE 'EOPHYSICSPREVIOUSLYSOME
$RILLING

'OLD3ILIVER
 3TREAM3OIL2OCK#HIP
!FAR4ENDAHO AND"ASE
3TRATEX -/- 3AMPLING$RILLING
-ETALS
)NTERNATIONAL0LC %,
-/- !FAR'ABALAAND'IRA 0RECIOUSAND 3TREAM3OIL2OCK#HIP
%, ,OCALITY "ASE-ETALS 3AMPLING$RILLING
3..02$IZI3HEKA 'OLD 3TREAM3OIL2OCK#HIP
%4./-INING -/-<
AND3URMA7EREDAS !SSOCIATED 3AMPLING)NTENSIVE4RENCHING
0LC %,\<
"ENCH-AJI:ONE -INERALS 0ITTING'ROUND'EOPHYSICS
!MHARA3EKOTA 0ITTING4RENCHING'ROUND
!CCESS#APITAL !-(<
,OCALITY3EKOTA7EREDA )RON/RE 'EOPHYSICSAND)NFERRED
3ERVICES3# %,<<
:ONEONE RESOUCEESTIMATION
 !FAR-USLEYAND $RILLING$OWN(OLE,OGGING 
9ARA$ALLOL"6 0OTASH
 #RESCENT,OCALITIES 3URVEY
-/-<
'"#ENTRAL $RILLING$OWN(OLE,OGGING 
%,< !FAR"ADA 0OTASH
!FRICAN 3URVEY
<
2ESOURCES,TD
%THIOPIA  $RILLING$OWN(OLE,OGGING 
!FAR$ALLOL 0OTASH
 3URVEY
3OURCE -O--INERAL,ICENSINGAND!DMINISTRATION$IRECTORATE&EBRUARY 

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 25

2.5.  Recommendations
3UMMARIZINGTHEABOVE%THIOPIAHASPROSPECTIVEGEOLOGYBUTTHEREISONLYONEOPERATINGLARGE SCALEMINE
ANDTHEREAREFEWADVANCEDSTAGEEXPLORATIONPROJECTSCOMPAREDTOOTHERCOUNTRIESWITHPROSPECTIVEGEOLOGY
)NVESTORSAREDRAWNTOALARGEEXTENTBYGEOLOGICALPROSPECTIVITYASEXEMPLIlEDBYTHELARGEINVESTMENTS
BEINGMADEINCOUNTRIESWITHWHATISREGARDEDASUNSTABLEANDORCOMPARATIVELYLESSATTRACTIVEMINING
REGULATORYREGIMES4HEBESTMARKETINGPOSSIBLEAREhSUCCESSSTORIESvTHATINTHEMSELVESATTRACTINTEREST
ANDDRAWINVESTORSTOTHECOUNTRY)NTHEABSENCEOFSUCCESSSTORIESTHECOLLECTIONOFNEWGEOLOGICALDATA
ANDTHESUBSEQUENTMARKETINGOFTHESEDATAASSUMEVITALIMPORTANCE2ECOMMENDATIONSBELOWAREAIMED
ATATTRACTINGINVESTMENTINTOEXPLORATIONTHATMAYLEADTOLARGE SCALEMINING&ORFURTHERDISCUSSIONAND
RECOMMENDATIONSONINDUSTRIALMINERALSSEE3ECTIONSAND

!IRBORNEGEOPHYSICALDATAISOFFUNDAMENTALIMPORTANCETOMINERALEXPLORATIONANDTHEAVAILABILITYOFTHIS
TYPEOFDATAISOFVERYHIGHINTERESTTOINVESTORS!IRBORNEGEOPHYSICALSURVEYSSHOULDPRIMARILYBEUNDERTAKEN
ACROSSTHELATE0ROTEROZOICTERRAINSORPARTSOFTHESE 

'EOLOGICALMAPPINGRELIESHEAVILYONAIRBORNEGEOPHYSICALDATAANDAIRBORNEDATAISAPREREQUISITETO
QUALITYGEOLOGICALMAPPING-OREDETAILEDGEOLOGICALMAPSATAlNERSCALEEG WOULDFACILITATE
EXPLORATION4HISCOULDBECOUPLEDWITHGEOCHEMICALSURVEYSINSELECTEDREGIONS

4HEIMPLEMENTATIONOFANINTEGRATEDGEOLOGICALANDDATAANDINFORMATIONMANAGEMENTSYSTEMALSOINCLUDING
GEOCHEMICALDATAISPROPOSED3UCHASYSTEMBASEDONSPATIALDATAWOULDFACILITATETHEHANDLINGOFDATA
ANDINFORMATIONANDBEAVERYUSEFULEXPLORATIONTOOL)NITIALLYTHEESTABLISHMENTOFAPOLICYDElNINGDATA
OWNERSHIPANDRULESANDWAYSFORDISSEMINATINGDATACOULDBECONSIDERED

-O-AND'3%COULDCONSIDERESTABLISHINGAPROMOTIONSTRATEGYFORTHE%THIOPIANMINERALSECTORINCOOPERATION
WITHTHE)NVESTMENT0ROMOTION!GENCY4HISMAYINCLUDEPUBLISHINGININTERNATIONALTRADEJOURNALSAND
GENERATINGPROMOTIONALMATERIALFORWIDERCIRCULATIONPLANNEDPRESENCEATINTERNATIONALMINERALSECTOR
CONFERENCESANDEVENTSDIRECTCONTACTWITHTARGETEDINVESTORSANDPRODUCTIONOFMONTHLYNEWSLETTERS
ETC&ORAHOLISTICSTRATEGYTOTAKEINTOACCOUNTINVESTORSPOSITIVEPERCEPTIONSANDREQUIREMENTREQUESTFOR
INFORMATIONCONCERNSETCTHEFORMULATIONOFTHESTRATEGYWOULDBENElTFROMANINITIALSURVEYOFINVESTORS
PERCEPTIONOF%THIOPIAASAMININGDESTINATION)TWOULDBEIMPORTANTTOINCLUDECURRENTINVESTORSPAST
INVESTORSTHATHAVEWITHDRAWNANDPOTENTIALINVESTORS4HESURVEYSHOULDALSOINCLUDEDIFFERENTSIZED
COMPANIESIEJUNIORSANDMAJORS

)NTHESHORT TERMTHECURRENTLYAVAILABLEPROMOTIONALMATERIALMAYBEREVIEWEDANDUPDATED)NTHELONGER

TERMTHESEMATERIALSWOULDTHENBEUPDATEDCONTINUALLY

7HILETHE'3%ISCURRENTLYREDESIGNINGITSWEBSITETOBECOMEMOREUSER FRIENDLYANDATTRACTIVEANDTOMAKE

DATAANDINFORMATIONMOREACCESSIBLETHE-O-COULDALSOCONSIDERDOINGSO4HEWEBSITEISOFTENTHElRST
POINTOFCONTACTFORPOTENTIALINVESTORSANDTHE-O-WEBSITECOULDPROVIDEMOREDETAILEDINFORMATIONTO
ASSISTPOTENTIALINVESTORSINTERMSOFFOREXAMPLEAPPLICABLEREGULATORYPROCESSESANDPROCEDURES

26 FINAL  REPORT
 ©  Yara  Dallol  BV

 3#%.!2)/3&/2-).).'$%6%,/0-%.4!.$%#/./-)#
IMPLICATIONS
 4HISCHAPTERFOLLOWSONFROMTHEPREVIOUSCHAPTERSEXAMINATIONOFTHECURRENTSTATUSOFTHE%THIOPIANMINING
SECTORANDBASEDONTHISINFORMATIONITGENERATESTHREEFUTURESCENARIOSFORMEDIUMTOLARGESCALEMINE
PRODUCTIONINTHECOUNTRY4HESCENARIOSAREBASEDONEXISTINGMINESANDPROJECTSANDCURRENTEXPLORATION
ACTIVITIES'IVENTHEDERIVEDSCENARIOSPROJECTIONSFORCASHmOWSTOTHESTATEASWELLASDIRECTEMPLOYMENT
NUMBERSAREGENERATED

 %XISTINGMINESINCLUDE-IDROCS,EGA$EMBIGOLDMINEARTISANALGOLDMININGANDTHESTATEOWNED+ENTICHA

TANTALUMMINEWHEREPRODUCTIONISCURRENTLYONHOLD7ITHREGARDSTOPOTENTIALFUTUREMINESITISONLYTHE
!LLANA0OTASHS$ALLOLPROJECTTHATHASREACHEDSUCHANADVANCEDSTAGEPRE CONSTRUCTION THATONEMAY
EXPECTWITHSOMECERTAINLYTHATTHEPROJECTWILLREACHTHEPRODUCTIONSTAGE%XCEPTFOR.YOTA-INERALS4ULU
+APIPROJECTNONEOFTHEMOREORLESSADVANCEDEXPLORATIONPROJECTS4ABLE HAVEESTABLISHEDMINERAL
RESOURCESORRESERVES4HUSFUTUREPRODUCTIONRATESCANONLYBEESTABLISHEDTOALIMITEDEXTENTWITHCERTAINTY
IEBASEDONCURRENTMINESORPROJECTSTHATBEYONDDOUBTWILLBECOMEPRODUCINGMINES 4HEPROPOSED
SCENARIOSARETHUSBASEDON@NORMALRATESFOREXPLORATION MINEDEVELOPMENTSUCCESSGIVENTHEGEOLOGICAL
FOUNDATIONANDTHENUMBERANDPROGRESSOFEXPLORATIONPROJECTSANDCOMMONLEADTIMESFROMEXPLORATION
TOMINEDEVELOPMENTASFURTHERDISCUSSEDIN3ECTION

 4HEDEVELOPMENTOFECONOMICLINKAGESFROMTHEMININGSECTORISESSENTIALTOPREVENTTHEDEVELOPMENTOF
AN@ENCLAVEMININGSECTOR&ORWARDANDlSCALLINKAGESARETHEMAINFOCUSFORTHESTATEWHILEATTENTION
MUSTALSOBEPAIDTOBACKWARDLINKAGESWHICHINCLUDESARANGEOFSERVICEPROVISIONSASWELLASDEVELOPING
LOCALMANUFACTURINGCAPABILITY4HUSTHECHAPTERPROVIDESFURTHERCONSIDERATIONSOFTHEEXISTINGLINKAGES
BETWEENMININGANDOTHERSECTORSOFTHEECONOMYANDRECOMMENDATIONSAREMADEFORHOWSUCHLINKAGES
MAYBEIMPROVED

3.1.  Fundamental  geological,  exploration  and  mining  factors  to  consider

 4HEEXISTINGGOLDPROJECTSEXTENSIVEARTISANALGOLDMININGANDPOLYMETALLICPROJECTSINNEIGHBOURING%RITREA
SHOWTHEPOTENTIALFORGOLDINALLTHE0ROTEROZOICTERRAINSANDFORPOLYMETALLICDEPOSITSINPARTICULARINTHE
NORTHERNTERRAIN4ABLEINDICATESTHEAPPROXIMATESURFACEAREASUNDERLAINBYPROSPECTIVEGEOLOGYIN
SOMEGOLDPRODUCINGCOUNTRIESALONGWITHTHOSECOUNTRIESANNUALGOLDPRODUCTION4HELATE0ROTEROZOIC
TERRAINSIN%THIOPIAAREGEOGRAPHICALLYEXTENSIVEALTHOUGHITISNOTEDTHATTHEGOLDPOTENTIALOF%THIOPIACANNOT
BEDIRECTLYDERIVEDFROMTHEOTHERCOUNTRIESASGOLDIN'HANA"URKINA&ASOAND'UINEAISFOUNDINEARLY
0ROTEROZOICAND!RCHEANTERRAINSRATHERTHANLATE0ROTEROZOICTERRAINS

Table  3.1  Comparison  of  prospective  surface  areas  and  gold  production  in  2012.
Prospective  surface  area  
Country Gold  production
APPROXIMATEKM
'HANA  OZ
"URKINA&ASO  OZ
'UINEA  OZ
!PPROXIMATELYOZOFWHICHABOUTIS
Ethiopia 
REPORTEDTOCOMEFROMARTISANALMINING

3OURCE2AW-ATERIALS'ROUP

-O-%THIOPIA

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 27

  &ROMTHERECENTEXPLORATIONWORKUNDERTAKENPRIMARILYBY!LLANA0OTASHTHE$ANAKHILDEPRESSIONISKNOWN
TOHOSTLARGERESOURCESOFPOTASH)TMAYBEASSUMEDTHATATLEASTONEMINE!LLANA0OTASH WILLBEDEVELOPED
BASEDONTHESERESOURCESWITHTHEPOSSIBLEDEVELOPMENTOFADDITIONALMINESINTHEFUTURE

 %XPLORATIONFORMINERALSIN%THIOPIAHASINCREASEDSUBSTANTIALLYOVERTHELAST YEARSWHILEBOTHADVANCED

ANDGREENlELDPROJECTSARESTILLCOMPARATIVELYFEW(OWEVERFROMEARLYEXPLORATIONTOTHESTARTOFINDUSTRIAL
SCALEPRODUCTIONUSUALLYTAKESYEARSORMOREANDITMAYEVENTAKESOME YEARSFROMTHEINITIAL
ESTIMATIONOFMINERALRESOURCES4HISTIMEISUSEDTOCARRYOUTDETAILEDRESOURCEESTIMATESTODOTHEVARIOUS
METALLURGICALGEOTECHNICALlNANCIALANDENVIRONMENTALSTUDIESNECESSARYFORABANKABLEFEASIBILITYSTUDY
ANDTOARRANGElNANCINGANDPERMITTING4HESEESTIMATESMAYBESOMEWHATLOWERFORTECHNICALLYSIMPLE
SMALLERGOLDMINESANDCANBESUBSTANTIALLYHIGHERFORLARGEANDCOMPLEXPOLYMETALLICMINES

 )TISALSOIMPORTANTTOKEEPINMINDTHATFEWEXPLORATIONPROJECTSACTUALLYLEADTOMINEDEVELOPMENT&OR
EXAMPLELOOKINGATMAJORMETALSOVERARECENT YEARPERIODOUTOF GREENlELDDISCOVERIES
IN#ANADAREACHEDFEASIBILITYSTAGE&OR!USTRALIATHENUMBERSWEREOUTOFOR &ARFEWER
PROJECTSWOULDSURVIVEALLTHEWAYTOTHEMINECONSTRUCTIONSTAGE

3.2.  Proposed  scenarios  

 'IVENTHECURRENTSTATEOFMININGANDEXPLORATIONIN%THIOPIAMEDIUMTOLARGESCALEOVERTHENEXTTWENTY
YEARSISMOSTLIKELYTOBEFORGOLDPOTASHTANTALUMANDCOPPER4HEREFOREECONOMICPROJECTIONSAREMADE
ONTHEBASISOFMININGFORTHESECOMMODITIES

 'IVENFACTSABOVEANDTAKINGINTOACCOUNTTHEVERYFEWADVANCEDPROJECTSANDRELATIVELYFEWSERIOUS
GREENlELDPROJECTSIN%THIOPIATODAYEVENINTHEBESTCASEONLYAMODERATEINCREASEINNUMBEROFMINES
ANDPRODUCTIONISEXPECTEDOVERTHENEXTYEARS)NTHELONGERTERMHOWEVERTHECOMPARATIVELYLARGE
AREASWITHPROMISINGGEOLOGYCANLEADTOANUMBEROFNEWMINESANDEXTENSIONOFEXISTINGPROJECTSPROVIDED
THATEXPLORATIONACTIVITIESWILLCONTINUETOINTENSIFYINTHEFUTURE

4HREEDIFFERENTSCENARIOSTERMEDCONSERVATIVEPROBABLEANDPOSSIBLEAREGIVENIN4ABLE)TISEMPHASIZED
THATTHESCENARIOSREMAINSPECULATIVEASTHEREAREFEWADVANCEDPROJECTSPARAGRAPH ANDARANGEOFFACTORS
THATAREDIFlCULTTOPREDICTMAYDRIVEDEVELOPMENTTOWARDSEITHEROFTHETHREESCENARIOSEGGOVERNMENT
POLICYANDINPARTICULARCLARITYANDATTRACTIVENESSOFTHELICENSINGPROCEDURECOMMODITYPRICESGLOBAL
ECONOMICCLIMATETECHNICALISSUESPOLITICALRISKSSOCIALCONmICTSETC

Table  3.2.  Proposed  scenarios  for  mineral  production  over  the  next  20  years.
  -IDROCOPERATIONS,EGA$EMBI CONTINUETOPRODUCEGOLDATABOUTOZYR
FORYEARS!FTERGOINGUNDERGROUND,EGA$EMBI 3AKAROPRODUCESOZYRFOR
Conservative ANOTHERYEARS
$UETOTHEMANY   !RTISANALGOLDPRODUCTIONCONTINUESATCURRENTLEVELSTYR
POSSIBLERISKS   4HEONLYADVANCEDMETALSPROJECT.YOTAS4ULU+APIPREVIOUSLYBELIEVEDTOGOINTO
EXPLORATIONIN MININGINISNOTREALIZED
%THIOPIAISNOT   4ANTALITEPRODUCTIONREMAINSHALTED
INTENSIlED
  !LLANA0OTASHWILLSTARTPRODUCINGBYMIDTOLATEBUTATHALFTHEPLANNEDRATE
-TYR DUETOUNFORESEENPRODUCTIONORLOGISTICALISSUES
  -IDROCOPERATIONS,EGA$EMBI CONTINUETOPRODUCEGOLDATABOUTOZYRFOR
YEARS!FTERGOINGUNDERGROUND,EGA$EMBI 3AKAROWITHSOMERESOURCEEXTENSIONS
CONSIDEREDLIKELYPRODUCEOZYRFORANOTHERYEARS
Probable
  !RTISANALGOLDPRODUCTIONCONTINUESATCURRENTLEVELSABOUTTYR
/NLYSMALL   4ULU+APIORANOTHERSMALLGOLDDEPOSITISIDENTIlEDSTARTSPRODUCINGOZA
INCREASEIN IN
MININGPRIMARILY   /NEOTHERSMALLGOLDDEPOSITIDENTIlEDSTARTSPRODUCINGOZAIN
due  to  the  
COMPARATIVELYFEW   4WOSMALLGOLDDEPOSITSAREIDENTIlEDSTARTPRODUCINGOZAEACHFROM
ADVANCEDPROJECTS   4ANTALITEOREPRODUCTIONRE STARTSINABOUTTYRINACCORDANCEWITH
ANDLOWINTENSITY GOVERNMENTALPLANS ANDREMAINSATTHISLEVELASTHEDEPOSITISDEPLETEDANDNEW
OFEXPLORATION DEPOSITSAREIDENTIlED
  !LLANASTARTSPRODUCINGANDEXPORTINGPOTASHASPLANNEDAT-TYRBYMIDTOLATE
  !NOTHERSMALLERPOTASHOPERATIONSTARTSPRODUCINGINAT-TYR

 2AW-ATERIALS'ROUP 

28 FINAL  REPORT
   -IDROCOPERATIONS,EGA$EMBI CONTINUETOPRODUCEGOLDATABOUTOZYRFOR
YEARS!FTERGOINGUNDERGROUND,EGA$EMBI 3AKAROWITHSOMERESOURCEEXTENSIONS
CONSIDEREDLIKELYPRODUCEOZYRFORANOTHERYEARS
  !RTISANALGOLDPRODUCTIONCONTINUESATCURRENTLEVELSABOUTTYR
  4ULU+APIORANOTHERSMALLGOLDDEPOSITIDENTIlEDSTARTSPRODUCINGOZAIN

  /NEOTHERSMALLGOLDDEPOSITISIDENTIlEDSTARTSPRODUCINGOZAEACHFROM
Possible 
7ILLREQUIRE   !LARGERGOLDDEPOSITISIDENTIlEDSTARTSPRODUCINGOZABY
VERYSTRONG   4WOSMALLGOLDDEPOSITSAREIDENTIlEDSTARTPRODUCINGOZAEACHFROM
INTENSIlCATION
OFEXPLORATION   4ANTALITEOREPRODUCTIONRE STARTSINABOUTTYRINACCORDANCEWITH
ACTIVITIES GOVERNMENTALPLANS ANDREMAINSATTHISLEVELASTHEDEPOSITISDEPLETEDANDNEW
DEPOSITSAREIDENTIlED
  !LLANASTARTSPRODUCINGANDEXPORTINGPOTASHASPLANNEDAT-TYRBYMIDTOLATE

  !NOTHERSMALLERPOTASHOPERATIONSTARTSPRODUCINGINAT-TYRANDINCREASES
PRODUCTIONTO-TYRIN
  !6-3DEPOSITISIDENTIlEDSTARTSPRODUCINGGOLDOZYR FROMAND
COPPERKTYR FROM

3.3.  Revenue  and  employment  potential  

!SSUMINGTHECURRENTCORPORATEINCOMETAXRATEOFISMAINTAINEDANDROYALTYRATESAREKEPTATTHE
PRESENTLEVELPRECIOUSMETALSMETALLICMINERALSANDINDUSTRIALMINERALS 4ABLESHOWSTHE
ESTIMATEDECONOMICIMPACTFROMTHETHREESCENARIOS#ORPORATETAXATIONANDROYALTYREVENUEGENERATED
FROMTHEPROJECTSAREESTIMATEDONTHEPROJECTEDPRICESEEBELOW ANDTONNAGEFORECASTFORTHEPROJECTS
%MPLOYMENTSRATESAREBASEDONTHEDIRECTEMPLOYMENTATMINESITEBASEDONASSUMEDSCALEOFTHESE
PROJECTSANDDONOTINCLUDESECONDARYEMPLOYMENTORARTISANALMINERS 

)NgoldACCOUNTEDFOROFTHEVALUEOFGLOBALMINEPRODUCTIONEXCLUDINGCOAL (OWEVERBETWEEN

 GOLDOREPRODUCTIONISEXPECTEDTODECREASEBY/REGRADESFORGOLDAREALSOLIKELYTOFALL
FROMGPTINTOGPTBY)NGENERALGOLDMINESHAVEEXPERIENCEDCONSIDERABLEINCREASE
INCOSTSANDHAVEHADDIFlCULTIESMEETINGOUTPUTTARGETS!FRICACURRENTLYACCOUNTSFOROFPROJECT
PIPELINECAPITALEXPENDITURESFORGOLDWITH3OUTH!FRICA4ANZANIA'HANAAND"URKINA&ASOACCOUNTING
FORJUSTBELOWHALFOFTHESEPROJECTS4HEPRICEOUTLOOKFORGOLDWOULDINDICATEAPRICERANGEOF53$
AND53$OZTILLBELOWTHE53$PRICEREACHEDINAND 

Potash,MAINLYUSEDBYTHEAGRICULTURALSECTORISLIKELYTOSEESTRONGDEMANDINTHENEXTDECADEPARTICULARLY

FROMEMERGINGECONOMIESSUCHAS"RAZILAND#HINA4HEGLOBALPOTASHMARKETSAREDOMINATEDBYSUPPLIES
FROM#ANADAAND2USSIAAND%THIOPIANPRODUCTIONWILLBEASMALLSHAREOFTHEGLOBALMARKET)NRECENT
DEVELOPMENTSTH*ULY THEPRICEEXISTINGCARTELFOR0OTASHTOOKAMAJORBLOWWHEN5RALKALIMAJOR
2USSIANPRODUCER WALKEDAWAYFROMPRICEAGREEMENTSINSTEADCHOOSINGTOPURSUEAPOLICYOFSALESVOLUME
OVERPRICE#ONSEQUENTLYPRICEFORMATIONINTHE0OTASHMARKETSISmUIDATTHISTIMEASSTAKEHOLDERSADJUSTTO
THERAMIlCATIONSOFTHEBREAKUPOFTHEPRICECARTEL"YTHEENDOFPRICESPLUNGEDTOBELOW53$
TONNERELATIVETOTHEHIGHOF53$TONNEATTHESTARTOFTHEYEAR)NPRICESTABILISATIONISEXPECTED
AROUNDTHE53$TONNEMARK4HEMAJORIMPACTOFTHISPRICEFALLWOULDBEONTHECONTINUEDFEASIBILITY
OFPOTASHPROJECTSINTHECOUNTRYANDTHEEXPECTEDIMPACTONREVENUESDUETOLOWERPRICES0OTASHEXPORTS
HAVENOTBEGUNYETBUTTHEFALLININTERNATIONALPOTASHPRICESWILLHAVEANIMPACTONCONTINUEDINVESTMENT
INTHESECTORASWELLASREVENUEGENERATIONFORTHESTATEFROMTAXATION

0RICESFORtantalumARESUBJECTTOSHARPCHANGESGIVENTHELIMITEDNUMBEROFSUPPLIERSINTHESECTOR4HEREFORE
CHANGESINONEMAJORPRODUCERCANCAUSESUBSTANTIALmUCTUATIONS7HILETHEAVERAGEFORTHEMETALOVER
THE DECADEHASBEENAROUND53$KGSPIKESININCREASEDPRICESTONEARLY53$
KGFORASHORTPERIOD4HESESHORTPRICESPIKESAREUSUALLYASARESULTOFPANICBUYINGBYCONSUMERSWHEN
MINEPRODUCTIONISHALTEDORINVENTORYLEVELSAREPERCEIVEDTOBELOW(OWEVERASSOONASSUPPLYISRESTORED
THEPRICESRETURNTOTHEIRAVERAGELEVELS#HANGESINTHEDEMANDFORELECTRONICEQUIPMENTTHEMAINUSEFOR
TANTALUMWILLAFFECTPRICELEVELS0RICESFORTHENEXTTHREEYEARSAREFORECASTAT53$TO53$KG

CopperPRICESGENERALLYREmECTTHESTATEOFTHEGLOBALECONOMYWITHCOPPERPRICESRISINGINPERIODSOF
ECONOMICGROWTH)NRECENTYEARSGLOBALCOPPERDEMANDHASMAINLYBEENDRIVENBY#HINESEDEMANDAND
PRICEmUCTUATIONSOFTENOCCURINRESPECTTOCHANGESINTHEPERFORMANCEOFTHE#HINESEECONOMY)N
COPPERPRICESRECEDEDSOMEWHATFROMTHEIRPREVIOUSHIGHSINTHE53$TONANDTHEYCURRENTLYRESIDE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 29

 INTHE53$TONREGION#OPPERPRICESAREFORECASTTOFALLMARGINALLYINASNEWPRODUCTIONCOMES
ONLINE WITHARETURNTOAROUND53$IN)NTHELONGTERMUNTIL COPPERPRICESSHOULD
AVERAGEATTHE53$TONMARK

4HESCENARIOSPRESENTEDIN4ABLEREmECTTHEPRESENTLIMITEDDEVELOPMENTOFLARGEANDMEDIUMSCALE
MININGIN%THIOPIAWITH,EGA$EMBIBEINGTHEONLYCURRENTMINEINPRODUCTIONANDWITH!LLANA0OTASHAND
+ENTICHATANTALUM EXPECTEDTOSTARTPRODUCTIONINTHENEXTTWOYEARS4HEMAJORITYOFTHEOTHERPROJECTS
INCLUDEDINTHEPOSSIBLEANDPROBABLESCENARIOSARENOTEXPECTEDTOCOMEONLINEBEFOREMAKING
PRICEFORECASTSFORTHEIRMINERALPRODUCTIONOPENTOCONSIDERABLEUNCERTAINTYANDMARGINSOFERROR

Table  3.3.    Estimation  of  economic  impact  (corporate  tax  and  royalties)  and  employment  based  on  development  
scenarios.
%CONOMIC)MPACTMILLION53$   2024  
#ONSERVATIVE     
0ROBABLE     
0OSSIBLE     
$IRECT%MPLOYMENT0OTENTIAL.UMBER
#ONSERVATIVE     
0ROBABLE     
0OSSIBLE     

&IGURESHOWSTHEREVENUEFROMTHESALESOFTHEPROJECTSLISTEDIN4ABLE4HESHARPRISEINREVENUE
ISMAINLYLINKEDTOSTARTPRODUCTIONOFNEWGOLDPROJECTSWHILETHEFALLINREVENUEINISLINKED
TODEPLETIONOFRESOURCESAT-IDROCS,EGA$EMBIMINE!SNEWPRODUCTIONCOMESONLINEFORGOLDIN
REVENUESPICKUPAGAIN

)NAPROBABLESCENARIOITISPROPOSEDTHATTHEMINERALSECTORCOULDGENERATEREVENUEUPTO53$BILLION
BYANDINANOPTIMISTICSCENARIOSOME53$MILLIONSEEGRAPHABOVE )NTHEPROBABLESCENARIO
THEREVENUECORRESPONDSTOABOUTOFTHECURRENTEXPORTVALUEOFGOLDIN4ANZANIA53$IN 
ANEMERGINGMININGECONOMYDOMINATEDBYGOLDPRODUCTION)N'HANAWHICHHASALONGMININGHISTORY
WHEREGOLDACCOUNTSFORMORETHANOFTHETOTALMINEDVALUEGOLDEXPORTSWEREWORTHALMOST53$
BILLIONIN

3000

2500

2000
USD Millions

1500

1000

500

0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035

Conservative Probable Possible

Figure  3.1.  Conservative,  possible  and  probable  sales  revenues.

)NTOTALSALESFROMTHEMININGSECTORIN!FRICAWHEREVALUEDAT53$BILLIONTHISDOESNOTINCLUDE
MININGFORINDUSTRIALMINERALS REPRESENTINGNEARLYOFTHECONTINENTS'ROSS0RODUCT)N!FRICAMETAL
MININGANDCOALMININGAREABOUTTHESAMEMAGNITUDEINTERMSOFVALUE!MONGTHEMETALSGOLDCOPPERAND
IRONOREMAKEUPMORETHANHALFOFTHEVALUE)FONEASSUMESTHATTHEGEOLOGYOF%THIOPIAISASPROSPECTIVE
ASTHE!FRICANhAVERAGEvTHENTHESENUMBERSWOULDIMPLYTHATTHEPRESENTDAYECONOMICPOTENTIALFORTHE
DEVELOPMENTOFTHE%THIOPIANMININGSECTORWOULDBETOACHIEVEANANNUALTURNOVEROFNEARLY53$BILLION
WITH%THIOPIACOVERINGKMÜOF!FRICASSURFACE 

30 FINAL  REPORT
3.4.  Current  and  projected  economic  linkages  
%XPLORATIONACTIVITIESMAYGENERATEBACKWARDLINKAGESTHROUGHTHENEEDFORLOGISTICALSERVICESLABORATORYAND
TESTINGSERVICESANDOTHERSUPPLEMENTARYSERVICES4ELECOMMUNICATIONSANDLOGISTICSARETHELARGERSECTORS
THATCANBENElTFROMDEVELOPMENTOFBACKWARDLINKAGES(OWEVERRESTRICTIONSONFOREIGNPARTICIPATIONIN
TELECOMMUNICATIONANDLOGISTICSWITHOUTTHEEXISTENCEOFCOMPETITIVENATIONALALTERNATIVESEFFECTIVELYMEANS
THATTHEFULLPOTENTIALOFCREATINGBACKWARDLINKAGESINTHISREGARDISNOTBEINGACHIEVED/THERSERVICES
SUCHASTHEEXISTENCEOFNATIONALLYBASEDLABORATORYANDTESTINGPROVISIONOFSECURITYCATERINGACCOUNTING
AND)4SERVICESCANALSOBEEXPANDED%FFECTIVEPARTICIPATIONBYTHEPRIVATESECTORCANCONTRIBUTETOCOST
REDUCTIONSINPROVIDINGTHESESERVICESWHICHINTURNCONTRIBUTESTOAMOREATTRACTIVEINVESTMENTENVIRONMENT
FORMININGANDEXPLORATIONlRMS(IGHERPARTICIPATIONRATESCANLEADTOINCREASEDEMPLOYMENTANDINCOME
OPPORTUNITIES

,ARGESCALEINTERNATIONALMINEOPERATORSTENDTOIMPORTNECESSARYEQUIPMENTANDMATERIALIFNOTFOUND

DOMESTICALLY&URTHERINTERNATIONALSUPPORTlRMSSUCHASEQUIPMENTPROVIDERSLOGISTICALSERVICESCHEMICALS
ANDOTHERMATERIALINPUTSLABORATORYSERVICESETCTENDTOFOLLOWANDBECLOSELYASSOCIATEDWITHNEWLARGE
MININGPROJECTS4HISINTURNRESTRICTSPOSSIBILITIESTODEVELOPWITHINCOUNTRYLINKAGES7HILE-O-HAS
CONCENTRATEDONATTRACTINGEXPLORATIONANDMININGlRMSITCOULDALSOLOOKATTHENEEDSOFTHEMINING
SECTORINTERMSOFINPUTSFROMOTHERTYPESOFlRMSANDSECTORS#OORDINATIONWITHOTHERMINISTRIESSUCH
ASTHE-INISTRYOF)NDUSTRYAND-INISTRYOF%DUCATION TODEVELOPTHESECAPACITIESLOCALLYINSTEPWITHTHE
DEVELOPMENTOFTHEMINERALSECTORWILLENSUREGREATERBACKWARDLINKAGESINTHEECONOMYAREESTABLISHED

#URRENTLYTHECONTRIBUTIONOFTHEMININGSECTORTOEXPORTINCOMESISLIMITEDTOREVENUESBEINGGENERATEDFROM
GOLDANDGEMSTONEEXPORTSWITHPOTASHEXPORTSEXPECTEDTOCOMEONLINEINTHENEXTTWOYEARS0RODUCTION
OFINDUSTRIALMINERALSISLIMITEDTODOMESTICCONSUMPTION

4HECURRENTMINERALPRODUCTIONISSMALLWHICHINTURNEXPLAINSALOWLEVELOFEXISTINGLINKAGESBOTHFORWARD

ANDBACKWARDWITHTHERESTOFTHEECONOMY%MPLOYMENTLEVELSINTHELARGESCALEMININGSECTORAREALSO
LOWANDTHEREISLITTLEEVIDENCESEENSOFAROFTHESECTORLINKINGWITHTHEINDUSTRIALANDMANUFACTURINGSECTOR
-ININGOFLIMESTONEANDOTHERINDUSTRIALMINERALSAREHOWEVERUSEFULLYANDSTRONGLYCONTRIBUTINGTOAND
LINKINGWITHTHECEMENTANDCONSTRUCTIONSECTORS

4HE,EGA$EMBIMINEOFFERSLOCALEMPLOYMENTANDALSOGENERATESSIGNIlCANTSECONDARYANDASSOCIATED
EMPLOYMENT/VERALLFORWARDLINKAGESFROMGOLDARELIMITEDASNEARLYOFTHEVALUEISCREATEDATTHE
MINESTAGEANDNOTFROMBENElCIATION"ACKWARDLINKAGESINTERMSOFINPUTSINTOMININGOPERATIONSSUCH
ASSERVICEPROVISIONCHEMICALINPUTSMACHINERYETC HAVEGREATERPOTENTIAL&OREXAMPLEIN'HANATHE
GOLDMININGSECTORCONTRIBUTESAROUNDTO'$0EMPLOYINGNEARLYPEOPLE4HECOUNTRYSCAPITAL
EXPENDITUREBYTHEGOLDSECTORlRMSWAS53$MILLIONWITHLOCALPURCHASESEXCLUDINGFUELPOWER WERE
53$MILLIONIN)NADDITIONVOLUNTARYCONTRIBUTIONSTOWARDSCOMMUNITYDEVELOPMENTPROJECTSBY
JUSTONEOFTHEGOLDMININGlRMSAMOUNTEDTO53$MILLIONINALONE-ORRISETAL 

4ANTALUMEXPORTSFROM%THIOPIAHAVEBEENSPORADICWITHFEWLINKAGESCURRENTLYBEINGEVIDENT4ANTALUM
ISUSEDINCHEMICALPROCESSEQUIPMENTCAPACITORSNUCLEARREACTORSANDAIRCRAFTPARTSANDTHEREFOREIS
UNLIKELYTOSERVEASARAWMATERIALFORTHEDOMESTICMANUFACTURING&URTHERTHEPRODUCTIONAT+ENTICHAIS
ASSOCIATEDWITHCHALLENGESWITHREGARDSTOPROCESSINGASTHEPRODUCTHASELEVATEDLEVELSOFRADIOACTIVITY
(ENCEINTHISCASEINITIATIVESRELATEDTOIMPROVETHEPROCESSINGANDTHEREBYADDINGVALUETOTHEPRODUCT
WOULDBEMOSTBENElCIALANDITWOULDRESULTINHIGHEREXPORTREVENUES!SSESSMENTSNEEDTOBECONDUCTED
WEIGHINGTHECOSTSANDBENElTSFROMCONTINUINGTOEXPORTTANTALITEORETOINITIATINGABENElCIATIONEXERCISE
THATCANBECOSTLY

0OTASHMININGWITHPOTASHBEINGANINTERNATIONALLYTRADEDCOMMODITYOFFERSSUBSTANTIALOPPORTUNITIES
FORECONOMICLINKAGES)THASAPOTENTIALTOCONTRIBUTESUBSTANTIALLYTOTHEDOMESTICAGRICULTURALSECTOR)N
TERMSOFFORWARDLINKAGESTHE!LLANA0OTASHPROJECTWILLCONTRIBUTETOTHElSCALLINKAGESTOTHEECONOMY
THROUGHEXPORTANDTAXREVENUES%MPLOYMENTCREATIONISEXPECTEDTOBEAROUNDJOBSONCETHEFACILITY
ISINPRODUCTIONWITHEMPHASISBEINGPLACEONRECRUITINGLOCALLY(OWEVERFORSOMESKILLEDJOBSEXPATRIATE
LABOURISREQUIREDGIVENTHELACKOFCERTIlCATIONOFDOMESTICLABOUR4HISFOLLOWSASINTERNATIONALOPERATORS
PARTICULARLYTHOSEHEADQUARTEREDIN.ORTH!MERICAAND%UROPEAREREQUIREDTOENSURETHATMINESITE
PERSONALHAVEINTERNATIONALLYACCEPTABLEQUALIlCATIONSWHICHARENOTAVAILABLEFORDOMESTICLABOUR

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 31

 4HEAGRICULTURALSECTORISTHEMAINSTAYOFTHE%THIOPIANECONOMYANDLINKAGESFROMTHEMININGSECTOR
FROMPOTASHMAYCONTRIBUTESIGNIlCANTLYTOINCREASEDAGRICULTURALPRODUCTIVITY7ITHTHEAGRICULTURALSECTOR
BEINGRESPONSIBLEFOROFTHE'$0ANDOFTOTALMERCHANDISEEXPORTREVENUESLINKAGESBETWEENTHE
MININGSECTORANDAGRICULTUREAREOFHIGHIMPORTANCETOTHESTATE%THIOPIAMAYGAINFROMANINCREASEIN
AGRICULTURALPRODUCTIVITY&OREXAMPLECURRENTLYFORCEREALITSYIELDAREATHGHA COMPAREDTO%GYPTS
HGHA OR:AMBIASHGHA 4HEESTIMATEDCONSUMPTIONOFFERTILIZERSIN%THIOPIAIN
WASTONNESPERYEARWHEREASTHEREQUIREDCONSUMPTIONTOREACHNATIONALAGRICULTURALPRODUCTIVITY
OBJECTIVESINISESTIMATEDATMILLIONTONNESPERYEAR.OTONLYDOESFERTILIZERCONSUMPTIONNEEDTO
DOUBLEBUTAMOREDIVERSERANGEOFFERTILISESAPARTFROMONLY52%!AND$!0 ISALSOREQUIRED7ITHTHIS
NEEDINMIND!LLANA0OTASHANDTHE!4!HAVESIGNEDAMEMORANDUMOFUNDERSTANDINGIN&EBRUARY
TOFUNDANATIONALFERTILIZERBLENDINGPROGRAMTODEMONSTRATETHEBENElTSOFPOTASHTHROUGHSYSTEMATIClELD
TRIALS

!PARTFROMPOTASH%THIOPIAHASSEVERALTYPESOFINDUSTRIALMINERALDEPOSITS4ABLE BUTONLYCEMENT

RAWMATERIALSANDDIMENSIONSTONEAREMINEDATANINDUSTRIALSCALE!PARTFROMCEMENTRAWMATERIALSAND
DIMENSIONSTONESALTANDSILICASANDAREMINEDQUITEEXTENSIVELYTHROUGHSMALL SCALEANDARTISANALMINING
'YPSUMCLAYSKAOLINETCHAVEBEENMINEDONASMALLSCALEINTHEPAST

-ANYOFTHEINDUSTRIALMINERALSANDCOAL AVAILABLEIN%THIOPIAAREIMPORTEDANDTHEREISCERTAINLYSCOPEFOR
THESECTORTOGROWPRIMARILYTOSERVETHEDOMESTICMARKET/FTHEINDUSTRIALMINERALSTHATAREIMPORTEDTHEY
ARELARGELYSOURCEDFROM#HINAANDTHE%UROPEAN5NIONWHILECOALISIMPORTEDFROMTHE%UROPEAN5NION
ASWELL5KRAINE)NTHEPASTATTEMPTSTOSUPPLYTHEDOMESTICMARKETWITHINDUSTRIALMINERALSHAVEFAILED
MAINLYDUETOINCONSISTENTSUPPLYANDTHELACKOFPROPERSPECIlCATIONSFORTHEDIFFERENTPRODUCT-ORGAN
 

Table  3.4  Overview  of  key  industrial  minerals  resources.

Commodity Main  application 0RODUCTIONPOTENTIAL
,IMESTONE #EMENTPRODUCTION !LLCEMENTRAWMATERIALSAREREADILYAVAILABLEANDMINED
'YPSUM WITHIN%THIOPIA4HECURRENTCEMENTPRODUCTIONCAPACITY
ISTWICETHEDOMESTICDEMAND
0UMICE
#LAY
"ASALT
3ANDSTONE
$IMENSIONSTONE "UILDINGCONSTRUCTION ,OCALLYPRODUCEDDIMENSIONSTONEISUSEDEXTENSIVELYIN
MARBLEGRANITE EXTERIORANDINTERIORAPPLICATIONSIN%THIOPIA4HEREHAS
LIMESTONE ALSOBEENSOMEEXPORTINTHEPAST
"ENTONITE $RILLINGMUDBINDER 3OMETESTINGOF%THIOPIANBENTONITEINDICATESSUITABLE
PROPERTIESBUTESSENTIALLYALLBENTONITEISIMPORTED
#OAL %NERGYFORCEMENTPRODUCTION #OALISCURRENTLYIMPORTEDFORUSEASENERGYBYCEMENT
FACTORIES)NTHEFUTURELOCALLYMINEDCOALHASTHE
POTENTIALTOSUBSTITUTEFORIMPORTEDCOAL
Diatomite )NDUSTRIALlLTERSMILD 3OMETESTINGOF%THIOPIANBENTONITEINDICATESSUITABLE
ABRASIVEPESTICIDER PROPERTIESBUTMOSTISIMPORTEDTHEREISSOMEARTISANAL
ABSORBANT MINING 
+AOLIN #ERAMICSTOOTHPASTElLLER -OSTOFTHEKAOLINUSEDIN%THIOPIAISPRODUCEDIN
PAINTPRODUCTION COUNTRYBUTSOMEISIMPORTED
3ILICASAND 'LASSWARE 3ILICASANDASWELLASOTHERINGREDIENTSFORGLASS
DOLOMITEFELDSPARLIMESTONE AREMINEDLOCALLYBUTTHERE
AREISSUESRELATEDTOTHECONSISTENCYOFQUALITYDELIVERED
3ODAASH 0RODUCTIONOFCAUSTICSODAFOR -OSTSODAASHUSEDISIMPORTEDWHILETHEREAREPLANSTO
MANUFACTURINGOFDETERGENTS UPGRADETHEPLANTAT,AKE!BIYATATOMEETTHEDOMESTIC
DEMAND
3OURCES 4ADESSE VARIOUSPROMOTIONALDOCUMENTSAVAILABLEATTHE'3% WWWGSEGOVETACCESSED.OVEMBER 
 DISCUSSIONSWITH-O-STAFF

32 FINAL  REPORT
-ARBLEEXPORTSGENERATESOMESMALLREVENUESONLYANDTHEACTIVITIESMAYBENElTFROMEFFORTSTOINCREASE
THESCALEOFPRODUCTIONANDTOGENERATEBETTERLINKAGESWITHOTHERACTIVITIES-OSTOFTHEMARBLEISPRODUCED
BYONEDOMINANTlRM.ATIONAL-INING#ORPORATIONWHICHOWNTHE!WASH-ARBLEPROCESSINGPLANT$ALLETI
-ARBLE1UARRYAND(ARAR1UARRY ANDTHETOTALVALUEOFPRODUCTIONWASSOME53$IN-ARBLE
ISALSOUSEDINTHECONSTRUCTIONSECTORWHEREDOMESTICCONSUMPTIONARELIKELYTOINCREASEWITHTHECONTINUED
INVESTMENTSINTHATSECTOR7HILEMARBLEPRODUCTIONBOTHFORDOMESTICCONSUMPTIONANDEXPORTS CANBE
INCREASEDTHECURRENTSTRUCTUREONEDOMINANTPRODUCERNUMEROUSSMALLSCALEPRODUCERS OFPRODUCTION
MAYNEEDTOSHIFTTOWARDSAGREATERNUMBEROFLARGEANDMEDIUMSCALEPRODUCERSFORGREATEREMPLOYMENT
ANDINDUSTRIALLINKAGESTOBEREALIZED

4HE#EMENT)NDUSTRYIN%THIOPIAHASEXPANDEDRAPIDLYINTHEPASTlVEYEARSBUILDINGMAINLYONRAWMATERIALS
SOURCEDFROMWITHINTHECOUNTRY4HE'40SAIMISTORAISETHECOUNTRYSTOTALCURRENTPRODUCTIONCAPACITYTO
MILLIONTONSPERANNUMBY4HEREVIEWSOFTHE'40REPORTSTHETOTALCURRENTCAPACITY
OFTHESECTORTOBEATMILLIONTONS4OSUPPORTTHEDOMESTICINDUSTRY%THIOPIABANNEDCEMENTIMPORTS
IN-ARCH

#EMENTPLANTSAREOFTENCAPITALINTENSIVELARGESCALEPROJECTSDOMINATEDBYMULTI NATIONALCOMPANIESTHE

LARGESTCOMPANYINTHEWORLD,AFARGE ALONEHASACAPACITYOFMILLIONTONSPERYEAR)N%THIOPIATHE
CEMENTSECTORISDOMINATEDBYDOMESTIClRMSWITHONLYONEPLANTPARTLYOWNEDBY3OUTH!FRICAS0RETORIA
0ORTLAND#EMENT)TISREPORTEDTOEXISTTOCEMENTPRODUCERSINTHECOUNTRYTOOFTHESEARELARGE
CEMENTMANUFACTURERSWITHACOMBINEDCAPACITYTOPRODUCETOMILLIONTONSYEAR4HEREAREFOUR
MAJORINTEGRATEDCEMENTPLANTSWITHTHREELOCATEDIN/ROMIAANDONEINTHENORTHOFTHECOUNTRYCLOSETO
THE%RITREANBORDER4HEMAJORCEMENTFACTORIESOWNTHEIROWNQUARRYSITESINCLUDINGTHOSEFORLIMESTONE
GYPSUMANDSAND )N$ANGOTE#EMENTALARGEANDWELLESTABLISHEDCEMENTPRODUCERFROM.IGERIA
HASSTARTEDCONSTRUCTIONOFITSPLANTIN-UGERVALLEYWITHAMILLIONTONCAPACITYTOCOMEONLINEINTHE
SECONDHALFOF

4HERAWMATERIALSFORCEMENTAREMAINLYLIMESTONEGYPSUMCLAYANDSILICASAND#EMENTPLANTSWILL

NORMALLYOPERATETHEIROWNQUARRIESWITHPLANTSLOCATEDCLOSETOQUARRYSITESTOREDUCECOSTOFTRANSPORTING
RAWMATERIALTOAMINIMUM2AWMATERIALSAREUSUALLYLESSTHANOFTHECOSTOFPRODUCTIONANDTHE
MAJORFACTORSFORECONOMICEFlCIENCYARECOSTSOFTRANSPORTENERGYCOSTSANDTHECAPITALINVESTMENTIN
THEPLANTS4RANSPORTATIONCOSTSPLAYALARGEROLEINDETERMININGTHESITEOFCEMENTPLANTSWITHPRODUCERS
GENERALLYPREFERRINGTOCHOOSESITESCLOSETOTHEIRSOURCEOFRAWMATERIALS%NERGYCOSTSFUELOIL WASREPORTED
TOACCOUNTFOROFTHEPRODUCTIONCOSTSOFTHEMAJORCEMENTPLANTSOPERATINGIN%THIOPIAIN

4HECURRENTPERCAPITACEMENTCONSUMPTIONISESTIMATEDATKGYEARANDTHEGOVERNMENTWISHESTO
INCREASETHISTOKGYRBY4HISISINLINEWITHTHEHEAVYINFRASTRUCTUREINVESTMENTSBEINGMADEBY
THEGOVERNMENTINCLUDINGTHECONSTRUCTIONOFTHE-ILLENNIUM2ENAISSANCE$AM ASWELLASTHEINCREASE
INCONSTRUCTIONACTIVITIESWILLINCREASETHEDEMANDFORCEMENTINTHENEXTlVEYEARS(OWEVERWHILETHIS
lGUREISSTILLBELOWTHEGLOBALAVERAGEOFKGYRITISDOUBTFULWHETHERTHE%THIOPIANECONOMYREALLYCAN
ABSORBAPRODUCTIONOFKGYR4OILLUSTRATETHISITMAYBEOBSERVEDTHATWHILSTTHE#HINESEECONOMY
SUPPORTSAPERCAPITACEMENTCONSUMPTIONOFKGYRIN)NDIATHISNUMBERISKGYR&URTHERTHE
CEMENTPRODUCTIONIN*ULYWASREPORTEDATMILLIONTONSWHILEDEMANDWASREPORTEDATMILLION
TONS%VENWITHEXPECTATIONSOFDEMANDPICKINGUPINTHENEXTFEWYEARSTHEINDUSTRYFACESASERIOUSRISK
OFOVER SUPPLYWHICHWILLFORCESOMEACTORSOUTOFTHESECTOR

4HEEXPORTOFSURPLUSCEMENTMAYBECONSIDERED(OWEVERREGIONALLY+ENYAHASANESTABLISHEDCEMENT

INDUSTRYANDMAYNOTSERVEASAPOSSIBLEMARKET3OMALIASDEMANDFORCEMENTGIVENITSTENSEPOLITICAL
ANDECONOMICSITUATIONISUNSTABLEANDSMALL3OUTH3UDANCOULDBEAPOSSIBLEMARKETFORCEMENTEXPORTS
HOWEVERTHISPOTENTIALNEEDSFURTHERINVESTIGATION7HILEEXPORTINGOUTSIDETHE!FRICANREGIONISAPOSSIBILITY
ITISNOTEDTHATTHEGLOBALCEMENTMARKETISHIGHLYCOMPETITIVE

4HE'40TARGETSTHESETTINGUPOFCAUSTICSODAANDSODAASHINDUSTRIESUSINGLOCALLYAVAILABLERAWMATERIAL
4HETARGETSINCLUDEDINCLUDEESTABLISHINGACAUSTICSODAMANUFACTURINGPLANTWITHTHECAPACITYOF
TONSPERYEARASWELLASASODAASHPLANTWITHTHECAPACITYTOPRODUCETONSPERYEAR

%THIOPIASIMPORTANTPRODUCERSANDSTAKEHOLDERSINVOLVEDINTHECAUSTICSODAANDSODAASHPRODUCTIONINCLUDE
!BIJATA3ODA!SHCOANDTHE.ATIONAL-INING#ORPORATIONANAFlLIATEOFTHE-IDROC'ROUP #URRENTLYTHERE
ISALSOONESTATEOWNEDCAUSTICSODAFACTORYOPERATINGIN:EWAY/ROMIAEMPLOYINGPEOPLE

4HE'40TARGETSFORTHE-ETALAND%NGINEERING)NDUSTRYINCLUDETHEENHANCEMENTOFTHEINDUSTRYSPRODUCTION
IMPROVEDQUALITYANDPRODUCTIVITYFOCUSONIMPORTSUBSTITUTIONANDTHEBUILDINGOFCAPACITYTOSUPPORT
OTHERMANUFACTURINGUNITS)NTERMSOFTARGETSTHISTRANSLATESINTOINCREASINGTHEGROSSVALUEOFDOMESTIC
PRODUCTSOFTHEINDUSTRYTOOVER%4"BILLIONRAISINGTHECAPACITYUTILIZINGOFTHEINDUSTRYTOAND
IMPROVEANNUALPERCAPITAMETALCONSUMPTIONTOSOMEKGBYTHEENDOFTHEPROGRAM4ARGETSALSOINCLUDE
IMPROVINGTHEPRODUCTIONANDTECHNOLOGICALCAPACITYTOBEABLETOPRODUCESPAREPARTSANDCOMPONENTS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 33

 FORMAJORMANUFACTURINGINDUSTRIESSUCHASLEATHERTEXTILESUGARCEMENTAGRO PROCESSINGCONSTRUCTION
ANDVEHICLEBODYINDUSTRIES4HE'40REVIEWREPORTSVARIOUSPROJECTSATCONSTRUCTIONANDOTHER
PHASESOFOPERATIONSBUTPROVIDESNODETAILS

)NRElNEDMETALS%THIOPIASLARGESTIMPORTSINWEREFORIRONANDSTEEL53$MILLION FOLLOWED

BYTHATFORCOPPER53$MILLION ANDALUMINIUM53$MILLION 7ITHTHEPLANNEDINFRASTRUCTUREAND
CONSTRUCTIONPROJECTSASWELLASTHEINCREASEDRATESOFURBANIZATIONTHATCANBEEXPECTEDOFTHE%THIOPIAN
ECONOMYTHEREWILLBEINCREASEDUSAGEOFIRONSTEELANDCOPPERINTHENEXTTWODECADES

7HILETHEGOALOFTHE'40ISTOINCREASEIMPORTSUBSTITUTIONFORINPUTSINTOTHEMETALANDENGINEERINGINDUSTRY
ANDEFFORTSAREBEINGMADETOWARDSMANUFACTURINGSPAREPARTSDOMESTICALLYTHEREISSTILLONLYLIMITEDLOCAL
CAPABILITYFORMETALSMELTINGANDRElNINGCAPACITY(OWEVERIN/CTOBERTHECOUNTRYEXPORTEDTONS
OFSTEELMANUFACTUREDFROMIMPORTEDSCRAPTHElRSTINTHECOUNTRYSHISTORY

Box  1:  Macroeconomic  contributions  of  mining  to  low  and  middle  Income  economies

In  terms  of  Foreign  Direct  Investment  (FDI)  mining  investments  can  in  some  cases  account  for  as  
MUCHAS OFTOTAL&$)mOWSINLOWANDMIDDLEINCOMEECONOMIESESPECIALLYINCASESWHERETHE
COUNTRYINQUESTIONISNOTSEENASBEINGANOTHERWISEATTRACTIVEDESTINATIONSFORINTERNATIONALCAPITAL
-INERALPRODUCTIONMINING ANDMINERALPROCESSINGSMELTINGANDRElNING MAYBELOCATEDINDIFFERENT
COUNTRIESTHISASPROCESSINGTOAGREATEREXTENTMAYBENElTFROMECONOMIESOFSCALEnTHUSTHEREARE
MANYFEWERPROCESSINGPLANTSSMELTERSTHANTHEREAREMINESINTHEWORLD BUTALSOASSOMETYPEOF
PROCESSINGREQUIRESHIGHLEVELSOFTECHNOLOGYANDCAPITALANDAVAILABILITYOFENERGYWHICHMAYNOTBE
READILYAVAILABLEINTHECOUNTRYWHERETHEMININGISDONE&URTHERPROCESSINGFACILITIESAREOFTENLOCALIZED
INMORECENTRALIZEDLOCATIONSAGAINDUETOTHEAVAILABILITYOFTRANSPORTMARKETSCAPITALANDOVERALL
BUSINESSENVIRONMENTS4HUSTHECONTRIBUTIONOFMININGTOTHENATIONALINCOMEINLOWANDMIDDLEINCOME
COUNTRIESMAYBECOMELIMITEDTOEXTRACTIVEACTIVITIESANDINSUCHCASESTHECONTRIBUTIONMAYBELESS
SAYINTHETOOF'$0RANGE/VERALLLARGESCALEMININGTENDSTOGENERATECOMPARATIVELYLOWLEVELS
OFDIRECTEMPLOYMENTANDMAYOFTENACCOUNTFORNOMORETHANFROMTOOFTOTALNATIONALEMPLOYMENT
INLOWINCOMECOUNTRIES-INERALEXPORTSFORSUCHCOUNTRIESCANBESUBSTANTIALACCOUNTINGFROMTO
OFALLEXPORTSPARTICULARLYINLOWINCOMEAGRARIANECONOMIES3TATEREVENUESRECEIVEDFROMTHE
MININGSECTORTHROUGHDIRECTANDINDIRECTTAXATIONCANACCOUNTFROMTOOFTOTALREVENUES4HISIS
APARTICULARLYIMPORTANTCONTRIBUTIONINLOWANDMIDDLEINCOMECOUNTRIESTHATOTHERWISEHAVELIMITEDTAX
RAISINGCAPACITY
3OURCE "ASEDON)#-- @4HEROLEOFMININGINNATIONALECONOMIES

3.5.  Recommendations
%THIOPIANPOLICYAIMSTOWARDSDEVELOPINGANESSENTIALLYNEWECONOMICSECTORTHATISTHELARGE SCALEMINERAL
SECTOR4HELEADTIMESFROMEXPLORATIONTOALARGE SCALEMINEBEINGCOMMISSIONEDARELONGOFTEN 
YEARS ANDTHUSASIMILARLYLONG TERMPERSPECTIVEISNECESSARYWHENSUPPORTINGANDMANAGINGTHESECTOR
/URPROJECTIONSSUGGESTTHATTHERAPIDDEVELOPMENTENVISIONEDMAYNOTBEREALIZEDANDTHEREFORETHE
DEVELOPMENTOFTHEMINERALSECTORCOULDBENElTFROMADOPTINGALONGERTERMVIEWBASEDONASLOWERGROWTH
RATE!LONGTERMVIEWNEEDSINGENERALTOBEBASEDONTHESECTORSPARTICULARCHARACTERISTICSSUCHASTHE
INHERENTGEOLOGICALANDlNANCIALUNCERTAINTIESTHEINDUSTRYSCYCLICALNATUREANDTECHNICALREQUIREMENTS
NEEDEDFORADVANCEDEXPLORATIONPROJECTSTOBECOMEACTUALPRODUCINGMINES

7HENDEVELOPINGTHISNEWSECTORITNEEDSTOBECONSIDEREDHOWTOBESTESTABLISHECONOMICLINKAGESWITH
OTHERNEWANDEXISTINGSECTORS4HElNDINGSOFTHISREPORTSUGGESTTHATARANGEOFAPPROACHESANDACTIVITIES
WILLBENEEDEDANDTHESEARELISTEDBELOW

)TISNECESSARYTOASSESSTHENEEDSOFTHEDOMESTICECONOMYFORINDUSTRIALMINERALSTHATCANBEGENERATED
WITHINCOUNTRY&OREXAMPLERECENTINCREASESINCEMENTPRODUCTIONCAPACITYISTENDINGTOWARDSOVERSUPPLY
FORTHEDOMESTICMARKET/VERALL%THIOPIASABSORPTIONCAPACITYNEEDSTOBEASSESSEDBEFOREMOREPROTECTION
SUCHASTHEBANONCEMENTIMPORTS ISPROVIDEDTOTHESECTOR

4HEDEVELOPMENTOFINDUSTRIALMINERALMININGWOULDBENElTFROMADETAILEDMARKETANALYSIS)NTHElRST
INSTANCEPRODUCTIONWOULDBEAIMEDFORTHEDOMESTICMARKETTOSUBSTITUTEFORIMPORTSANDSUCHANANALYSIS
SHOULDESTABLISHQUANTITIESANDQUALITIESDETAILEDSPECIlCATIONS OFDIFFERENTINDUSTRIALMINERALSREQUIRED
&OLLOWINGONPREVIOUSSTUDIESOFINDUSTRIALMINERALSDEPOSITSUNDERTAKENBYTHE'3%ADDITIONALSTUDIES
WOULDTHENBEREQUIREDTOESTABLISHWHETHERTHEDEPOSITSTHATHAVEBEENIDENTIlEDCANMEETTHEQUALITY
REQUIREMENTSOFTHEMARKET

34 FINAL  REPORT
/NEOFTHENATURALLINKAGESFROMAMININGSECTORISTOWARDSTHEBENElCIATIONOFTHEMINERALRAWMATERIAL
PRODUCEDINTHECOUNTRY!LTHOUGHTHEREISINDICATEDGEOLOGICALPOTENTIALFORBASEMETALSIN%THIOPIASUCH
MINESWILLONLYBEESTABLISHEDINTHELONGERTERMPERSPECTIVE!TTHISTIMETHUS%THIOPIASMETALAND
ENGINEERINGINDUSTRYREMAINSSMALLANDRELIANTONDOMESTICSCRAPANDIMPORTEDRAWMATERIALS%FFORTSNEED
TOBEMADETOALIGNTHEAIMSOFTHEENGINEERINGSECTORWITHTHATOFTHEIDENTIlEDPOTENTIALMINERALS

0OLICIESTOINCREASELINKAGESCANBEAIMEDATANUMBEROFDIFFERENTLEVELS4HESEARESUMMARISEDINTABLE
-ACROPOLICIESTHATPROMOTEPROPERTYRIGHTSANDPROVIDEABUSINESSFRIENDLYENVIRONMENTAREWELCOME
4ARGETEDPOLICIESFORTHEMINERALSECTORCANDIFFERONTHEBASISOFTHEMINERALPRODUCEDFOREXAMPLE
TARGETEDPOLICIESFORGOLDWILLDIFFERFROMTHOSEFORIRONORE!VALUECHAINANALYSISFOREACHMINERALCOULDBE
AUSEFULTOOLINDETERMININGWHERETHEINVESTMENTREDUCINGCOSTSAREINCURREDANDWHERETHELARGESTPROlT
MARGINISGENERATED!VALUECHAINANALYSISWILLALSOALLOWFORSTRATEGIESFORBETTERTARGETEDBACKWARDAND
FORWARDLINKAGESTOBEDEVELOPED/NAlRMLEVELTHENATUREOFTHELEADlRMCANAFFECTTHELINKAGESTHAT
AREGENERATEDANDlRMSWHICHASSISTINLOCALCAPACITYDEVELOPMENTSHOULDBEENCOURAGED

Table  3.5.  Macro,  meso  and  micro  policies  to  promote  production  linkages  to  the  resource  sector.
0ROPERTYRIGHTSSTABILITYEXCHANGERATESKILLSAND.ATIONAL3YSTEMOF
-ACRO0OLICIES
)NNOVATIONINFRASTRUCTUREINNOVATION
"ASEDONANINFORMEDANALYSISOFDIFFERENTCOMMODITIESSECTORSANDTHEIR
LINKAGESTOIDENTIFYINGFEASIBLEBACKWARDANDFORWARDLINKAGESTHROUGHTHE
INVOLVEMENTOFVALUECHAINRESTRUCTURINGCONSORTIUMINVOLVINGKEYPLAYERSIN
THESECTOR
-ESOTARGETING 
!NALYSISOFGLOBALVALUECHAINSINEACHCOMMODITIESSECTORTODEVELOPSTRATEGY
POLICIES
TOSELECTIVELYSOURCEKEYTECHNOLOGIESANDTOENGAGEWITHTHEMOSTCOOPERATIVE
GLOBALlRMSWHOSESTRATEGIESLENDTHEMSELVESTOLINKAGEDEVELOPMENT

3ECTORSPECIlCSUPPORTFORKEYMARKETFAILURESNOTABLYWITHREGARDTO
CAPABILITIESANDSKILLSTHE.ATIONAL3YSTEMOF)NNOVATIONANDINFRASTRUCTURE
-ICRO lRMLEVEL ,EADlRMSTRATEGIESSUPPLYCHAINANDCUSTOMERDEVELOPMENTSTRATEGIESlRM
POLICIES LEVELUPGRADING
3OURCE -ORRISETAL

4HEMININGSECTORCANCONTRIBUTETOWARDSADIVERSIlEDECONOMYIFPOLICIESAREPUTINTOPLACENOWTOENSURE
ITDOESNOTBECOMEANENCLAVESECTOR3UCHPOLICIESNEEDTOFOCUSONDEVELOPINGSKILLSBOTHENTREPRENEURIAL
ANDLABOURCAPACITY THATSERVEASSUPPORTINDUSTRIESTOTHEMININGSECTOR4HESECANINCLUDEDEVELOPING
LOGISTICALSUPPORT)4SKILLSPROVISIONOFSERVICESSUCHASSECURITYANDCATERING%NGINEERINGSKILLSCANBE
DEVELOPEDTOSERVICETHEMACHINERYATOPERATINGMINES%FFORTSCANBEMADETOMANUFACTUREINPUTSFOR
THEMININGOPERATIONSTHEMSELVESSTARTINGWITHLOWTECHNOLOGYPRODUCTSSUCHASPIPESMOVINGTOHIGHER
TECHNOLOGYPRODUCTSASEXPERTISEDEVELOP 3KILLSDEVELOPEDINSUPPORTINGTHEMININGSECTORCANALSOBE
TRANSFERREDTOOTHERSECTORS&OREXAMPLETHECAPACITYTOSERVICEHEAVYMACHINERYFORTHEMININGSECTOR
CANBEUTILISEDFORTHECONSTRUCTIONSECTORANDLARGESCALEAGRICULTURALMACHINERY#APACITYDEVELOPEDBY
THEPROVISIONOF)4SERVICESCANBEPROVIDEDTOOTHERSECTORSASWELL

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 35

 ©  The  Swedish  Geological  AB

4.   HUMAN  RESOURCES  AND  EDUCATION

 4HISCHAPTERCONCERNSLOCALHUMANRESOURCESFORWORKINTHEMININGANDEXPLORATIONINDUSTRYWHILETHE
READERISREFERREDTO#HAPTERFORANASSESSMENTOFHUMANRESOURCESCAPACITYRELATEDTOMINERALSECTOR
GOVERNANCE

 7HILELARGE SCALEMININGISACAPITAL INTENSIVEBUSINESSITCREATESFARLESSDIRECTEMPLOYMENTTHANFOREXAMPLE

THEMANUFACTURINGINDUSTRYANDEVENWITHARELATIVELYSTRONGDEVELOPMENTOFTHESECTORLESSTHAN
NEWDIRECTMINEJOBSAREEXPECTEDWITHINTHENEXTYEARS3ECTION .EVERTHELESSJOBCREATIONMAY
BEOFIMPORTANCETOMAINLYLOCALECONOMIESANDSHORTAGEOFSKILLEDLOCALLABOURISALSOONEOFTHEPRIMARY
BUSINESSRISKSCONSIDEREDBYINTERNATIONALCOMPANIESINTHEIRINVESTMENTSTRATEGIES)NSURVEYSUNDERTAKEN
BY%RNST9OUNGSKILLSSHORTAGEWASRANKEDASTHETHHIGHESTBUSINESSRISKIN ANDINTHETWO
PRECEDINGANNUALSURVEYSITWASRANKEDASHIGHASND%RNST9OUNGAND 

 !$&!4$FUNDEDSTUDYONHUMANRESOURCESREQUIREMENTSFORTHE%THIOPIANMINERALSECTORANDTHEPROVISION

OFHIGHEREDUCATIONAND46%4TRAININGHASRECENTLYBEENUNDERTAKEN#ATALYSTTO$EVELOPMENT 4HE
READERISREFERREDTOTHISSTUDYFORADETAILEDASSESSMENTOFMINERALSECTORHUMANRESOURCESANDEDUCATION

4.1.  Current  employment  and  needs  for  the  future

 #URRENTMININGANDEXPLORATIONACTIVITIESWEREPRESENTEDIN#HAPTER)NSUMMARYTHEREISONELARGE SCALE
MINETHE,EGA$EMBIGOLDMINEWHICHEMPLOYSSOMEPEOPLE4HE+ENTICHATANTALUMMINEWHICHIS
NOWONCAREANDMAINTENANCEUSEDTOEMPLOYSOMEPEOPLE"YMIDTOLATE!LLANA0OTASHPLANS
TOSTARTPRODUCTIONINITIALLYWITHATOTALWORKFORCEOFSOMEPEOPLE!LLANASPOLICYISTOPUTEMPHASISON
RECRUITINGLOCALLY(OWEVERFORMANYSKILLEDJOBSEXPATRIATELABOURISREQUIREDGIVENTHELACKOFCERTIlCATION
OFTHESKILLEDDOMESTICLABOUR#ERTIlCATIONREQUIRESTHATANACCEPTABLE@PROOFOFCOMPETENCEISPROVIDED
WHICHISTHERESULTOFASYSTEMATICPROCESSBASEDONTESTINGANDACCREDITATIONSUCHASNUMBEROFHOURS
SPENTUNDERSUPERVISIONATTESTATIONTOTHEABILITYTOPERFORMCERTAINTASKSETC

 !CCORDINGTOTHESCENARIOSDEVELOPEDIN#HAPTERLESSTHANDIRECTMINEJOBSMAYBEEXPECTED

PROBABLESCENARIO WITHINTHENEXTYEARS!SEMPHASIZEDIN#HAPTERTHEPROPOSEDSCENARIOSARE
HIGHLYUNCERTAINDUETOARANGEOFFACTORSMOREORLESSOUTOFCONTROLTOTHEMININGINDUSTRY

 %XPLORATIONACTIVITIESHAVEINCREASEDOVERTHELASTCOUPLEOFYEARS#HAPTER ANDMOSTOFTHE ACTIVE

lRMSAREINTERNATIONALORHAVEINTERNATIONALFUNDING-ANYOFTHESECOMPANIESHAVEEMPLOYEDLOCALGEOLOGISTS
THATTOALARGEEXTENTCOMEFROMANDHAVERECEIVEDTRAININGATTHE'EOLOGICAL3URVEYOF%THIOPIA'3% WHICH
HASCREATEDASKILLSSHORTAGEATTHE'3%#HAPTER 4HUSTHEREISANDWILLBEASHORTAGEOFEXPLORATION
GEOLOGISTSIN%THIOPIA$UETOTHEUNCERTAINNATUREOFTHEINDUSTRYTHENUMBERISDIFlCULTTOESTIMATE'IVEN
THECURRENTLEVELOFEXPLORATIONANDASSUMINGTHATTHISLEVELISMAINTAINEDORWILLINCREASEATAMODERATE
LEVELLABOURREQUIREMENTMAYBEONTHEORDEROFSEVERALHUNDREDTOAFEWTHOUSANDPROFESSIONALSOVERTHE
NEXT YEARS

 !CCORDINGTO#ATALYSTTO$EVELOPMENT ATTHEEXPLORATIONPHASEAROUNDOFTHEJOBSREQUIRE

A"3CDEGREEA46%4LEVELORTECHNICIANLEVELS ANDTHEREMAININGWILLNOTREQUIREFORMAL
TRAINING!TTHEMININGPHASEABOUT OFTHEJOBSWOULDREQUIREA"3COR-3CDEGREE A.ATIONAL
4ECHNICALAND6OCATIONAL%DUCATION4RAINING46%4 LEVELTECHNICIANLEVEL A46%4LEVELSPECIALIZED
WORKER ANDTHEREMAINING WOULDNOTREQUIREANYFORMALTRAINING

 (IGHLYSKILLEDLABOUR"3COR-3CLEVEL ATTHEEXPLORATIONPHASEWOULDPRIMARILYINCLUDEGEOLOGISTSAND

GEOPHYSICISTSUPPORTEDBYTECHNICIANSDRILLERSANDCASUALLABOUR(IGHLYSKILLEDSTAFFINTHEMININGPHASE
"3COR-3CLEVEL WOULDINCLUDEFOREXAMPLEMININGENGINEERSMINERALPROCESSINGENGINEERSMINE

36 FINAL  REPORT
 GEOLOGISTSANDSURVEYORS/THERQUALIlEDLABOURWOULDINCLUDEFOREXAMPLEVARIOUSTYPESOFTECHNICIANS
DRILLERSBLASTERSHEAVYEQUIPMENTOPERATORSHEAVYVEHICLEOPERATORSETC3EVERALJOBQUALIlCATIONSNOT
SPECIlCTOMININGWILLALSOBEREQUIREDSUCHASACCOUNTANTS)4STAFFCIVILENGINEERSHUMANRESOURCES
PERSONNELENVIRONMENTALEXPERTSELECTRICIANSWELDERSETC

 3IMILARTOTHEMINERALSECTORGLOBALLYWOMENCONSTITUTEAVERYSMALLPARTOFTHELABOURFORCEINCURRENTLY

OPERATINGEXPLORATIONANDMININGCOMPANIES#OMPANIESINTERVIEWEDINTHE#ATALYSTTO$EVELOPMENT 
STUDYNEVERTHELESSNOTETHEIMPORTANCEOFANINCREASEDNUMBEROFWOMENINTHEINDUSTRYINPARTICULAR
FORPOSITIONSTHATREQUIREGOODCAREFOREQUIPMENT)TISALSONOTEDTHAT!LLANA0OTASHSEEKSTOENCOURAGE
WOMENTOWORKASTRUCKDRIVERS(ISTORICALLYMININGHASBEENAMALEDOMINATEDWORKPLACEMAINLYBECAUSE
ITHASINVOLVEDPHYSICALLYHARDWORKANDTHEUSEOFRUDIMENTARYMININGTECHNIQUESOFTENINDIRTYAND
REMOTEENVIRONMENTSnINMANYCULTURESANDTIMESCONSIDEREDNOTSUITABLEFORWOMEN4ODAYMININGIS
ATECHNOLOGICALLYADVANCEDINDUSTRYTHATOFFERSSEVERALTYPESOFPOSITIONSFORWHICHMENANDWOMENARE
EQUALLYQUALIlED&URTHERMORESEVERALSTUDIESSHOWTHATBUSINESSESINGENERALBENElTFROMGENDERBALANCE
INTERMSOFNUMBERSOFSTAFFATALLEMPLOYMENTLEVELSIETHEREISABUSINESSCASEFORMAINSTREAMINGGENDER
INTOBUSINESSSTRATEGYDEVELOPMENT

4.2.  Education  and  vocational  training  in  Ethiopia

Higher  education
4HEINFORMATIONBELOWISLARGELYDRAWNFROM#ATALYSTTO$EVELOPMENT )NGENERALHIGHEREDUCATION
HASEXPANDEDSIGNIlCANTLYOVERTHELASTTWODECADESWITHNEWUNIVERSITIESBEINGFOUNDEDANDTHEVARIETY
OFPROGRAMSBEINGOFFEREDISALSOINCREASING2EFERRINGTOTHE-O%WEBSITEON-AY#ATALYSTTO
$EVELOPMENT REPORTSTHATTHEREAREACCREDITEDGOVERNMENTALANDNON GOVERNMENTALHIGHER
EDUCATIONINSTITUTIONSIN%THIOPIA

(IGHEREDUCATIONOFDIRECTRELEVANCETOTHEMINERALSECTORISHOWEVERLIMITEDTOPROGRAMSIN%ARTH3CIENCE
OR'EOLOGYGIVENATUNIVERSITIESAND-INING%NGINEERINGAND-ETALLURGYATUNIVERSITYEACH4HEREARE
ALSOPROGRAMSIN'EOMATIC%NGINEERINGUNIVERSITY AND3URVEYING4ECHNOLOGYUNIVERSITIES 

)NTHEACADEMICYEAR THEREWEREALMOSTSTUDENTSENROLLEDINTHEABOVEMENTIONED

PROGRAMSYEAR YEAR4ABLE 4HEMAJORITYWEREENROLLEDINTHE%ARTH3CIENCEAND'EOLOGYPROGRAMS
WHICHACCOUNTFORALMOSTOFTHESTUDENTS4HE-INING%NGINEERINGPROGRAMISGIVENBY5NITY5NIVERSITY
WHICHISASUBSIDIARYOF-IDROC'OLD)NADDITIONTOTHISNOTSHOWNIN4ABLE 5NITY5NIVERSITYRUNSA
MININGPROGRAMSINCETWOYEARSWITHSTUDENTSINEACHYEAR-IDROCEXPECTSTHATMOSTOFTHEGRADUATES
WILLJOINTHECOMPANYAFTERGRADUATION

Table  4.1.     Number  of  students  enrolled  in  university  programs  of  relevance  to  the  mineral  sector  year  
1-­year  4  in  the  academic  year  2011-­2012.
Program Male Female Total
%ARTH3CIENCE'EOLOGY   
'EOMATICENGINEERING   
3URVEYINGTECHNOLOGY   
-INING%NGINEERING   
-ETALLURGY   
Total   
$ATASOURCE-O%%DUCATIONSTATISTICALABSTRACT ASREFERREDTOBY#ATALYSTTO$EVELOPMENT 

4HEREISSOMEGENDERDISPARITYWITHOFTHESTUDENTSBEINGFEMALE4HEREISANAPPARENTPOSITIVETREND
OFINCREASINGFEMALEENROLMENTINPROGRAMSOFRELEVANCETOTHEMINERALSECTORFROMINYEARTO
INYEAR4ABLE (OWEVERITISNOTKNOWNWHETHERTHISISDUETOANACTUALINCREASEDFEMALEENROLMENT
ORIFFEMALESTUDENTSHAVEAHIGHERTENDENCYTODROPOUTOFUNIVERSITY4HETOTALSHAREOFFEMALESTUDENTS
 ISSOMEWHATLOWERTHANNATIONALUNIVERSITYTOTALOF!SCANBESEENIN4ABLETHEGENDER
DISPARITYISTHELOWESTIN%ARTH3CIENCE'EOLOGY

4HEMAJORITYOFTHESTUDENTSAREENROLLEDIN%ARTH3CIENCE'EOLOGYWITHATOTALOFALMOSTSTUDENTS
4ABLE WHICHGIVESANAVERAGEOFSTUDENTSYEAR!DOPTINGOVER ALLUNIVERSITYGRADUATIONRATEOF
ABOUTBASEDONDATAIN#ATALYSTTO$EVELOPMENT4ABLE WOULDGIVEGEOLOGYGRADUATES
YEARANDMANYOFTHESEMAYCHOOSETOWORKINOTHERSECTORSTHANEXPLORATIONANDMINING4HUSTHENUMBER
OFUNIVERSITYGEOLOGYGRADUATESWOULDLIKELYNEEDTOINCREASETOMEETTHEMINERALSECTORDEMANDS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 37

 Table  4.2.     Male,  female  and  percent  female  students  for  each  year  (1-­4)  in  university  programs  of  relevance  to  the  
mineral  sector,  academic  year  2011-­2012.
Year Male Female Total Percent  female
    
    
    
    
Total    
$ATASOURCE-O%%DUCATIONSTATISTICALABSTRACT ASREFERREDTOBY#ATALYSTTO$EVELOPMENT 

4HEUNIVERSITIESAREFACINGSEVERALPROBLEMSRESULTINGINTHATTHEQUALITYOFTHEEDUCATIONISVERYLOW!CCORDING
TOTHE-O%!NNUALSTATISTICALABSTRACT THEREISATOTALOFACADEMICSTAFFATDEPARTMENTS
OFRELEVANCETOTHEMINERALSECTOR4HISISDEEMEDTOBESOMEWHATLOWBUTMOREORLESSADEQUATELOOKING
ATTHEOVER ALLNUMBEROFSTUDENTS(OWEVERTHEREARELARGEDIFFERENCESBETWEENTHEUNIVERSITIESWITH
STUDENTTEACHERRATIOSRANGINGFROMABOUTTOWITHMANYGEOLOGYDEPARTMENTSBEINGUNDERSTAFFED
&URTHERMORETHELEVELOFQUALIlCATIONOFTHESTAFFISOVER ALLLOWWITHONLYBEING0H$HOLDING-3C
DEGREESWHILETHEMAJORITYOFHOLDABACHELORSDEGREE/NLYOFTHEACADEMICSTAFFAREFEMALE

,ABORATORYANDlELDTRAININGWHICHAREBOTHCENTRALTO'EOLOGYAND%ARTH3CIENCEEDUCATIONINGENERAL

SUFFERSFROMLACKOFTRANSPORTLABORATORYFACILITIESEQUIPMENTANDINSTRUMENTSANDFROMALACKOFSUFlCIENTLY
QUALIlEDTEACHERSANDTECHNICIANS4HUSTHEEDUCATIONISTOAVERYLARGEDEGREETHEORY BASED

4HE!DDIS!BABA5NIVERSITY!!5 THEOLDESTANDBESTDEVELOPEDINTHECOUNTRYSTANDSOUTFROMTHERESTWITH

MORETHANHALFOFALLTHE0H$ LEVELSTAFFANDWITHABETTEREQUIPPED%ARTH3CIENCEDEPARTMENT!PPARENTLY
MANYOTHERUNIVERSITIESRELYONASSISTANCEFROMTHE!!5FOREXAMPLEINUSINGTHEIRLABORATORIES(OWEVER
EVENAT!!5THEREARESERIOUSSHORTFALLSWITHREGARDSTOlELDANDLABORATORYTRAINING

)NTERVIEWSWITHTHEINDUSTRYUNDERTAKENWITHINTHISPROJECTANDINFORMATIONRECEIVEDBYTHE!!5#ATALYSTTO
$EVELOPMENT INDICATETHATSTUDENTSAREINGENERALLYPOORLYTRAINEDTOTHEDEGREETHATMANYCANNOT
IDENTIFYDIFFERENTROCKTYPES

TVET
!NEW46%4STRATEGYWASADOPTEDBY'O%INDESIGNEDTOBEOUTCOMEBASEDANDDEMAND DRIVEN
!FTERSECONDARYEDUCATION'RADES  OFTHESTUDENTSTHATCONTINUESTUDYINGAREEXPECTEDTOJOIN
46%4INSTITUTIONSANDAREEXPECTEDTOJOINHIGHEREDUCATIONINSTITUTIONS)NSOME
STUDENTSENROLLEDAT46%4INSTITUTIONSANDOFTHESEWEREFEMALE!MONG46%4TRAINERSHOWEVERONLY
SOME AREFEMALE

46%4INSTITUTIONSOFFERTRAININGATlVELEVELSWHERE,EVEL6WOULDPRODUCEMINERALSECTORPROFESSIONALSSUCH
ASTECHNICIANSINMININGMINERALPROCESSINGANDGEOLOGYAND,EVEL))) )6WOULDOFFERMINERALSECTORSPECIlC
TRAININGINFOREXAMPLEDRILLINGSURVEYINGMINERALPROCESSINGEQUIPMENTOPERATIONETC(OWEVERASYET
NEEDSOCCUPATIONALSTANDARDSAND46%4CURRICULASPECIlCTOTHEMINERALSECTORHAVENOTBEENDElNED
WHILE'O%PLANSTOEXPAND46%4TOINCLUDEMINERALSECTORSPECIlCPROFESSIONS

&OR,EVEL6THELACKOF46%4CURRICULAISNOTSPECIlCTOTHEMINERALSECTORBUTTHEREAREOVER ALLVERYFEW

PROGRAMSOFFEREDANDGRADUATESATTHISLEVEL3EVERAL46%4NEVERTHELESSOFFERGENERALTRAININGAT,EVELS
) )6INVARIOUSAREASPLUMBINGENGINEERINGDRILLINGSURVEYINGMACHINEOPERATIONETC PRIMARILYTOMEET
THENEEDSOFTHEINDUSTRIALANDAGRICULTURALSECTORS'RADUATESATTHESELEVELCOULDINMANYCASESWORKIN
THEMINERALSECTORIFINTERNALTRAININGATEMPLOYMENTISGIVEN

$ESPITETHELACKOFCURRICULA46%4TRAININGPRESUMABLY,EVEL IN3URVEYING4ECHNOLOGYISGIVENATTWO

UNIVERSITIES!DAMA5NIVERSITYAND$IRE$AWA5NIVERSITY 4HEREISTOTALOFSTUDENTSENROLLEDBUTONLY
OFTHESEAREFEMALEAFARLOWERSHAREWHENCOMPAREDTOBOTH46%4INGENERAL ANDTORECENT
UNIVERSITYENROLMENTINMINERALSECTORDISCIPLINES4ABLE 

38 FINAL  REPORT
4.3.  Recommendations
!NIMPROVEMENTOFTHEQUALITYOFEDUCATIONATHIGHERINSTITUTIONSANDDEVELOPMENTOF46%4TRAININGWOULD
ASSISTINATTRACTINGINVESTMENTINEXPLORATIONANDITWOULDALSOLEADTO%THIOPIABENElTINGBETTERFROMA
POTENTIALLYGROWINGMINERALINDUSTRYTHROUGHINCREASEDLOCALEMPLOYMENT)NCREASEDEFFORTSINTHESEAREAS
INITIATEDTODAYWOULDBEWELLTIMEDASTHEMININGSECTORISSTILLINITSINFANCY.EVERTHELESSEXPLORATIONSKILLS
AREIMMEDIATELYREQUIREDANDNEEDSINTHISAREAAREEXPECTEDTOGROWINTHEFUTUREWHILEANINCREASED
REQUIREMENTFORPROFESSIONALSPECIALIZEDINMININGMININGENGINEERSETC ISMORELIKELYEXPECTEDWITHIN
SOME YEARS

#ATALYSTTO$EVELOPMENT RECOMMENDSASTRATEGYFORSUPPORTTOIMPROVETHEQUALITYOFMINING RELATED

EDUCATIONIN%THIOPIA4HEPROPOSEDSTRATEGYTAKESALONGTERMVIEWONIMPLEMENTATIONYEARS ANDHAS
AWIDESCOPEINCLUDINGNOTONLYSUPPORTFORIMPROVEDTECHNICALTRAININGBUTALSOFORTHEREINFORCEMENTOF
INFORMATIONCAPITALANDORGANIZATIONALCAPITAL4HISANDSIMILARINITIATIVESWOULDBEOFFUNDAMENTALIMPORTANCE
TOTHEDEVELOPMENTOFTHESECTOR)MPORTANTLYTHECURRENTGENDERDISPARITIESSEENATUNIVERSITIESAND46%4S
NEEDTOBECONSIDEREDANDSTRATEGIESFORHIGHERWOMENENROLMENTANDEXAMINATIONRATESDEVELOPED

46%4CURRICULAAREDEVELOPEDONTHEBASISOFOCCUPATIONALSTANDARDSANDACCORDINGTOTHE46%4STRATEGY
THEVARIOUSMINISTRIESARERESPONSIBLEFORSETTINGTHESESTANDARDS!PARTFROMDEVELOPINGOCCUPATIONAL
STANDARDSITISPROPOSEDTHAT-O-WOULDBEINVOLVEDINTRAININGDEVELOPMENTTHROUGHTHEMONITORINGAND
ASSESSMENTOFTHEREQUIREMENTSOFTHEINDUSTRYSOTHATREQUIREDQUALIlCATIONSANDNUMBERSOFSTUDENTSARE
ALIGNEDWITHFUTUREINDUSTRYDEMAND

4HE'3%ANDTHEMINERALSECTORINDUSTRYHOLDAMPLEKNOWLEDGEINTHEAREASOFEXPLORATIONANDMINING
%DUCATIONTRAININGOFMINERALSECTORPROFESSIONALCOULDBENElTGREATLYFROMCOLLABORATIONBETWEENUNIVERSITIES
AND46%4SANDTHE'3%ANDTHENEWLYESTABLISHEDMINERALINDUSTRYBUSINESSORGANIZATIONSEE#HAPTER 

%THIOPIAHASAVERYINTERESTINGGEOLOGYWITHROCKSRANGINGINAGEFROM0RECAMBRIANTOVERYYOUNGVOLCANIC
ROCKSANDON GOINGGEOLOGICALPROCESSESINTHERIFTVALLEY4HISGEOLOGICALENDOWMENTISOFINTERESTTORESEARCH
GROUPSGLOBALLYANDCOULDPROVIDEAPOSSIBILITYFORJOINTRESEARCHPROGRAMMESWHEREEDUCATIONALSUPPORT
FROMINTERNATIONALUNIVERSITIESCOULDBEINCLUDED

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 39

 ©  The  Swedish  Geological  AB

 34!+%(/,$%2/6%26)%7
5.1.  Stakeholders  and  key  sector  involvement
 &EDERALGOVERNMENTALINVOLVEMENTINTHEMINERALSECTORISCENTREDTOTHE-O-ANDTHE'3%SEENEXT
CHAPTER -INISTRYOF&INANCEAND%CONOMIC$EVELOPMENT-O&%$ HASINTERESTINTHESECTORRELATEDTO
ITSCONTROLOFTHEBUDGETPROCESSANDPLANNINGPROCESSITSINTERESTINANDADMINISTRATIONOFREVENUES
TAXESROYALTIESANDFOREIGNEXCHANGEEARNINGSFROMTHESECTORANDITSCONTROLOFTHElNANCIALASPECTSOF
DEVELOPMENTPROGRAMSSUPPORTBYDEVELOPMENTPARTNERS4HE.ATIONAL"ANKOF%THIOPIAISINVOLVEDTHROUGH
THEGOLD BUYINGPOLICYWHEREGOLDPRODUCEDBYARTISANALANDSMALL SCALEMINERSISBOUGHTBYTHEBANK
4HE%NVIRONMENTAL0ROTECTION!UTHORITY%0! USEDTOBERESPONSIBLEFORTHE%)!PROCESSBUTHASSECONDED
ENVIRONMENTALSUPERVISIONANDCONTROLOFTHEMINERALSECTORTOTHE-O-/THERMINISTRIESORGOVERNMENTAL
OFlCESARELITTLEINVOLVEDANDSEEMTOHAVEWEAKKNOWLEDGEOFTHESECTOR

 4HEREGIONALSTATESFOLLOWINGTHEGENERALORGANIZATIONALSET UPOFTHE%THIOPIANSTATEHAVEAGOVERNMENTAL

STRUCTURERELATEDTOMININGTHATPARALLELSTHEFEDERAL LEVELSTRUCTUREANDTHISSTRUCTUREEXTENDSDOWNTOTHE
ZONEWOREDAANDKEBELESUB REGIONALLEVELS3OMETYPESOFMINERALLICENSESANDASSOCIATEDREGULATION
AREUNDERCONTROLOFTHEREGIONSANDWOREDASARESIGNIlCANTLYINVOLVEDIN!3-MANAGEMENT

 4HEREARENOSPECIlCALLY%THIOPIANMINING RELATEDANDFORMAL.'/SOR#3/S3EVERAL.'/SAND#3/SARE

NEVERTHELESSAWAREOFTHEDEVELOPMENTOFTHESECTORINPARTBECAUSEOFEFFORTSBYTHEGOVERNMENTAND
DEVELOPMENTPARTNERSTOENGAGEABROADRANGEOFSTAKEHOLDERSINSEMINARSANDWORKSHOPS4HEWORKOF
LOCAL.'/STHATRECEIVEINTERNATIONALFUNDINGARERESTRICTEDBYLAWASTOWHICHISSUESTHATTHEYMAYWORK
WITHSOMEOFWHICHMAYRELATETOMINING7ITHREGARDSTOINTERNATIONAL.'/S/XFAMHASANh%XTRACTIVE
)NDUSTRIES'LOBAL0ROGRAM3TRATEGYvANDHASSTAFFBASEDIN!DDIS!BABAWHICHSPECIlCALLYWORKWITH
EXTRACTIVEINDUSTRIESRELATEDISSUES

 4HEREEXISTALONGHISTORICTRADITIONOFINFORMALCOMMUNITY BASEDORGANIZATIONSIN%THIOPIAANDTHESETYPES

OFORGANISATIONSEXISTTHROUGHOUTTHECOUNTRY3OMEOFTHESETRADITIONALFORMSOFORGANISATIONSAREBEINGUSED
BYDEVELOPMENTORGANISATIONSASRECIPIENTSOFASSISTANCESUCHASMICROlNANCEOREXTENSIONSERVICES

 4HEMASSMEDIACONSISTOFRADIOANDTELEVISIONWHICHAREUNDERGOVERNMENTCONTROLASWELLASVARIOUS

PRIVATENEWSPAPERANDMAGAZINES'IVENTHELARGEEXPANSEOFTHECOUNTRYANDTHERELATIVELYLOWLITERACY
RATESINMOREREMOTEAREASRADIOANDTELEVISIONAREIMPORTANTWHEREASPRINTEDMEDIASERVEONLYASMALL
PARTOFTHEPOPULATION&URTHERWITHLITTLEMININGTRADITIONANDEXPERIENCEINTHECOUNTRYTHEJOURNALISTSARE
OVERALLNOTWELLVERSEDINREPORTINGABOUTTHESECTOR

 4HEMININGINDUSTRYGLOBALLYISCHARACTERIZEDBYAVERYLARGENUMBEROFJUNIORCOMPANIESPERFORMING

GRASSROOTSTOADVANCEDEXPLORATIONUSINGPRIVATEPLACEMENTFUNDINGANDVENTURECAPITAL,ARGERCOMPANIES
HAVEINPARTICULAROVERTHELASTYEARSBECOMEMORERISKADVERSEANDCOMMONLYACQUIREDEVELOPMENT
PROJECTSPARTSORFULLY ONLYONCETHEYAREFARADVANCEDANDHAVEBEENPROVENTOBElNANCIALLYFEASIBLE
ANDTHEYALSODEVELOPINCREASINGLYTHROUGHMERGERANDMID CAPLARGE CAPCOMPANYACQUISITIONS4ODAYTHE
LARGE CAPMININGCOMPANIESLESSTHAN CONTROLMORETHANOFTHEVALUEOFMINEDMETALSGLOBALLY
4HERESTISCONTROLLEDBYMID CAPANDSMALLCOMPANIESWHILEJUNIORSAFEWTHOUSANDCOMPANIES CONTROL
LESSTHANOFTHEMINEDVALUE)N%THIOPIATHEREARESOMEINTERNATIONALEXPLORATIONCOMPANIESTHAT
ACTIVELYPURSUEEXPLORATION4HESEAREALLJUNIORCOMPANIESSEE4ABLE OFWHICHSOMEAREATAMODERATELY
ADVANCEDSTAGEANDSOMEINTERESTFROMLARGERCOMPANIESISSEENFOREXAMPLEINTHE!NGLO'OLD!SHANTI*6
WITH3TRATEX)NTERNATIONALFOREXPLORATIONINTHE!FARREGION/NECOMPANY!LLANA0OTASHHASREACHEDPAST
THEEXPLORATIONSTAGEANDPLANSTOGOINTOPOTASHPRODUCTIONBYMIDTOLATE

40 FINAL  REPORT
 7ITHINTHEINDUSTRIALMINERALSSECTORTHEREAREANUMBEROFOPERATORSMOSTOFTHEMDOMESTICANDWITHTHE
MOSTIMPORTANTONESBEINGSOME KEYCEMENTPRODUCERSINCLUDINGTHESTATE OWNED-UGHER#EMENT
%NTERPRISE

 4HEREISONLYONEPRIVATE%THIOPIANCOMPANY-IDROC'OLD-INE0LCTHATISINVOLVEDINLARGERSCALEAND

FORMALGOLD MININGINTHECOUNTRY

 4HEREAREPLANSTOFORMABUSINESSORGANIZATIONSIMILARTOA#HAMBEROF-INESINOTHERCOUNTRIESAND

WHICHWOULDINCLUDEBOTHMININGANDEXPLORATIONCOMPANIES!SOF.OVEMBERTHEORGANIZATIONHAS
BEENREGISTEREDBUTHASNOTSTARTEDACTIVITIESWHILESOMECOMPANIESAREACTIVEATMINERALSECTORSTAKEHOLDER
EVENTS

4HEREISANEXTENSIVEARTISANALMININGSECTORIN%THIOPIAMANYOFTHEMINERSAREPARTOFARTISANALMINING
COOPERATIVESBUTMANYREMAININFORMAL'OLDGEMSTONEANDSALTARETHEMAJORCOMMODITIESBEINGMINED
BYTHESEMINERS

!NUMBEROFDONORORGANIZATIONSAREACTIVEASSTAKEHOLDERS3PECIlCALLYINTHEMININGSECTORTHEREISSEMI
FORMALCOORDINATIONBETWEENINITIATIVESANDPROJECTSCONDUCTEDBYTHE7ORLD"ANK)&#$F)$$&!4$THE
!USTRALIAN'OVERNMENTANDALSO$ANIDA

4HE7ORLD"ANKTHROUGHFUNDINGFROMTHE*APANESE3OCIAL$EVELOPMENT&UND*3$& ISSUPPORTINGA

PROJECTTOIMPROVETHEECONOMICSOCIALANDENVIRONMENTALSUSTAINABILITYOF!RTISAN-INERSIN%THIOPIAWITH
SPECIALREFERENCETOWOMENMINERS!N!3-BASELINESURVEYHASBEENUNDERTAKENANDSUPPORTTOSELECTED
COMMUNITIESISPROVIDEDINTHEFORMOFTRAININGINMODERNENVIRONMENTALLYSUSTAINABLEMININGTECHNIQUES
ANDINSETTINGUPANDRUNNINGSMALL BUSINESSTHEPROVISIONOFSMALLGRANTSPROGRAMTOACCESSIMPROVED
TECHNOLOGIESANDUPGRADINGOFBASICINFRASTRUCTURELIKESANITATIONANDACCESSTOPOTABLEWATER

4HE7ORLD"ANKHASALSOlNANCEDANDEXECUTEDTHE%THIOPIA2EVENUE4RANSPARENCY)NITIATIVEAIMEDTOLAY
THEFOUNDATIONSTOENABLETHE'OVERNMENTTOAPPLYASANOFlCIALCANDIDATEWITHTHE%)4)MAINLYTHROUGH
ORGANIZINGTRAININGWORKSHOPSEXCHANGESANDOTHERFORMSOFCAPACITYBUILDING

$!.)$!HASPROVIDEDFUNDINGANDCAPACITYBUILDINGFORSOMEINTERNATIONALMARKETINGACTIVITIESUNDERTAKEN

BYTHE-O-INCLUDINGREGULARPARTICIPATIONATTHEYEARLY-INING)NDABAANDTHEPRODUCTIONOFMARKETING
MATERIAL

$&!4$ISACTIVELYENGAGEDWITHTHE-INISTRYOF-INESINSCOPINGACTIVITIESANDTECHNICALCAPACITYBUILDING
EFFORTSTHROUGHANUMBEROFPROGRAMMESINCLUDINGI AlVEYEARINITIATIVECALLEDh%DUCATIONFOR-ININGv
WITHABUDGETOFABOUT53$MILLIONAIMINGATINCREASINGPOSSIBILITIESFOR%THIOPIANSTOBEEMPLOYEDIN
MININGANDII AlVEYEARPROGRAMMETOSTRENGTHENTHE-INISTRYOF-INESCOMPRISINGABUDGETOFSOME53$
 MILLION0ARTOFTHELATTERPROJECTHASINVOLVEDTRAININGINTOPICSRELATEDTOMINERALTITLESMANAGEMENT
)N$&!4$UNDERTOOKTHREESCOPINGSTUDIESINTHEAREASOF-INERAL3UPPLY#HAINS%DUCATIONFOR
-ININGAND#32

$&!4$ANDTHE!USTRALIAN'OVERNMENTAREJOINTLYASSISTINGINSUPPORTINGTHE!FRICA-INERAL2ESOURCE#ENTRE
!-$# INTURNANINSTITUTIONCREATEDTOASSIST!FRICANNATIONSINACHIEVINGTHE!FRICAN-INING6ISION!-6
SEEBOXIN3ECTION 

%THIOPIAISABENElCIARYOF!USTRALIAS-ININGFOR$EVELOPMENT)NITIATIVE!SPARTOFTHISTHE-O-HAS
BENElTEDFROMPARTICIPATIONINSTUDYTOURSTRAININGANDINRECEIVINGSCHOLARSHIPSFORTRAINING

$F)$ISPRESENTLYPREPARINGINITIATIVESAIMEDATTHEMININGSECTORWITHTHEAIMTOSTARTWORKFROM
ONWARDS)NTHEPLANNING$F)$ISLEANINGTOWARDSINITIATIVESTHATRELATETOENVIRONMENTALASPECTSANDOR
!3-ANDISDRAWINGONASSISTANCEFROMTHE.ATURAL2ESOURCE#HARTERCFBOXIN3ECTION 

)&#ISINVOLVEDTHROUGHEQUITYPARTICIPATIONINTHE!LLANA0OTASHAND4ULU+APIPROJECTS4HISINTURN
MEANSTHATTHOSEPROJECTSAREHAVEBEENDEVELOPEDINACCORDANCEWITHTHE)&#0ERFORMANCE3TANDARDS
ON%NVIRONMENTALAND3OCIAL3USTAINABILITYWHICHARECOMPREHENSIVEINTHEIRSCOPE#OMPANIESWITH)&#
lNANCINGMUSTFULlLTHEREQUIREMENTSOFTHESTANDARDSANDCONTROLSAREPERFORMEDTHROUGHEXTERNALAUDITS

4HE#HINESEGOVERNMENTISINVOLVEDASANECONOMICPARTNERANDCURRENTLYSUPPORTSAPROJECTTOGENERATE
EXPLORATIONTARGETSINSOUTHERN%THIOPIA4HISPROJECTINCLUDESCAPACITYBUILDINGATTHE'3%INTHEAREASOF
MINERALEXPLORATIONANDLABORATORYDEVELOPMENT

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 41

5.2.  Recommendations
#ENTRALANDGOVERNMENTINSTITUTIONSINVOLVEDINMININGSECTORDEVELOPMENTAREINGENERALINNEEDOF
STRENGTHENINGANDCAPACITYBUILDING-OSTOFTHEDEVELOPMENTCOOPERATIONRELATEDEFFORTSTHATAREEITHER
ON GOINGORBEINGPLANNEDINTHESECTORARECONCERNEDWITHTHISNEED)TISIMPORTANTTHATTHEEFFORTSINTHIS
REGARDAREWELLCOORDINATED&URTHERASMININGSECTORDEVELOPMENTISSOMETHINGTHATREQUIRESEXTENSIVE
PERIODSOFTIMEITISIMPORTANTTHATALLINITIATIVESAREPLANNEDWITHALONGTERMPERSPECTIVE4HEINITIATIVES
TAKENSHOULDFURTHERMORETOTHEEXTENTPOSSIBLEBEUNTIEDTOANYSPECIlCNATIONORORGANISATIONANDTHE
BESTANDORMOSTRELEVANTEXPERTISESHOULDBESOUGHT

#IVIL3OCIETYSKNOWLEDGEANDUNDERSTANDINGOFMININGANDITSVARIOUSIMPLICATIONSISRATHERLIMITEDIN

%THIOPIA4HUSACTIVITIESTHATSTRENGTHENEITHERFORMAL.'/#3/SORTHATTARGETMOREINFORMALANDTRADITIONAL
LOCALORGANISATIONSARENEEDED4HISTOENSURETHATTHEVOICEANDCONCERNSOFLOCALCOMMUNITIESMAYBE
ARTICULATEDEXPRESSEDANDCONSIDEREDINTHEDEVELOPMENTOFFUTUREMININGPOLICYASWELLASANYFUTURE
MININGANDEXPLORATIONSPROJECTS

3OCIALMOBILIZATIONANDDISPUTERESOLUTIONISANIMPORTANTTOENSURETHATLOCALCOMMUNITIESDONOTUNNECESSARILY
BEARTHEBRUNTOFEXTRACTIVEINDUSTRYOPERATIONS#URRENTLYUNDERTHEWORKPLANFORPREPARATIONFORTHE
CANDIDACYTOTHE%XTRACTIVE)NDUSTRIES4RANSPARENCY)NITIATIVE%)4) THE-INISTRYOF-INESISWORKINGWITH
CIVILSOCIETYORGANIZATIONSTOPROMOTESOCIALMOBILIZATIONANDAWARENESSAMONGCIVILSOCIETYMEMBERSFOR
THEMININGSECTOR3OCIALMOBILIZATIONALSOINCLUDESMANAGINGEXPECTATIONSOFTHELOCALCOMMUNITIESWHEN
ITCOMESTOMININGOPERATIONSINTHEIRAREAS%DUCATIONHASTOBEANIMPORTANTPARTOFTHISEFFORT

4HEMEDIASROLEININFORMINGTHEPUBLICABOUTMININGANDININmUENCINGPUBLICOPINIONISIMPORTANTIN
ALLCOUNTRIES)NITIATIVESAIMEDATIMPROVINGJOURNALISTSANDOTHERSINTHEMEDIASECTORKNOWLEDGEAND
UNDERSTANDINGOFHOWMODERNEXPLORATIONANDMININGISCONDUCTEDWOULDTHEREFOREBEBENElCIAL

42 FINAL  REPORT
 ©  Yara  Dallol  BV

6.   MINERAL  POLICY  AND  LEGISLATION

6.1.  Introduction
 4HEMININGSECTORHASRECEIVEDCONSIDERABLEATTENTIONFROMPOLICYMAKERSINLATERYEARS(OWEVERADECADE
ORSOAGOMININGPOLICYISSUESWEREMOSTINTENSELYANDALMOSTONLYDISCUSSEDANDCONSIDEREDINANYDEPTH
ATTHE7ORLD"ANK4ODAYTHEREAREANUMBEROFONGOINGPOLICYDEVELOPMENTINITIATIVESBOTHBYNEWLYSET
UPINSTITUTIONSASWELLASBYWELL ESTABLISHEDORGANISATIONSANDORTHINKTANKSSUCHASTHE!FRICAN5NION
%UROPEAN5NIONANDTHE7ORLD%CONOMIC&ORUMWHOHAVEPREVIOUSLYGIVENTHEMININGSECTORRELATIVELY
LIMITEDINTERESTSEEBOX 

Box  2:  Policy  initiatives  for  the  Mining  Sector

Before  the  millennium,  in  depth  discussion  on  how  to  best  develop,  manage  and  control  the  mining  
sector  in  developing  countries  was  almost  solely  discussed  at  the  World  Bank.  The  advice  provided  was  
BASEDONFREEMARKETREFORMANDTOENSURETHATFOREIGNINVESTMENTSWEREALLOWEDTOmOWINTOEXPLORATION
ANDMININGDEVELOPMENT7ITHREGARDSTOEXPLORATIONITWASRECOMMENDEDTHATRIGHTSSHOULDBEISSUES
ONAhlRSTCOMElRSTSERVEDvBASIS

In  the  1990s,  the  World  Bank  Group  had  become  increasingly  concerned  with  the  need  to  consider  
environmental  and  social  issues  in  mining  sector  development.  In  fact,  severe  criticism  of  some  World  
"ANKPROJECTSANDADEBATEOVERTHEhRESOURCECURSEvLEDTOAREVIEWOFTHEBANKINVOLVEMENTIN
PROJECTSINTHEhEXTRACTIVESECTORv4HEh%XTRACTIVE)NDUSTRIESREVIEWvWASCOMPLETEDINANDIT
CONCLUDEDTHATTHEPROPERDEVELOPMENTOFEXTRACTIVEINDUSTRIESCANCONTRIBUTETOPOVERTYREDUCTIONAND
THAT7ORLD"ANKINVOLVEMENTCANPOSITIVELYINmUENCEINDUSTRYSTANDARDS3INCETHE7ORLD"ANK
has  developed  a  comprehensive  set  of  tools  aimed  at  assisting  in  the  proper  development  and  control  of  
ALLTHELINKSINTHEhMINERALRESOURCECHAINv4HESETOOLSHAVEBECOMETIGHTLYCOUPLEDWITHTHE%)4)

Following  the  latest  commodity  price  boom,  a  number  of  new  policy  initiatives  have  been  developed.  In  
GENERALTHESEEITHERAIMTOENSURETHEFUTURESUPPLYOFMETALSEGTHE%5SRAWMATERIALSINITIATIVE 
ORATTEMPTINGTOPROVIDEADVICETORESOURCERICHCOUNTRIESOFHOWTOBETTERENSURETHATBENElTSOFTHE
SECTORCANBEBETTERHARNESSED3OMEOFTHELATTERTYPEOFADVICEEGTHE.ATURAL2ESOURCE#HARTER IS
suggesting  that  the  mineral  sector  should  be  managed  more  like  the  oil  sector,  including  public  bidding  
FORTENEMENTSINCONTRASTTOhlRSTCOMElRSTSERVEDvAPPROACH/THERDEVELOPMENTRELATESTOATTEMPTSTO
FORMALISEBETTERSTRUCTUREANDEVENSTIPULATELEGALREQUIREMENTSFORTHE#32RELATEDACTIVITIESTHATOFTEN
are  performed  by  international  mining  companies  that  operate  in  developing  countries.

4HE!FRICA-INING6ISION!-6 WASADOPTEDATTHE!FRICAN5NIONSUMMIT4HISVISIONISATTEMPTING
to  provide  a  path  to  better  integrating  mining  with  development  policies  and  goals  and  to  assist  states  to  
MOVEFROMBEINGSOLELYEXPORTEROFRAWMATERIALSTOALSOBEINGMANUFACTURERANDSUPPLIEROFKNOWLEDGE
BASEDSERVICES4HENEEDTOENSURELOCALDEVELOPMENTANDCOMMUNITYBENElTSAREHIGHLIGHTEDASARE
efforts  to  improve  the  capacity  of  nations  to  negotiate  contracts  with  mining  companies.

6.2.  Ethiopian  mineral  policy

 4HE'40HASASTRONGROLEIN%THIOPIAINTERMSOFPOLICYFORMULATIONANDTHE-O-HASESTABLISHEDA YEAR
PLANINRESPONSETOTHE'40%THIOPIAHASNOTPREVIOUSLYHADANOFlCIALMINERALPOLICYBUTTHEREISNOWA
DRAFT-INERAL0OLICYUNDERREVIEW4HE-INING0ROCLAMATIONALSOCONTAINSAFEWPOLICYELEMENTS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 43

  )NLINEWITHMORERECENTPOLICYDEVELOPMENTSSEEBOXABOVE THE%THIOPIANPOLICYFRAMEWORKRECOGNIZESTHE
POTENTIALOFTHEMINERALSECTORTOBECOMEA@TRIGGEROFINDUSTRIALIZATIONANDWIDERECONOMICDEVELOPMENTWITH
AMBITIOUSGOALSSETINTHE'40(OWEVERTHE-O-INDEPENDENTLYPRODUCESITSTARGETSANDBUDGETREQUESTS
ANDTHERESEEMTOBELITTLEORNOCOOPERATIONWITHOTHERRELEVANTMINISTRIESSUCHASTHATFORTRANSPORTINDUSTRY
ANDTRADE )TWOULDAPPEARTHATATTHEPLANNINGSTAGEEACHSECTORINDUSTRIALAGRICULTURALTEXTILEETC IS
TREATEDASASEPARATEENTITYANDCROSS SECTORALLINKAGESANDCO DEPENDENTDEVELOPMENTISNOTSUFlCIENTLY
CONSIDERED

 4HEPOLICYFRAMEWORKCLEARLYDElNESTHEROLEOFTHEGOVERNMENTASTHEFACILITATORPROMOTERANDREGULATOR

OFAMINERALSECTORENVISIONTOBEDRIVENBYPRIVATESECTORINVESTMENT4HEOVER ALLVISIONISTHATTHEMINERAL
SECTORSHALLCONTRIBUTETOATLEASTOFTHE'$0ANDTHATFOREIGNCURRENCYEARNINGSHALLINCREASE FOLD
BY ANDTHISSHOULDBEFACILITATEDTHROUGHMEASURESAIMEDATTRACTINGPRIVATEINVESTMENTSUCH
ASACLEARLEGISLATIVEREGIMETHEPROVISIONOFQUALITYGEOSCIENTIlCINFORMATIONANENABLINGlSCALANDTAX
REGIMEANDSECURITYOFTENUREANDAlRST COME lRST SERVEDSYSTEMFORLICENSEAPPLICATIONS

 +EYOBJECTIVESINCLUDEEXPLORATIONANDEXPLOITATIONOFALLTYPESOFMINERALSFORIMPORTSUBSTITUTIONFOR

EXPORTTOINCREASEFOREIGNCURRENCYEARNINGSANDMINERALSFORTHEPRODUCTIONOFFERTILIZERSARESPECIlCALLY
MENTIONED4HEPOLICYFRAMEWORKALSORECOGNIZESTHEIMPORTANCEOFENVIRONMENTALSOCIALANDHEALTHAND
SAFETYSAFEGUARDSANDSTAKEHOLDERPARTICIPATIONFORSUSTAINABLEDEVELOPMENTANDINCLUDESARANGEOFPOLICY
MEASURESINTHESEAREAS4HESUSTAINABLEDEVELOPMENTOFTHEARTISANALANDSMALL SCALEMININGSECTORFORMS
ANINTEGRALPARTOFTHEPOLICYFORMULATION

 4HEDRAFT-INERAL0OLICYCOVERSARANGEOFAREASAPPROPRIATEATAPOLICYLEVELANDITISCOMPREHENSIVEIN

ITSOVERALLCONTENTWHILEITVARIESEXTENSIVELYINCONTENTDETAILANDPOLICYACTIONS4HUSITISVERYDETAILEDIN
SOMEPLACESANDMANYSECTIONSCOULDBEPLACEDINLAWSORREGULATIONSRATHERTHANPOLICY)NOTHERPLACES
ITISRATHERVAGUEANDGENERALWITHALACKOFPOLICYMEASURESANDACTIONS)NALLTHISMAKESITDIFlCULTFOR
STAKEHOLDERSTOASSESSTHEPOLICYANDFORTHEAUTHORITIESTOIMPLEMENTTHESAME

 %THIOPIAISASIGNATORYTOTHE!-6BUTTHE%THIOPIANPOLICYFRAMEWORKDOESNOTREFERTOTHE!-6ANYWHERE
4HEYDOHOWEVERSHAREMANYOVER ALLPOLICYDIRECTIONSINCLUDINGTHEOUTLOOKTOREGIONALPLANNINGAND
COOPERATIONACENTRALVISIONOFTHE!-6

 2EGIONALSTATESIN%THIOPIADONOTHAVETHEIROWNMININGPOLICYDOCUMENTSAPARTFROMTHEREGIONAL'40S

4HESECTIONINTHE/ROMIA'40CONCERNINGMININGAPPEARSSIMILARTOTHEFEDERAL LEVEL'40BUTWITHLESS
DETAIL

6.3.  Mineral  legislation  and  model  mining  agreement

 4HEPRIMARYLEGISLATIVEBRANCHOFTHEFEDERALGOVERNMENTTHATISTHE(OUSEOF0EOPLES2EPRESENTATIVES
ENACTSFRAMEWORKLAWS0ROCLAMATIONS ANDDELEGATETHE#OUNCILOF-INISTERSTOENACTSECONDARYLEGISLATION
2EGULATIONS 0ROCLAMATIONSOFTENDELEGATEASPECIlCAUTHORITYMINISTRYAGENCYBUREAUBOARDOFlCE TO
DEVELOPFURTHERSECONDARYLEGISLATION$IRECTIVES )NCASEOFCONTRADICTIONS0ROCLAMATIONSPREVAILOVER
2EGULATIONSAND2EGULATIONSPREVAILOVER$IRECTIVES/NESHOULDNOTHOWEVERLOSESIGHTOFEXCEPTIONAL
CIRCUMSTANCESWHEREIN0ROCLAMATIONSMIGHTBEAMENDEDBY2EGULATIONS4HEMAINLEGISLATIONFORTHE
GOVERNANCEOFTHEMINERALSECTORINCLUDES
  4HE#ONSTITUTION
  -INING/PERATIONS0ROCLAMATION.O
  -INING/PERATIONS!MENDMENT 0ROCLAMATIONPASSEDIN$ECEMBER 
  -INING/PERATIONS2EGULATION.OBASEDONTHE-INING0ROCLAMATION.O
  4RANSACTIONSOF0RECIOUS-INERALS0ROCLAMATION.OPROVISIONSAROUNDBROKERAGECRAFTING
ANDRElNINGOFPRECIOUSMINERALS
  $IRECTIVESISSUEDIN!MHARICONLY
  2EGARDINGTHEISSUANCEOFPROFESSIONALCERTIlCATEFORPROVISIONOFCONSULTINGSERVICESINTHEMINING
SECTOR!UGUST
  4ODETERMINETHEMAXIMUMGEOGRAPHICSCOPEOFLICENCES*UNE
  4ODETERMINEPRECONDITIONSFORDIFFERENTTYPESOFLICENSES/CTOBER
  2EGARDINGlNANCIALCOMPETENCEREQUIREMENTSTOOBTAINALICENSELIMITATIONSONGEOGRAPHICALSCOPE
AMOUNTSOFSERVICEFEESANDNON REFUNDABLEAPPLICATIONFEES*ANUARY
  -INERAL,ICENSE!PPLICATION0ROCESSING$IRECTIVE/CTOBER
  /NCONDITIONSUNDERWHICHVEHICLESMAYBEIMPORTEDTAXFREEDATEUNKNOWN

44 FINAL  REPORT
)TISANOBJECTIVEOFTHEDRAFT-INERAL0OLICYTOESTABLISHALEGISLATIVEANDREGULATORYFRAMEWORKTHATWILL
PROVIDEFORTHEEFFECTIVEADMINISTRATIONOFTHEMINERALSECTORANDANACCOMPANYINGMEASUREISTOPREPARE
ANDIMPLEMENTAMININGPROCLAMATIONANDREGULATIONS!FTERTHEISSUINGOFTHE-INING/PERATIONS
0ROCLAMATIONANAMENDMENTTOTHEPROCLAMATIONANDTWODIRECTIVESHAVEBEENENACTEDSEEABOVE 
4HUSTHEREISAPPARENTLYANON GOINGPROCESSOFREVIEWINGANDUPDATINGTHELEGISLATIVEREGIMEWHILENEW
REGULATIONSTOGIVEFURTHEREFFECTTOTHE-INING/PERATIONS0ROCLAMATIONAREYETTOBEDRAFTED

4HEKEYLEGISLATIONGOVERNINGTHEMINERALSECTORISTHE-INING/PERATIONS0ROCLAMATIONh-INING
0ROCLAMATIONv )NLINEWITHTHE#ONSTITUTIONTHE-INING0ROCLAMATIONPROVIDESTHATMINERALRESOURCES
WITHINTHETERRITORYOF%THIOPIAARETHEPROPERTYOFTHE'OVERNMENTANDOFALLTHEPEOPLESOF%THIOPIAAND
THATTHE'OVERNMENTISTHECUSTODIANOFMINERALRESOURCESWITHDUTYTODEPLOYTHEMFORTHEBENElTAND
DEVELOPMENTOFALL%THIOPIANS4HE-INING0ROCLAMATIONFOCUSESONESTABLISHINGTHERULESANDPROCEDURES
FORALICENSINGSYSTEMANDINCLUDESKEYASPECTSOFTYPESOFLICENSESDIVISIONBETWEENTHEFEDERALGOVERNMENT
ANDREGIONALSTATESINTHEISSUINGOFDIFFERENTTYPESOFLICENSESRULESANDPROCEDURESFORACCESSTOMINERAL
RIGHTSTHEIRTERMINATIONANDRIGHTSANDOBLIGATIONSOFLICENSEHOLDERS4HEPROCLAMATIONISRATHERGENERAL
ANDTHEREAREASYETNOREGULATIONSDRAFTEDINRESPONSETOTHEPROCLAMATION4HEREGULATIONTHATISCURRENTLY
INUSETOIMPLEMENTTHE-INING/PERATIONS0ROCLAMATION.OISTHE-INING/PERATION2EGULATION
.OWHICHMAINLYDEALSWITHISSUANCEOFALICENSERENEWALTRANSFERANDREVOCATIONOFALICENSE
RIGHTSANDDUTIESOFLICENSEESANDROYALTYFEEANDTAXATIONISSUES

!NUMBEROFPROVISIONSINTHE-INING0ROCLAMATIONRESULTINUNCLEARANDWHATCANBEPERCEIVEDASCONTRADICTIVE
RULESWHICHNEGATETHEOBJECTIVEOFTHEDRAFTMINERALPOLICYTOESTABLISHALEGALREGIMEATTRACTIVETOINVESTORS
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UPONASSESSMENTOFlNANCIALANDTECHNICALRESOURCES (OWEVERTHEFOLLOWINGSUB ARTICLESTATESTHATFOR
APPLICATIONSSUBMITTEDhATTHESAMETIMEvPRIORITYWILLBEDETERMINEDBYATECHNICALTEAMONTHEBASIS
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 THATSTATESTHATTHELICENSINGAUTHORITYWILLREGISTERTHEAPPLICATIONANDGIVEARECEIPTTOTHEAPPLICANT
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4HE-INERAL,ICENSING!PPLICATION0ROCESSING$IRECTIVEWHICHCAMEINTOEFFECTON/CTOBER

IN!MHARICNUMBEREDINACCORDANCEWITHTHE%THIOPIANCALENDAR HOWEVERESTABLISHESTHERULES
ANDPROCESSESTOAPPLYINPROVIDINGTHATI EXPLORATIONLICENSEAPPLICATIONSSHALLBECOLLECTEDONAMONTHLY
BASISII ALLAPPLICATIONSRECEIVEDDURINGAONEMONTHPERIODAREASSESSEDBYATECHNICALTEAMACCORDING
TOASETOFCRITERIAWITHASCORINGSYSTEMANNEXEDTOTHE$IRECTIVEIII AMINIMUMSCOREOFISREQUIRED
FORGRANTINGOFTHELICENSETOBECONSIDEREDANDINCASEOFAPPLICATIONSOFTHESAMESTATUSTHATOVERLAP
SPATIALLYTHEONEWITHTHEHIGHESTSCOREWILLBEGRANTEDTHEEXPLORATIONRIGHT0OWERISHOWEVERGIVENTOTHE
STATETOGIVEPRIORITYTOAPPLICATIONSTHATFALLINLINEWITHANYDEVELOPMENTSTRATEGYOFTHEGOVERNMENT!FTER
THE MONTHCLOSUREDATEFORTHERECEIPTOFAPPLICATIONSTHEAPPLICANTSWILLBEINFORMEDWITHIN DATESON
WHENTHEAPPLICATIONSWILLBEOPENEDINPUBLIC ANDTHEOPENINGOFTHEAPPLICATIONSSHOULDOCCURWITHIN
 DAYS)NCASEOFSPATIALLYOVERLAPPINGLICENSESAPPLICATIONSSUBMITTEDATTHEFEDERALANDREGIONALLEVELS
RESPECTIVELYTHETWOAUTHORITIESSHOULDTOGETHERESTABLISHTHETECHNICALTEAMTOEVALUATEDTHEAPPLICATIONS

!RTICLE OFTHE-INING0ROCLAMATIONHOWEVERADDSUNCERTAINTYTOTHEPROCESSISASITENTITLESTHELICENSING

AUTHORITYTODISREGARDAPPLICATIONSALTOGETHERANDOPTFORBIDDINGFORTHEAREAINQUESTION!RTICLE C 
ALSOPROVIDESFORMININGAGREEMENTSTOBEESTABLISHEDTHROUGHCOMPETITIVEBIDDINGORDIRECTNEGOTIATION
(OWEVERTHELAWDOESNOTPROVIDECLEARRULESANDPROCEDURESFORCALLINGFORCOMPETITIVEBIDDINGUNDER
THE-INING0ROCLAMATION4HEAWARDOFMINERALRIGHTSTHROUGHBIDDINGISINLINEWITHSOMERECENTLY
PROPOSEDPOLICYDIRECTIONSSEEBOXABOVE 

4HE-INING0ROCLAMATIONALSOENVISAGESANENTREPRENEURIALROLEFORTHE'OVERNMENTINMININGOPERATIONS
hTHATAREVITALFORTHEOVERALLECONOMICGROWTHEITHERBYITSELFORINPARTNERSHIPWITHPRIVATEINVESTORSv
!PPARENTLYSTATECOMPANIESMUSTACCESSLICENSESUNDERTHESAMECONDITIONSASOTHERAPPLICANTS)NORDER
TOMAKETHISCLEARTOTHEINVESTORCOMMUNITYTHISSHOULDBEPROVIDEDFORINTHEMININGLAWASINTHE
#HILEAN-INING#ODEFOREXAMPLE 

4HE-INING0ROCLAMATIONSTATESTHATTHELICENSINGAUTHORITYCANPREPAREhMODELMININGAGREEMENTSv
TOSERVEASBASISFORNEGOTIATION)NPRACTICEEXPLORATIONLICENSEHOLDERSMUSTNEGOTIATEANDENTERINTOA
-INING!GREEMENTWITHTHE'OVERNMENTTOGETGRANTEDALARGE SCALEMININGLICENSEASEVIDENCEDBYTHE
RECENTNEGOTIATIONOFA-INING!GREEMENTWITH!LLANA0OTASH

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ANDHASNOTBEENUPDATEDANDMADECONSISTENTWITHTHE-INING0ROCLAMATION)TESTABLISHESTERMSIN
ARATHERGENERALMANNERWITHOUTELABORATINGMUCHONIMPORTANTlNANCIALENVIRONMENTALANDCOMMUNITY

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 45

 ASPECTSANDLEAVINGAFEWPROVISIONSOPENFORNEGOTIATION4HE--!INCLUDESCLAUSESONTHEDETERMINATION
OFTHEGEOGRAPHICALSCOPEOFTHELICENSEAREAANDITSDURATIONANDPROVISIONSTOADDANNEXESONTHERELEVANT
WORKPROGRAMMEANDEXPENDITURE)TFURTHERDETAILSTHERIGHTSOFLICENSEESTOBUILDINFRASTRUCTUREANDUSE
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LOCALPROCUREMENT)TSETSENVIRONMENTALPROTECTIONANDCOMMUNITYDEVELOPMENTPROVISIONS)TISNOTEDTHAT
-O-ISCURRENTLYWORKINGONREVISINGTHE--!

4HE--!PROVIDESFORTHEACQUISITIONOFAPARTICIPATIONINTERESTBYTHE'OVERNMENTWITHOUTACOSTWHICH
ISALSOPARTOFTHERECENT AMENDMENTTOTHE-INING0ROCLAMATION)NLINEWITHTHISTHENEW
MININGPROCLAMATIONSTATESTHATTHEFEDERALSTATEHASTHERIGHTTOFREECARRYINMININGPROJECTS!DDITIONAL
EQUITYPARTICIPATIONBYTHESTATEWITHAGREEMENTFROMTHEINVESTORSCANBEDECIDEDWHENTHEMININGLICENSE
AGREEMENTISSIGNED

/THER!FRICANCOUNTRIESHAVECONCENTRATEDONINCREASEDSTATEPARTICIPATIONINTHEMININGSECTORWITH!NGOLA
INITSNEWMININGCODE3EPTEMBER ALLOWINGTHESTATETOBEENTITLEDTOATLEASTOFOWNERSHIPIN
THECOMPANYORTHEMINERALSBEINGEXTRACTED3IMILARLY:AMBIAINANNOUNCEDPLANSTOINCREASEITS
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STATE OWNEDCOMPANIES4HE$2#INITSREVISIONOFTHEMININGCODEHASPROPOSEDANINCREASEDSHAREHOLDING
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LICENSE!SPERTHEINTERVIEWSWITHGOVERNMENTOFlCERSANDINDUSTRYREPRESENTATIVESAMAINCONSTRAINTFOR
NEGOTIATINGASTRONGAGREEMENTISTHELACKOFEXPERTISEFROMTHEGOVERNMENTAUTHORITYINTECHNICALASPECTS
SUCHASTHEASSESSMENTOFTHEFEASIBILITYSTUDY

6.4.  Recommendations
&ORTHEORDERLYANDSUCCESSFULDEVELOPMENTOFTHEMINERALSECTORTHEROLEOFTHE3TATE WHENOTHERTHAN
REGULATORYnCOULDBEMADEMORECLEARINTHEPOLICYANDLEGALFRAMEWORK&URTHERMOREINGENERALITIS
BENElCIALTOBOTHINVESTMENTANDGOVERNANCETHATTHISROLEISCLEARLYCOMMUNICATEDTOSTAKEHOLDERSAND
INVESTORSANDTHATITISREmECTEDINALLACTIONSTHATRELATETOSTATEINVOLVEMENTINTHESECTOR4HE%THIOPIAN
POLICYENVIRONMENTEXPLICITLYENVISIONSMINERALSECTORDEVELOPMENTTOBEDRIVENBYPRIVATESECTORINVESTMENT
'IVENTHESCARCITYOFEXPERIENCEDMININGOREXPLORATIONCOMPANIESWITHINTHECOUNTRYSUCHINVESTMENTSARE
THEREFORELIKELYTOCOMEFROMFOREIGNOPERATORS!TTHESAMETIMETHEPOLICYANDLEGALFRAMEWORKDOESPROVIDE
FORSTATEINVOLVEMENTINMINING4HEREAREGOODEXAMPLESOFPARTLYORFULLYSTATE OWNEDMININGCOMPANIES
SUCCESSFULLYCOEXISTINGWITHTHEPRIVATESECTORFOREXAMPLE#/$%,#/IN#HILEAND,+!"IN3WEDEN 3UCH
SUCCESSESAREGENERALLYBASEDONLONGHISTORIESANDSIGNIlCANTCONTRIBUTIONSFROMTHERESPECTIVECOMPANIES
TONATIONALDEVELOPMENTBUTALSOONCLEARPOLICIESANDRULESFORHOWSUCHCOMPANIESSHOULDBEMANAGED
ANDRUNASWELLASTHETRANSPARENTIMPLEMENTATIONOFTHESERULES)TISRECOMMENDEDTHATTHE%THIOPIAN
GOVERNMENTCAREFULLYCONSIDERTHELESSONSLEARNEDFROMELSEWHERESEEBOX ANDDEVELOPSANDIMPLEMENTS
POLICIESTHATAREINLINEWITHTHEWEALTHOFEXPERIENCESTHANNOWEXISTWITHREGARDSTOSTATEINVOLVEMENTIN
MINING

!FORUMFORCOLLABORATIONEGPOLICYCOMMITTEE INVOLVINGOTHERAUTHORITIESTHANTHE-O-EGTRANSPORT
INDUSTRYWATERANDENERGYENVIRONMENTEDUCATIONINVESTMENT WOULDBEBENElCIALTOMINERALPOLICYDElNITION
ANDIMPLEMENTATION4HECURRENTDRAFTMINERALPOLICYINCLUDESMANYAREASTHATREQUIREKEYINVOLVEMENT
FROMOTHERAUTHORITIESANDPOLICYMEASURESACTIONSNEEDTOBEBETTERDElNEDTOFACILITATEIMPLEMENTATION
-OREFORMALIZEDMEANSOFCOMMUNICATIONWOULDBEBENElCIALTOTHELONGTERMSUSTAINABLEDEVELOPMENT
OFTHESECTOR

46 FINAL  REPORT
Box  3:  State  involvement  in  the  mineral  sector

The  last  decade  has  seen  an  increasing  interest,  especially  among  developing  countries,  in  increasing  
state  involvement  in,  and  control  of,  mining  projects.  This  relates  to  a  period  when  commodity  prices  
have  been  high,  and  when  China’s  role  in  world  mining  has  risen  (in  China,  all  mining  is  state  controlled).  
This  period  -­  in  turn  -­  follows  a  prolonged  period  (1980-­2000)  which  saw  wide  spread  privatisation  of  
state  owned  mines,  in  turn,  following  the  collapse  of  the  Soviet  Union  and  the  subsequent  turn  to  market  
based,  liberal  policies  which  saw  a  very  limited  role  for  state  enterprises.  The  period  of  privatisations  
was  also  concurrent  with  a  period  when  metal  prices  were  low,  and  when  minerals  were  deemed  to  
be  of  comparatively  lesser  strategic  importance  (in  contrast  to  oil  and  the  energy  minerals  where  state  
involvement  always  has  been  higher  than  in  the  minerals  sector).  In  line  with  this,  state  control  has  in  
general  been  greater  in  minerals  that  are  deemed  to  have  strategic  importance  (e.g.  iron,  aluminium,  
copper),  compared  to  those  that  are  regarded  as  not  being  strategic  in  this  way  (e.g.  gold).

Throughout  these  historical  trends  and  changes,  state  control  and/or  ownership  in  mining  operations  
HAVECONTINUEDTOEXISTBUTITSRELATIVEIMPORTANCEHASVARIEDREmECTINGTHECYCLICALITYOFTHESECTORAS
well  as  changes  in  policy  direction.  Raw  Materials  Group  (2011)  reports  that  for  a  subset  of  the  most  
important  minerals  and  metals  (bauxite,  Cu,  Au,  Fe,  Pb,  Mn,  Ni,  Sn  and  Zn),  state  control  by  value  was  
at  a  high  of  46%  in  1984,  and  at  a  historical  low  of  22%  in  the  early  parts  of  2000.  Raw  Materials  Group  
(2011)  further  suggests  that  today,  there  is  realisation  that  there  are  no  simple  answers  as  to  whether  
state  control  in  mining  is  good  or  bad.  In  all  cases,  however,  were  there  is  state  control,  the  level  of  
success  is  determined  by  a  number  of  factors,  and  among  those  of  special  importance  are:  the  existence  
of  adequate  management  capacity;  continual  reinvestments  must  be  made;  the  need  of  understanding  
on  part  of  the  owner  (the  state)  of  the  cyclicality,  long-­term  and  risky  nature  of  the  sector;  the  need  to  
RETAINCONSIDERABLElNANCIALSTRENGTHWITHINTHECOMPANYACLEARDISTINCTIONBETWEENTHESTATESROLEAS
ANOWNERANDAREGULATORFULLTRANSPARENCYANDWITHIN COMPANYCONTROLOFCOMPANYCASH mOW

In  addition  to  the  possibility  of  full  state  control  or  ownership,  there  is  partial  ownership.  This  is  
especially  prevalent  in  developing  countries,  and  commonly  the  state  in  question  assumes  ownership  
of  some  percentage  (either  through  free  carry  or  through  investing  in  the  project  at  an  early  stage)  of  a  
certain  project.  The  percentage  is  commonly  less  than  10  %.  Advantages  with  this  approach  include  
that  the  state  has  a  good  understanding  of  what  is  happening  within  the  company,  that  capacity  and  
understanding  of  mining  can  be  built  up  within  the  administration,  and  that  dividends  can  be  received  
from  successful  projects.  Disadvantages  include  that  such  a  set  up  may  be  a  substantial  deterrent  to  
private  investors  (especially  in  the  case  of  “free  carry”),  and  that  the  state  becomes  to  a  greater  extent  
EXPOSEDTOAVARIETYOFRISKSRELATEDTOPROJECTSNOTFULlLLINGEXPECTATIONS

The  issue  of  state  control  of  mining  in  Ethiopia  has,  in  part,  followed  international  trends  but  has  more  
IMPORTANTLYBEENCONTROLLEDBYDOMESTICPOLITICALCHANGES#URRENTLYTHE%THIOPIANMINERALPOLICYDElNES
the  role  of  the  government  as  the  facilitator,  promoter  and  regulator  of  a  mineral  sector  envision  to  be  
driven  by  private  sector  investment,  the  2010  Mining  Proclamation  envisages  an  entrepreneurial  role  for  
the  Government  in  mining  operations  “that  are  vital  for  the  overall  economic  growth  either  by  itself  or  in  
partnership  with  private  investors”.  The  Ethiopian  Mineral  Development  Share  Company  (EMDSC)  is  the  
state-­owned  enterprise  engaged  in  minerals  exploration  and  exploitation,  primarily  involving  the  Kenticha  
tantalum  mine.  During  2013,  the  Privatization  and  Public  Enterprises  Supervising  Agency  (PPESA)  
invited  prospective  business  partners  to  enter  into  a  Joint  Ventures  to  develop  the  EMDSC1.  Previously,  in  
the  late  1990’s,  the  Lega  Dembi  gold  mine  was  privatized  and  the  government  also  have  had  plans  to  sell  
the  state-­owned  Adola  Gold  Development  Enterprise2,  which  runs  a  small  alluvial  gold  project  in  southern  
Ethiopia,  but  this  plan  has  not  been  realized.  The  state  also  owns  the  Mugher  Cement  Enterprise,  one  of  
the  major  cement  producers  in  Ethiopia.  Recently  a  joint  Ethio-­Chinese  project  has  been  initiated  with  
the  objective  to  undertake  exploration  within  a  very  large  concession  in  southwestern  Ethiopia3.

1   The  Reporter  observed  on  18  August  2013  that  the  EMDSC  is  about  to  go  to  the  privatization  auction  block  in  full  in  2013/14  
after  the  PPESA  cancelled  plans  to  operate  the  company  under  a  joint  venture  deal.
2   Capital,  19  March,  2012.
3   The  Reporter,  28  December,  2013

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 47

 4HE'40COULDAIMFORAMORELONG TERMVIEWOFTHEDEVELOPMENTOFTHEMININGSECTOR4HISSHOULDBEBASED
ONANAWARENESSOFTHESECTORSPARTICULARCHARACTERISTICSINHERENTGEOLOGICALANDlNANCIALUNCERTAINTIES
THEINDUSTRYSCYCLICALNATURETECHNICALREQUIREMENTSFORADVANCEDEXPLORATION 4HISAWARENESSCANAND
SHOULDPERMEATEALLASPECTSOFMANAGEMENTOFSECTORGROWTHFROMTHE'40TOTHEROLEOFTHE-O-4HE
ENVISIONEDCONTRIBUTIONFROMTHEMINERALSECTORTOTHENATIONALECONOMYBYMAYNOTBEMETANDA
SLOWERDEVELOPMENTCANBEVIEWEDASPOSITIVEASITGIVESAMPLETIMEFORNEEDEDGOVERNANCESTRUCTURESTO
DEVELOP

4HEDEVELOPMENTOFNEWREGULATIONSANDREVISIONOFTHE--!ONTHEBASISOFTHENEWMININGPROCLAMATION
WILLLEADTOAMORECOMPLETELEGALFRAMEWORK!COMPREHENSIVEREVISIONOFTHE--!INTHELIGHTOFNEWLAWS
ANDREGULATIONSINCOMINGTRANSPARENCYREQUIREMENTSANDSUSTAINABLEDEVELOPMENTCOMMITMENTSWOULD
ALSOMAKEITAUSEFULTOOLFORCOORDINATINGTHEWORKOFDIFFERENTREGULATORYAGENCIESWITHAROLEINMINING
EGTHEENVIRONMENTALANDWATERAGENCYTHERELEVANTAGENCYFORPLANNINGINFRASTRUCTUREANDCOMMUNITY
DEVELOPMENTASWELLDIFFERENTLEVELSOFJURISDICTIONALAUTHORITY nASINLONG TERMMININGAGREEMENTSIN
7ESTERN!USTRALIA!THOROUGHREVIEWOFTERMINOLOGYANDCONSISTENCYWITHTHEOVERALL%THIOPIANLEGALSYSTEM
ISALSORECOMMENDED

4HEADVANTAGESANDDISADVANTAGESOFAMININGLICENSINGREGIMEWHICHISNOTSTRICTLYBASEDONTHElRST
COME lRST SERVEDMAYBERECONSIDERED7HILETHEGROUPINGANDASSESSMENTOFEXPLORATIONLICENSEON
AMONTHLYBASISMAYHAVESOMEMERITINTHAT@SPECULATIONANDAPPLICANTSTHATDONOTHAVEINMINDTO
UNDERTAKESERIOUSEXPLORATIONCANBEAVOIDEDACOMMONVIEWAMONGSTINTERNATIONALEXPLORATIONCOMPANIES
ISTHATSUCHAREGIMEANDINPARTICULARTHEPROVISIONTHATALLAPPLICATIONSCANBEDISREGARDEDANDTHEAREA
INQUESTIONCANBETAKENTOBIDDINGISAMAJORDISINCENTIVETOINVESTMENT4HUSCURRENTLYTHELEGALAND
REGULATORYFRAMEWORKHASARATHERLIMITEDROLEINESTABLISHINGTHEENABLINGCONDITIONSFORMININGTOUNLEASH
@SUSTAINABLEECONOMICGROWTHWHICHISAKEYVISIONOFTHEMINERALPOLICYFRAMEWORK

3OMECOUNTRIESPROVIDEFORCOMPETITIVEBIDDINGINHIGHLYPROSPECTIVEAREASORWITHREGARDTOCERTAINhSTRATEGICv
MINERALS)TWOULDBEBENElCIALTOINVESTMENTANDREGULATIONIFTHEBASISFORCALLINGFORCOMPETITIVEBIDDING
ASWELLASTHECRITERIAFORCOMPETITIVEANDTRANSPARENTPROCEDURES WOULDBEESTABLISHEDUNDERTHELAWIN
RELEVANTREGULATIONSORDIRECTIVES

)TCOULDBEHELPFULTOEXPLORETHEPOSSIBILITYOFESTABLISHINGCATEGORIESOFMINERALSANDRELEVANTACCESSREGIMES
ASWELLASTHEIRRESPECTIVEPRIORITIESANDRELATIONSHIPWHICHARESOMEHOWUNCLEARANDHARDTOIMPLEMENT
UNDERTHECURRENTSYSTEM

48 FINAL  REPORT
 ©  Allana  Potash  Afar  Plc.

7.   INSTITUTIONAL  FRAMEWORK
7.1.  Ministry  of  Mines
 4HE-INISTRYOF-INES-O- ISRESPONSIBLEFORESSENTIALLYALLASPECTSOFMINERALSECTORDEVELOPMENTAND
GOVERNANCE4HEREGULATORYBASISFORTHE-O-ISTHE@0ROCLAMATIONTOPROVIDEFORTHEDElNITIONOFPOWERS
ANDDUTIESOFTHEEXECUTIVEORGANSOFTHE&EDERAL$EMOCRATIC2EPUBLICOF%THIOPIA.O4HE
POWERSANDDUTIESDElNEDINTHEPROCLAMATIONBROADLYTRANSLATETOTHEFOLLOWINGI PROMOTIONFORSECTOR
DEVELOPMENTII COLLECTIONANDMANAGEMENTOFGEOSCIENTIlCDATAIII ENCOURAGEINVESTMENTTHROUGH
FACILITATINGEXPLORATIONANDMININGOPERATIONSIV REGULATIONOFTHESECTORINCLUDINGTHEARTISANALANDSMALL
SCALEGEMSTONESECTORV ORGANIZATIONOFRESEARCHANDTRAININGCENTRESFORSECTORDEVELOPMENTANDVI 
GRANTINGANDMANAGEMENTOFMINERALRIGHTS)TEMIIANDTOSOMEEXTENTITEMIFALLSUNDERTHE'EOLOGICAL
3URVEYOF%THIOPIA3ECTION 

 3INCETHE-O-ALSOASSUMESTHERESPONSIBILITYFORTHE%)!PROCESSSUPERVISIONEVALUATIONAND

COMPLIANCEMONITORING ASTHE%0!ISSECONDINGTHISPROCESSTODIFFERENTSECTORIALAUTHORITIESANDREMAINS
WITHASUPERVISORYROLE

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MINISTRIESWHILEOFlCESWITHDUTIESOFDIRECTRELEVANCETOSECTORDEVELOPMENTINCLUDE

  -INERAL,ICENSINGAND!DMINISTRATION$IRECTORATE)SSUINGANDADMINISTRATIONOFMINERALLICENSESAND
COMPLIANCEMONITORINGOFTECHNICALANDlNANCIALOBLIGATIONS4HEREARECURRENTLYSOMESTAFFATTHE
DIRECTORATEBUTTHEREISINSUFlCIENTCAPACITYTOHANDLEANDEVALUATELICENSEAPPLICATIONSANDPERFORM
COMPLIANCEMONITORINGSEEFURTHER#HAPTER 

  %NVIRONMENTALAND#OMMUNITY$EVELOPMENT$IRECTORATE4HEDIRECTORATEWASESTABLISHEDINAND
AFTERATRANSITIONPERIODTHEYARENOWFULLYRESPONSIBLEFORTHE%)!PROCESSINCLUDINGSUPERVISION%)!
EVALUATIONANDCOMPLIANCEMONITORING/CCUPATIONAL(EALTHAND3AFETYISALSOPARTOFTHESCOPEOFWORK
4HEREARECURRENTLYSTAFFATTHEDIRECTORATEBUTTHEREISNOSTAFFWITHEXTENSIVEEXPERIENCEANDSUFlCIENT
QUALIlCATIONSINTHElELDSREQUIREDMININGENVIRONMENTSOCIOECONOMICSCOMMUNITYDEVELOPMENTAND
/(3 FOREXAMPLEFORIN DEPTHASSESSMENTOF%)!S4HEREISALSOALACKOFINSTRUMENTSFORENVIRONMENTAL
MONITORINGATTHEDIRECTORATE&ROMINTERVIEWSCARRIEDOUTWITHINTHISPROJECTITAPPEARSASIFTHEDIRECTORATE
LACKSPOWERANDRESOURCESFORADEQUATEMONITORINGANDENFORCEMENTEGSOMECOMPANIESHAVENOT
LODGEDENVIRONMENTALBONDS 

  ,EGAL!FFAIRS$RAFTINGOFPOLICIESPROCLAMATIONSANDREGULATIONSASWELLASVARIOUSOTHERLEGALAGREEMENTS
IMPORTANTLYTHE-ODEL-INING!GREEMENTSEE#HAPTER 4HEREARESTAFFAT,EGAL!FFAIRSBUTNONEIS
QUALIlEDINMINERALLAW

  !RTISANAL-ININGAND4RANSACTIONS#OORDINATION2ESPONSIBLEFORTHEDEVELOPMENTOFTHEARTISANALMINING
SECTORTHROUGHTECHNICALANDTRAININGSUPPORTANDENCOURAGEMENTTOFORMCOOPERATIVES)NTHISTHEYWORK
CLOSELYWITHREGIONSANDWOREDASANDTHEREISCURRENTLYSTAFFATTHEUNIT4HEUNITHASMADEPROGRESS
INCERTAINGEOGRAPHICALAREASINTERMSOFPROMOTINGTHEESTABLISHMENTOFMININGCOOPERATIVES(OWEVER
CONSIDERINGTHEVERYLARGESIZEOFTHEARTISANALSECTORTHEUNITISUNDERSTAFFEDANDALSOLACKCAPACITYFOR
ADEQUATESUPERVISIONINTHEAREASOFENVIRONMENTALANDSOCIOECONOMICMANAGEMENT

  %)4))MPLEMENTATION3ECRETARIAT4HESECRETARIATISRESPONSIBLEFORTHEPROCESSANDAPPLICATIONFOR%THIOPIA
TOBECOMEAN%)4)CANDIDATECOUNTRY4HEREARESTAFFATTHESECRETARIAT

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 49

 -INISTERSOFlCE
(5)

Support  processes

Human  Resources  Development  &   Procurement,  Finance  &  Property  

Management  Process Administrative  Process
(28  /  45) (103  /  141)

Management  units

Planning,  
Gender   Public   Environmental  
Monitoring  
Audit  Support   Mainstreaming   Relations  &   &  Community  
&  Evaluation   Legal  Affairs
Process Management   Communication   Development  
Management   (7)
(8) Process /FlCE -ONITORING/FlCE
Process
(6) (8) (14)
(7)

Information   EITI  
Change   HIV/AIDS  Prevention  
Communication   Implementation   %THICS/FlCE
-ANAGEMENT/FlCE #ONTROL/FlCE
Technology  Centre Secretariat (3)
(5) (4)
(10) (5)

3TATE-INISTERSOFlCE
(5)

Core  processes

Artisan  Mining  
Mineral  Licensing  &   Petroleum  Licensing   Research  &  
&  Transactions  
Administration &  Administration Development
Coordination
(24  /  59) (27  /  44) (7  /  23)
(14)

Figure  7.1  `Ministry  of  Mines  organizational  structure.  There  is  a  total  of  287  staff  (of  which  40%  are  women)  compared  to  the  
REQUIREDBYTHEOFlCIALSTAFFSTRUCTURE4HENUMBEROFCURRENTSTAFFISSHOWNWITHINBRACKETS&IGURESINREDALSO
SHOWTHENUMBERREQUIREDBYTHEOFlCIALSTAFFSTRUCTUREFORTHElVEOFlCESWITHTHEHIGHESTSTAFFSHORTAGECOMPARED
to  the  staff  structure.  

 -O-HASCONSIDERABLECOMPETENCEAMONGSOMELONG TERMEMPLOYEES(OWEVEROVER ALLFROMINTERVIEWS

CARRIEDOUTWITHINTHISPROJECTTHEUNDERSTANDINGOFTHEMININGCYCLEANDMININGINDUSTRIALQUESTIONSIN
GENERALAMONGMANY-O-STAFFISPERCEIVEDTOBERATHERWEAKWHICHINmUENCESBOTHTHESUPERVISIONTO
PRIVATECOMPANIESTHEQUALITYANDEFlCIENCYINDECISION MAKINGANDEXPECTATIONSWITHREGARDSTOEXPLORATION
ANDMININGDEVELOPMENT)NSUFlCIENTCAPACITYISALSOANISSUEWITHREGARDSTOTHENEGOTIATIONOFMINING
CONTRACTS4HUSTHEREISINSUFlCIENTSTAFFCAPACITYBOTHINLIGHTOFFULlLLINGVISIONSANDGOALSANDTOPERFORM
COREFUNCTIONSSUCHASLICENSEASSESSMENTANDADMINISTRATION

 4HECAPACITYGAPISINPARTARESULTOFAHIGHTURNOVEROFSTAFFWHICHMAKESITDIFlCULTTOCONSISTENTLYBUILD

CAPACITYOVERTHELONGERTERMANDTHEHIGHSTAFFTURNOVERISMAINLYRELATEDTOTHELOWPUBLIC SECTORPAY
COMPAREDTOTHEPRIVATESECTORDIFFERBYAFACTOROFUPTO 4HEVIRTUALLYNON EXISTENTLARGE SCALEMINING
SECTORHASALSONOTREQUIREDSIGNIlCANTCAPACITYBUILDINGFORMINERALSECTORGOVERNANCE

 4HEREISATOTALOFALMOSTSTAFFATTHE-O-ANDTHEREISAHIGHNUMBEROFSTAFFINMANAGEMENTANDSUPPORT
PROCESSES ASCOMPAREDTOSTAFFINTHECOREPROCESSES nSEE&IGUREINTHISESTIMATIONTHE
%NVIRONMENTAL#OMMUNITY$EVELOPMENT-ONITORING/FlCEISHEREGROUPEDWITHTHECOREPROCESSESASIT
INESSENCEHASAREGULATORYFUNCTIONSIMILARTOTHATOFTHEMINERALLICENSINGDIRECTORATE /VERALLOFTHE
STAFFAREWOMENBUTTHEGENDERDISTRIBUTIONVARIESBETWEENDIFFERENTUNITSFROMWOMENATTHE,EGAL
!FFAIRSOUTOF TOATTHE%THICSOFlCEWHEREALLTHREESTAFFAREFEMALE!CCORDINGTOTHEESTABLISHED

50 FINAL  REPORT
 STAFFSTRUCTURETHERESHOULDBESTAFFATTHE-O-ANDTHEDISCREPANCYBETWEENCURRENTANDPLANNED
STAFFNUMBERSISRELATEDMAINLYTOlVEOFlCES&IGURE 

 4HE-O-BUDGETFORRECURRENTCOSTS4ABLE SHOWSTHATMANAGEMENTADMINISTRATIONANDSUPPORT

DOMINATETHECOSTS)TISNOTEDTHATWHILEONEOFTHEIMPORTANTCOREDUTIESOFTHE-O-ISTHEISSUINGOF
MINERALRIGHTSANDMONITORINGOFCOMPANIESPERFORMANCETHERESPONSIBLEOFlCEISONLYALLOCATEDOF
THEBUDGETAPPROVEDBY-O&%$!SIMILARLEVELALLOCATION FORTHEARTISANALMININGANDTRANSACTIONS
OFlCEREmECTSTHEPOLICYDECISIONTOPROVIDESIGNIlCANTSUPPORTTOTHEARTISANALMININGSECTOR

Table  7.1.     The  MoM  (not  including  the  GSE)  2012/2013  budget  for  recurrent  costs.
Birr Part  of  total  budget
-ANAGEMENTADMINSUPPORT  
-INERALLICENSINGADMIN  
0ETROLEUMLICENSINGADMIN  
!RTISANALMININGTRANSACTIONS  
2ESEARCHDEVELOPMENT  
3OURCE -O-(UMAN2ESOURCES$EVELOPMENT-ANAGEMENT

7.2.  Geological  Survey  of  Ethiopia

 4HE'EOLOGICAL3URVEYOF%THIOPIA'3% WASlRSTESTABLISHEDINASADEPARTMENTWITHINTHE-INISTRY
OF-INESAND%NERGY)NITWASTURNEDINTOANAUTONOMOUSGOVERNMENTAGENCYACCOUNTABLETOTHE
-O-NAMEDTHE%THIOPIAN)NSTITUTEOF'EOLOGICAL3URVEYS4HECURRENTREGULATORYBASISFORTHE'3%ISTHE
@0ROCLAMATIONTOPROVIDEFORTHEESTABLISHMENTOFTHE'EOLOGICAL3URVEYOF%THIOPIA.O

 4HERESPONSIBILITIESOFTHE'3%THATRELATESTOMINERALSECTORDEVELOPMENTBROADLYINCLUDESI REGIONAL

GEOLOGICALANDGEOCHEMICALMAPPINGII RECONNAISSANCEFOLLOW UPANDDETAILEDEXPLORATIONTOEVALUATE
THEMINERALPOTENTIALOFTHECOUNTRYIII ANALYSINGGEOLOGICALSAMPLESMINERALROCKSOILSTREAMSEDIMENT
ANDWATERETC RELATEDTOMAPPINGANDEXPLORATIONWORKIV UNDERTAKEGEOPHYSICALSURVEYSIV COLLECT
MANAGEANDDISSEMINATEGEOSCIENCEINFORMATIONANDV CARRYOUTCOREDRILLING

4HEORGANIZATIONALSTRUCTUREISSHOWNIN&IGUREANDASWITHTHE-O-SEVERALOFlCESAREGENERICTO
GOVERNMENTALINSTITUTIONSANDMOSTLYCONCERNEDWITHINTERNALPROCESSESWHILElVEUNITSCENTRESAREOFDIRECT
IMPORTANCETOMINERALSECTORDEVELOPMENTAREDESCRIBEDBELOW)TISNOTEDTHATAPARTFROMSUPPORTINGMINERAL
SECTORDEVELOPMENTTHE'3%ISALSOINVOLVEDINRESEARCHANDDEVELOPMENTINTHEAREASOFGROUNDWATER
GEOHAZARDSANDGEOTHERMALENERGYBUTTHESEAREASARENOTCONSIDEREDINTHISREPORT

  "ASIC'EOLOGICAL-APPINGSHALLUNDERTAKEGEOLOGICALMAPPINGGEOCHEMICALSURVEYSANDGEOPHYSICAL
INVESTIGATIONS4HEREARESOMESTAFFASCOMPAREDINTHEOFlCIALSTAFFSTRUCTURE4HE'3%UNDERTOOK
EXCELLENTMAPPINGANDEXPLORATIONWORKOVERMANYYEARSAFTERITSESTABLISHMENTINTHELATESANDSTILL
HOUSESCONSIDERABLECOMPETENCE(OWEVERDUETOALACKOFHUMANANDlNANCIALCAPACITYTHEPREVIOUS
LEVELOFWORKHASNOTBEENUPHELDANDITHASNOTBEENPOSSIBLETOBUILDONTHEWORKEXECUTEDANDTHE
COMPETENCEACQUIREDDURINGLARGETRAININGPROGRAMSINTHE S!SARESULTTHEEXISTINGWORK
ISLARGELYRESTRICTEDTOCOMPLETINGGEOLOGICALMAPPINGATTHESCALEBYALMOSTOFTHE
COUNTRYISNOWCOVERED )NADDITIONTOTHEISSUEOFSTAFFCAPACITYTHE'3%VEHICLEmEETANDEQUIPMENT
INSTRUMENTSAREINPARTOLDANDSOMETIMESDONOTFUNCTIONWELL4HEQUALITYOFTHEMAPPINGISALSOLIMITED
BYTHELACKOFAIRBORNEGEOPHYSICALDATATOSUPPORTTHEMAPPING

  -INERAL%XPLORATIONAND%VALUATIONISRESPONSIBLEFOREXPLORATIONFORMETALLICANDINDUSTRIALMINERALSAS
WELLASHYDROCARBONS 4HEREISSOME STAFFASCOMPAREDTOINTHESTAFFSTRUCTUREANDTHEWORK
ISFOCUSEDONTHEDELINEATIONOFTARGETAREASFORPLACERGOLDTOSUPPORTARTISANALMININGANDFORINDUSTRIAL
MINERALSCLOSETOEXISTINGINFRASTRUCTURETOSUPPORTARTISANALANDSMALL SCALEMINING%XPLORATIONFOR
METALLICMINERALSWASAKEYFOCUSINTHEPASTBUTWITHPRIVATECOMPANIESENTERINGTHEMARKETTHISWORK
HASCOMETOAHALTDUETOSTAFFLOSS

  4HE'EOSCIENCE$ATA#ENTREISRESPONSIBLEFORTHEADMINISTRATIONANDDISTRIBUTIONOFDATAANDINFORMATION
)THOSTSALIBRARYABIBLIOGRAPHICDATABASEWITHMAPSANDSOMETECHNICALREPORTSANDAMINERAL
OCCURRENCEDATABASEWITHMETADATAFORSOMEOCCURRENCES4HECENTREISALSOINVOLVEDINPRODUCING
PROMOTIONALMATERIAL7HEREASTHECENTREISWELLORGANIZEDTHEREARELARGEAMOUNTSOFINFORMATIONAND
DATANOTENTEREDINDATABASES&URTHERMORECOMPANIESAREOBLIGATEDTOPROVIDEEXPLORATIONDATAAND
INFORMATIONTOTHE'3%BUTDATAFROMTHECOMPANIESARENOTCURRENTLYCOLLECTED4HEREARECURRENTLY
STAFFATTHECENTRE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 51

   4HE'EOSCIENCE,ABORATORYISFOCUSEDONGEOCHEMICALANALYSISWITH!!3 AND82& CAPABILITIES
ANDONE)#0 /%3AWAITINGBUILDINGREFURBISHMENTANDINSTALLATION4HEREISALSOAN82$THINSECTION
PETROGRAPHYFACILITIESANDBASICEQUIPMENTFORMINERALROCKPHYSICALMEASUREMENTS)NMORE
THANOFSOMESAMPLESPREPAREDFORGEOCHEMICALANALYSISCRUSHINGANDGRINDING WERE
FORTHEPRIVATESECTOR,ESSTHANOFPREPAREDSAMPLESWEREANALYSEDATTHELABORATORYASPRIVATE
SECTORCLIENTSSENDSAMPLESOVERSEASFORANALYSISATACCREDITEDLABORATORIESTHELABORATORYHASBEEN
WORKINGTOWARDSACHIEVING)3/ACCREDITATIONSTATUSOVERTHELASTCOUPLEOFYEARS 4HEREISABOUT
STAFFATTHELABORATORYOUTOFWHICHMORETHANHALFAREPROFESSIONALSTAFFCHEMISTSANDGEOLOGISTS 
4HEANALYTICALOUTPUTISLOWCONSIDERINGTOTHENUMBEROFSTAFFANDTHEINSTRUMENTALCAPACITY+EYISSUES
INCLUDEALACKOFASTRONGCLIENTBASETHECUMBERSOMEPROCUREMENTPROCESSFORPURCHASEOFSPAREPARTS
ANDCONSUMABLESANDTHEFACTTHATMANYOFTHEINSTRUMENTSAREAGING

  4HE$RILLING3ERVICESCENTREHAS COREDRILLINGRIGSANDALSORIGSEACHFORWATERHOLEANDGEOTHERMAL
DRILLING 4HECOREDRILLINGWORKUNDERTAKENISALMOSTEXCLUSIVELYFORPRIVATECLIENTSWHEREASINTHEPAST
COREDRILLINGWASANINTEGRALPARTOFTHE'3%EXPLORATIONWORK!TTHEENDOF.OVEMBERlVEOF
THECOREDRILLINGRIGSWEREDEPLOYEDINTHElELDANDTHERESTWEREINWORKSHOPFORMAINTENANCE$ELAY
INTHEPROCUREMENTOFSPAREPARTSANDCONSUMABLESDUETOTHECUMBERSOMEBUDGETINGANDTENDERING
PROCEDURESISAKEYISSUE4HEREARESOMEDRILLERSANDSUPPORTSTAFFOFWHICHDRILLERSARE
CURRENTLYASSIGNEDTOGEOTHERMALDRILLINGFOR%"#/ASTATEENTERPRISE %XPLORATIONCOMPANIESBELIEVE
THATTHE'3%DRILLINGCENTREHASGOODEQUIPMENTANDSKILLEDDRILLERSBUTCLAIMTHATTHEDRILLINGSERVICE
ISVERYINEFlCIENT!SFASTHIGH QUALITYDRILLINGISOFPRIMARYIMPORTANCEINEXPLORATIONMANYCOMPANIES
PREFERTOUSEPRIVATEDRILLINGCOMPANIES

Director  General

Public  Relation  &  

Legal  Affairs   Geoscience  Data   Change  
Communication   ITC  Unit Audit  Unit
Unit Centre Management  Unit
Unit

Human   Proc.  &  Fin.,  Property  Admin  &  

Planning,  
Resources  &   HIV  AIDS  Focal   Gen.  Services,  Drilling  Equip.  &   Gender  Main-­ Ethics  Liaison  
Monitoring  &  
Development   Person Vehicle  Maintenance  &  Transp.   streaming  Unit /FlCE
Evaluation  Unit
Unit Support  Unit

Chief  Geologist

Basic   Groundwater   Geothermal  

Mineral  Exploration   Geohazards  
Geoscience   Resource   Resource  
&  Evaluation Investigations
Mapping Assessment Assessment

3CIENTIlC%QUIPMENT
Geoscience   Drilling  Services  
Engineering,  Repair  &  
Laboratory  Centre Centre
Maintenance  Centre

Figure  7.2    Organizational  structure  of  the  Geological  Survey  of  Ethiopia.

52 FINAL  REPORT
 4HESURVEYINTOTALHASSOMESTAFFASCOMPAREDTOTHESTAFFSTRUCTURETHATHASABOUTPOSITIONS
3IMILARTOTHE-O-THEMAJORITYOFTHEEMPLOYEESWORKINMANAGEMENTADMINISTRATIONANDSUPPORTABOUT
STAFFTHATFALLUNDERh0ROC&IN0ROPERTY!DMIN'EN3ERVICESETCvIN&IGURE !CCORDINGTO
THE'3%STRUCTURETHERESHOULDBEATOTALOFTECHNICALSTAFFVARIOUSTYPESOFGEOSCIENTISTSCHEMISTS
ETC WHILETHENUMBEROFTECHNICALSTAFFTODAYISABOUT

!PARTFROMTHEYEARLYGOVERNMENTALBUDGETALLOCATIONTOTHE'3%BASEDONSTAFFSTRUCTUREANDPLANNED
ACTIVITIESTHE'3%ISTOALARGEEXTENTRELIANTONDONOR SUPPORTEDPROJECTSFORTHECORETECHNICALWORKTOBE
UNDERTAKENANDMUCHOFTHEHISTORICALWORKINCOLLECTINGGEO SCIENTIlCDATAINSTITUTIONALSTRENGTHENING
ANDTRAININGHASBEENINPROJECT FORMBASEDONDONORFUNDS4HEREISCURRENTLYA YEARPROGRAMWITHTHE
#HINESEGOVERNMENTFOCUSEDONTHEDElNITIONOFTARGETAREASINSOUTHERN%THIOPIALABORATORYSUPPORTAND
TRAININGOFSTAFF

!SFORTHE-O-ANDTHE'3%WORKISALSOHAMPEREDBYINSUFlCIENTSTAFFCAPACITYBOTHINLIGHTOFVISIONS
ANDGOALSANDTOPERFORMCOREFUNCTIONSWHICHISINPARTDUETOTHEVERYHIGHTURNOVEROFSTAFFMAKINGIT
DIFlCULTTOBUILDCAPACITYOVERTHELONGERTERM&OREXAMPLEINABOUTTECHNICALSTAFFLEFTTHE'3%
ANDABOUTNEWSTAFFWERERECRUITED4HE'3%ISPERCEIVEDASHAVINGCONSIDERABLECOMPETENCEAMONG
MANYLONG TERMEMPLOYEESBUTMANYEXPERIENCEDSTAFFLEAVEANDNEWRECRUITSARENOTSUFlCIENTLYQUALIlED
ANDTHEYOFTENSTAYONLYFORASHORTTIME

4HE'3%REPORTSTHATTHEYRECEIVESUFlCIENTBUDGETALLOCATIONSBASEDONTHEIRANNUALREQUESTS$ESPITE
THISITISARGUABLETHATBUDGETSFORTHESEINSTITUTIONSARENOTSUFlCIENTFORFUNCTIONSFORWHICHTHEYTAKE
RESPONSIBILITY%VENIFTHEISSUEOFTHELEVELOFSTAFFSALARIESISTREATEDSEPARATELYBUDGETSUPPORTFORlELD
ACTIVITIESMAPPINGPROGRAMSETCAREPROBABLYTOOLOW

7.3.  Other  institutions

!SFOROTHERMINISTRIESANDGOVERNMENTALORGANIZATIONS-O&%$HASINDIRECTINVOLVEMENTINTHESECTOR4HIS
ISTHROUGHITSCONTROLOFTHEBUDGETPROCESSANDPLANNINGPROCESSANDITSINTERESTINANDADMINISTRATIONOF
REVENUESTAXESROYALTIESANDFOREIGNEXCHANGEEARNINGSFROMTHESECTOR-O&%$WOULDALSOBEINCONTROL
OFANYLOANSORPROGRAMSFORDEVELOPMENTOFTHESECTORFROMINTERNATIONALDEVELOPMENTAGENCIES

/THERMINISTRIESANDGOVERNMENTALOFlCESSEEMTOHAVENOKNOWLEDGEANDVERYLITTLEINVOLVEMENTINMINERAL
SECTORPLANNINGDEVELOPMENT4HEREISNOOFlCIALFORUMFORCOLLABORATIONANDJOINTPLANNINGBETWEENTHE
VARIOUSMINISTRIESAUTHORITIESTHATAREORSHOULDBECONCERNEDWITHTHEDEVELOPMENTOFTHEMINERALSECTOR
)SSUESCANBEADDRESSEDAT#OUNCILOF-INISTERMEETINGSBUTCOMMUNICATIONSEEMSTOBEMAINLYTHROUGH
THE-O-NOTIFYINGOTHEROFlCESOFEXPLORATIONANDMININGPROJECTSUNDERWAYASANDWHENNEEDED(OWEVER
THISNORMALFORACOUNTRYWITHLITTLEHISTORICALMININGANDANUNDEVELOPEDMININGSECTOR#OUNTRIESSUCH
AS3OUTH!FRICA'HANAANDTHE53!HAVESEENMORETHANYEARSOFMOREORLESSFORMALIZEDMINING
OREVENSEVERALHUNDREDYEARSINTHECASEOF3WEDEN4HISHASALLOWEDFORLONGTERMDEVELOPMENTOFLEGAL
ANDGOVERNANCESTRUCTURESWHILEITISEMPHASIZEDTHATEVENINTHESEREGIMESGOVERNANCESTRUCTURESAND
PROCEDURESARECONTINUOUSLYBEINGDEVELOPEDANDIMPROVED

4HEREGIONALSTATESFOLLOWINGTHEGENERALORGANIZATIONALSET UPOFTHE%THIOPIANSTATEHAVEAGOVERNMENTAL

STRUCTURERELATEDTOMININGTHATPARALLELSTHEFEDERAL LEVELSTRUCTURE&OREXAMPLE/ROMIAREGIONALSTATEHAS
A7ATER-INERALAND%NERGY"UREAUWITHA-INERALDEPARTMENTWITHINITSTAFFEDBYGEOLOGISTSANDOTHER
PROFESSIONALANDNON PROFESSIONALSTAFF)NFACTTHEPARALLELSTRUCTURETHEORETICALLYEXTENDSDOWNTOTHEZONE
WOREDAANDKEBELESUB REGIONALLEVELS(OWEVERINPRACTICALTERMSSUB REGIONALLEVELSAREDEPENDENTON
REGIONALCAPACITYANDACTASEXTENSIONSOFTHEREGIONALMININGAUTHORITIES

7OREDALEVELARESIGNIlCANTLYINVOLVEDIN!3-MANAGEMENTORGANIZATIONOFCOOPERATIVESOUTREACHFOLLOW

UPCONmICTRESOLUTIONETC 4HEWOREDAINVOLVEMENTPRESUMABLYVARIESASMUCHASTHE!3-ACTIVITIES
THEMSELVESACROSSTHECOUNTRY

4HEDEGREEANDSUCCESSOFCOORDINATIONBETWEENFEDERALREGIONALANDSUB REGIONALLEVELSISQUITEUNCLEAR

WITHCONTRADICTORYASSERTIONSHEARDTHAThEVERYTHINGRUNSSMOOTHLYvTOhTHEREISNOREALCOORDINATIONv)NA
LONGER TERMPERSPECTIVEFEEDBACKFROMSTAKEHOLDERSPARTICULARLYMININGCOMPANIESANDLOCALCOMMUNITIES
AFFECTEDBYMININGWILLREVEALHOWWELLCOORDINATIONISWORKING

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 53

7.4.  Recommendations
-O-AND'3%MAYCONSIDERORGANIZATIONALREVIEWSANDRESTRUCTURINGFORINCREASEDEFlCIENCYANDTOALLOWFOR
INCREASEDSTAFFSALARIESASKEEPINGSTAFFISVITALTOCONSISTENTLYBUILDCAPACITYINTHELONGERTERM)NGENERALIT
ISCONSIDEREDTHATTHELARGENUMBEROFSTAFFATTHE-O-ANDTHE'3%INTOTALABOUTCOMPAREDTOSOME
REQUIREDBYTHESTRUCTURALPLANS ISMIRROREDNEITHERBYTHEIROUTPUTNORBYTHENEEDSFORMANAGING
ASECTORWHICHISSTILLRATHERLIMITEDINSIZE)TISAPPARENTTHATTHEEXECUTIONOFCOREMANDATESSUFFERSFROM
ASERIOUSLACKOFCAPACITYWHILETHEREARECOMPARATIVELYLARGERESOURCESCONCENTRATEDONMANAGEMENT
ADMINISTRATIONANDVARIOUSTYPESOFSUPPORTPROCESSES

!CCORDINGTOACIVILSERVICEEXPERTCONSULTEDWITHINTHISPROJECTTHE'3%ALREADYHASTHEREQUIREDINSTITUTIONAL
STATUSTOALLOWFORINCREASEDSALARIESAS0ROCLAMATION.OESTABLISHESTHE'3%ASANAUTONOMOUS
FEDERALGOVERNMENTALORGANHAVINGITSOWNJURIDICALPERSONALITY4HE0ROCLAMATIONPROVIDESTHATSTAFFSALARIES
ANDPERDIEMRATESSHALLBEDETERMINEDBYDIRECTIVESISSUEDBYTHEGOVERNMENT7HILEINCREASINGSALARIESFOR
SEVERALHUNDREDSTAFFMAYNOTBElNANCIALLYVIABLEADETAILEDREVIEWOFTHEINSTITUTIONALSTRUCTUREANDSTAFF
REQUIREMENTSTOPERFORMCOREMANDATESSHOULDlRSTBEUNDERTAKEN#ONSIDERINGTHATAGOVERNMENTALCAREER
OFFERSGREATERJOBSECURITYANDPOSSIBLYOTHERNON MATERIALBENElTSSUCHASJOBSATISFACTIONOPPORTUNITIES
FORTRAININGETCINTERVIEWSWITH-O-STAFFINDICATETHATASALARYINCREASEMAYNOTNEEDTOBEATTHELEVELOF
PRIVATESECTORSALARIESFORSTAFFTOBERETAINED

)TMAYBECONSIDEREDTHATOFlCESWITHREGULATORYFUNCTIONSBELIFTEDOUTOF-O-ANDTURNEDINTOAUTONOMOUS
ORGANIZATIONSSIMILARTOTHE'3%ANDTHAT-O-REMAINSWITHPOLICYDElNITIONASTHEKEYMANDATE4HE
LICENSINGANDADMINISTRATIONDIRECTORATEANDTHEENVIRONMENTALSOCIALANDCOMMUNITYDEVELOPMENTUNIT
ARECRITICALTOTHESUSTAINABLEDEVELOPMENTOFTHEMINERALSECTORYETTHEYAREINSERIOUSLACKOFHUMANAND
TECHNICALCAPACITY3EPARATINGTHESEFROMTHE-O-WOULDPROVIDEFORINCREASEDSALARIESANDTHEPOSSIBILITY
TOFUNCTIONMOREEFFECTIVELYINSMALLERORGANIZATIONS4HEWORKOFTHESETWOUNITSOVERLAPINMANYAREAS
ANDTHEIRAMALGAMATIONINTOONEAGENCYMAYBECONSIDERED4URNINGGOVERNMENTALUNITSINTOAUTONOMOUS
INSTITUTIONSHASBEENSUCCESSFULLYAPPLIEDATANUMBEROFOTHER%THIOPIANMINISTRIES

&ORTHELABORATORIESANDTHEDRILLINGUNITSTHEIRCONTINUEDEXISTENCEASPARTOFTHE'3%SHOULDBERECONSIDERED
4HEIROUTPUTISCONSIDEREDTOBERATHERLOWCOMPAREDTOTHEIRINSTRUMENTANDEQUIPMENTCAPACITYAND
STAFFNUMBERSTHISISINPARTDUETOLACKOFCLIENTSANDINPARTDUETOLACKOFSPAREPARTSANDCONSUMABLES
&URTHERMOREINTHELONGERTERMTHEIRABILITYTOCOMPETEWITHPRIVATESERVICEPROVIDERSISREGARDEDTOBE
SEVERELYLIMITED4HEYARENOTINCHARGEOFTHEIROWNBUDGETSBUTHAVETORELYONYEARLYBUDGETREQUESTS
ANDALLOCATIONSFROM-O&%$%VENIFTHEYWERETURNEDINTOSTATEENTERPRISESACCORDINGTOOURINFORMATION
THEYWOULDHAVETOSURRENDEROFTHEIRREVENUESTOTHESTATE)TISPROPOSEDTHATEITHERSCALINGDOWNTO
MEETTHENEEDSONLYOFTHE'3%ORPRIVATIZATIONOFTHESEUNITSISCONSIDERED

#APACITYBUILDINGISREQUIREDTHROUGHOUTTHE-O-ANDTHE'3%,ONG TERMPLANSFORTHISSHOULDBECONSIDERED
INCONJUNCTIONWITHTHEPOSSIBLERE ORGANIZATIONOFTHEINSTITUTIONS

)NTHESHORTERTERMVARIOUSCAPACITYBUILDINGEFFORTSSHOULDBECONSIDERED4HISSHOULDBEPRIMARILYFOCUSED
ONTHE-INERAL,ICENSING!DMINISTRATION$IRECTORATEANDTHE%NVIRONMENTAL#OMMUNITY$EVELOPMENT
-ONITORING/FlCE)TISPROPOSEDTHATTHISCAPACITYBUILDINGISNOTINTHEFORMOF@STAND ALONETRAININGCOURSES
OREDUCATIONALPACKAGES2ATHERITISPROPOSEDTHATEXTERNALEXPERTISEISBROUGHTINTOASSISTWITHON GOING
WORKONACONTINUOUSORCONTINUALBASISANDTHATTRAININGISPROVIDEDON THE JOBANDALSOTHATSTRUCTURED
TRAININGORCOURSEWORKAREINCLUDEDASANINTEGRALPARTOFTHECONSULTANCY

3IMILARLYITISPROPOSEDTHATEXTERNALEXPERTISEISBROUGHTINFORTHENEGOTIATIONOFMININGAGREEMENTS!S
DISCUSSEDABOVEACOMPARATIVELYLOWLEVELOFREGULATION#HAPTERANDSEEALSO#HAPTERFORENVIRONMENTAL
ANDSOCIALREGULATION REQUIRESEVENSTRONGERNEGOTIATIONCAPACITY3UCHCONSULTANCYSERVICESSHOULDALSO
BECOMBINEDWITHTRAININGOFSTAFF

3UPPORTISALSOREQUIREDTO2EGIONAL/FlCESINPARTICULARINTHEAREAOFARTISANALMININGMANAGEMENT
!SITISASOLIDPOLICYOFTHEGOVERNMENTTHATARTISANALMININGREMAINSAKEYSECTORCONTRIBUTINGTOFOREIGN
CURRENCYEARNINGJOBCREATIONANDLOCALECONOMICDEVELOPMENTREGIONALOFlCESWOULDREQUIRECAPACITY
BUILDINGPRIMARILYINTHEAREAOFENVIRONMENTALANDSOCIALMANAGEMENT

54 FINAL  REPORT
 ©  Allana  Potash  Afar  Plc.

 &)3#!,2%')-%
8.1.  Fiscal  regulations
 4HELEGALBASISTOCOLLECTTAXANDROYALTYPAYMENTEMANATESFROMASETOFPROCLAMATIONSREGULATIONSAND
DIRECTIVESINCLUDINGTHE-INING/PERATIONS0ROCLAMATION-INING4AX0ROCLAMATION.O-INING
)NCOME4AX0ROCLAMATION!MENDMENT .OAND.O)NCOME4AX0ROCLAMATION.O
AND#OUNCILOF-INISTERS2EGULATIONON-INING/PERATIONS.O!DRAFTMININGINCOME
TAXPROCLAMATIONOFISUNDERREVIEW

 /VERALLTHE%THIOPIANCORPORATETAXRATESANDROYALTYRATESAREINLINEWITHTHOSEINTHEREGION!HOLDEROFA

SMALL SCALEMININGLICENSEPAYSINCOMETAXONTAXABLEINCOMEANDTHE0ROVINCIAL3TATEGOVERNMENTS
COLLECTTHISPAYMENT4HEINCOMETAXFORLARGE SCALEMININGISCOLLECTEDBYTHE&EDERALGOVERNMENTBY
-O&%$ 4HISFEDERALTAXWASRECENTLYLOWEREDTO4HEREISALSOATAXONDIVIDENDSWHICHIS
CALCULATEDAFTERAPPROPRIATEINCOMETAXESAREPAID

 2OYALTIESARECALCULATEDONANADVALOREMBASIS!DVALOREMBASISISCOMPUTEDINPROPORTIONTOTHEESTIMATED
VALUEOFTHEGOODSORTRANSACTIONCONCERNEDANDISOFTENCONNECTEDWITHTHELEVYINGOFTAXORCUSTOMDUTIES
2OYALTIESUNDER%THIOPIANMININGLAWAREPAIDBASEDONTHEhSALESPRICEvSETINTHECOMMERCIALTRANSACTION
OFMINERALSPRODUCED4HEROYALTYRATESFORMINEDPRODUCTSAREASFOLLOWS
  0RECIOUS-INERALS    )NDUSTRIALMINERALSSALT 
  3EMI PRECIOUSMINERALS    #ONSTRUCTIONMINERAL 
  -ETALLICMINERALS    'EOTHERMAL 

 -ININGROYALTIESARECOLLECTEDATTWOLEVELSFORTHEPRECIOUSMINERALSANDMETALLICMINERALSORLARGESCALE

PROJECTSTHEROYALTIESACCRUETOTHEFEDERALSTATE&ORINDUSTRIALANDCONSTRUCTIONMINERALSANDSMALLSCALE
MINESAPARTFROMPRECIOUSANDMETALLICMINERALSTHEROYALTIESACCRUETOTHEREGIONALSTATESINWHICHSUCH
QUARRIESOPERATE2OYALTIESARECOLLECTEDBY-O-ORBYTHEREGIONALMININGBUREAUSATTHEREGIONALLEVEL

 4HELEGISLATIONDElNESAREVENUESHARINGMECHANISMWHEREPERCENTOFTHEROYALTIESCOLLECTEDFROMLARGE

SCALEOPERATIONSAREALLOCATEDTOTHEFEDERALGOVERNMENTANDTHEREMAINDERISALLOCATEDTOTHEPROVINCIAL
STATEWHERETHEMINEINQUESTIONISLOCATED3IMILARLYFORSMALLSCALEMINESPERCENTOFTHEROYALTIES
REMAININTHESTATEWHERETHEMINEISLOCATEDWHEREASPERCENTISALLOCATEDTOTHEFEDERALGOVERNMENT

 4HE-INING/PERATIONS0ROCLAMATIONPROVIDESFOREXEMPTIONSFROMCUSTOMSANDDUTIESREGARDINGANY
CONSUMABLESEQUIPMENTMACHINERYANDVEHICLESTHATANYHOLDEROFANEXPLORATIONLICENSEORHISCONTRACTOR
MAYIMPORTTO%THIOPIAUSEFULFORTHEPURPOSEOFMININGOPERATIONSANDINACCORDANCEWITHTHEAPPROVED
WORKPROGRAM!RT !LSOTHEHOLDEROFSMALLORLARGESCALEMININGLICENSEMAYIMPORTFREEOFCUSTOM
DUTIESCONSUMABLESREQUIREDTOSTARTANDSUSTAINCOMMERCIALPRODUCTIONFORTHElRSTTHREEMONTHS!RT
 

 !CCORDINGTO!RTICLEOFTHE-INING/PERATIONS0ROCLAMATIONAND!RTICLE.INEOFTHE--! THE

GOVERNMENTMAYACQUIREAFREEPARTICIPATIONINTERESTOFUPTO4HESAMEARTICLEPROVIDESTHATh!N
ADDITIONALEQUITYPARTICIPATIONOFTHEGOVERNMENTMAYALSOBEPROVIDEDBYAGREEMENTWHICHSHALLSPECIFY
THEPERCENTAGETIMINGlNANCINGRESULTINGRIGHTSANDOBLIGATIONANDOTHERDETAILSOFSUCHPARTICIPATIONv
4HE0ROCLAMATIONTO!MENDTHE-INING/PERATIONS0ROCLAMATION TURNSGOVERNMENTPARTICIPATION
INTERESTOFINALLLARGEANDSMALL SCALEMININGPROJECTSINTOMANDATORYWITHTHEPOSSIBILITYTONEGOTIATING
ADDITIONALEQUITYPARTICIPATIONBYAGREEMENT

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 55

  4HElSCALREGIMECONSIDERSAMINEQUARRYOROTHERPLACEFOREXPLOITATIONOFNATURALRESOURCESASAPERMANENT
ESTABLISHMENTANDSUBJECTTOBUSINESSINCOMETAXWITHNON RESIDENTSBEINGTAXEDONTHEIR%THIOPIANSOURCED
INCOME)NCOMETAXHOLIDAYSARENOTPROVIDEDFORTHEMININGSECTORALTHOUGHTHEYAREAPPLICABLETONEW
MANUFACTURINGANDAGRO INDUSTRYINVESTMENTS ,OSSESFROMMININGOPERATIONSCANBECARRIEDFORWARDFOR
YEARSWHICHBROADLYAGREESWITHTHELEVELFOR!FRICANCOUNTRIES

 4HE$RAFT-INING)NCOME4AX0ROCLAMATIONOFINTRODUCESREGULATIONSTHATWOULDALLOWFORRINGFENCING
EACHLICENSEASASEPARATETAXUNITAPROVISIONTHATDIDNOTEXISTINTHE-INING)NCOME4AX0ROCLAMATION
NOAMENDED 4HEDRAFTALSOINTRODUCESDEDUCTIONSFORAMOUNTSDEPOSITEDINTOAFUNDFORMINE
REHABILITATIONWHERENOSUCHPROVISIONSEXISTEDINTHECURRENTTAXPROCLAMATION!LSODRAFTPROCLAMATION
ALLOWSFORMINISTERIALDISCRETIONFORGRANTINGTEMPORARYTAXRELIEFAGAINAPROVISIONABSENTINTHECURRENT
PROCLAMATION

8.2.  Revenue  collection

4HElSCALLINKAGESFROMTHEMININGSECTORMATERIALIZETHROUGHCORPORATEINCOMETAXPERSONALINCOMETAX
OFTHEEMPLOYEES TARIFFSONEXPORTSANDIMPORTSANDTHROUGHROYALTIES

!CCORDINGTODATAFROM-O&%$ROYALTIESCOLLECTEDBYTHEFEDERALGOVERNMENTHAVEINCREASEDFROMABOUT53$
MILLIONINTOALMOST53$MILLIONIN2OYALTIESCOLLECTEDBYTHEREGIONALGOVERNMENTSHAVE
INCREASEDFROMABOUT53$INTO53$MILLIONIN4HE7ORLD"ANK ESTIMATES
ROYALTYPAYMENTSTOACCOUNTFOROFTHEREVENUESTHATmOWTOTHESTATEWITHANOTHERCOMINGFROM
EQUITYPARTICIPATION#ORPORATETAXESESTIMATEDTOACCOUNTFORNEARLYOFTHEmOWS4HEREMAININGPARTS
DERIVEFROMTARIFFSANDPERSONALINCOMETAXES

#URRENTROYALTYRATESIN%THIOPIAAREINLINEWITHOTHER!FRICANCOUNTRIES!NUMBEROFCOUNTRIESHAVEALREADYOR
ARELOOKINGTOINCREASETAXATIONINTHEMININGSECTOR)N3OUTH!FRICAINTRODUCEDAPROlTBASEDMINING
ROYALTYOFTOWITHDIFFERENTRATESFORGOLDPRODUCERSRELATIVETOTHEINDUSTRIALSECTOR4ANZANIAAND
.AMIBIAARESPECIlCALLYLOOKINGATINTRODUCINGEXCESSPROlTTAXESFORMININGCOMPANIESAND-OZAMBIQUE
ISSEEKINGTOREVISEITSMININGCODETOENSUREHIGHERREVENUESFORTHEGOVERNMENT)N'HANAINCREASED
ITSMINERALROYALTYTAXFROMTO(OWEVERINOTHERCASESSUCHASTHATOF'UINEAATTEMPTSHAVEBEEN
MADETOREVISEMININGROYALTIESANDTAXATIONDOWNWARDSTOATTRACTINVESTMENT

7HILETHEROYALTYRATESTHECORPORATETAXRATEANDTHEPERCENTAGEOFEQUITYPARTICIPATIONBYTHESTATEIN
%THIOPIAISCOMPETITIVECOMPAREDTOMANYOTHER!FRICANCOUNTRIESTHISALONEWILLNOTSERVETOATTRACTINVESTORS
)NTERNATIONALCOMPANIESLOOKATTHE@EFFECTIVERATEOFTAXATIONIEWHENALLTHETAXESPAIDTOTHEGOVERNMENT
SUCHASEXCISEDUTIESPROPERTYTAXVEHICLETAXETC ASADETERMINANTOFPLANNEDINVESTMENTS

'IVENTHEPAUCITYOFLARGESCALEMININGTHEABILITYOFTHEFEDERALGOVERNMENTTOCOLLECTROYALTIESANDTAXES
FROMLARGESCALEOPERATORSHASNOTBEENWELLTESTED4HEREAREINDICATIONSTHATTHE-O-MAYNOTHAVEALL
THENECESSARYTECHNICALCAPACITIESTODOSOANDLIMITATIONSINTHISREGARDINCLUDETHEABILITYTOMONITORAND
AUDITlNANCIALSTATEMENTSANDPRODUCTIONlGURESANDASWELLASLIMITEDAVAILABILITYOFTHELEGALANDlNANCIAL
SPECIALISTSNECESSARYTOSUPERVISETHECOLLECTIONOFROYALTYPAYMENTS!SACONSEQUENCEINPRACTICETHE
CONTRIBUTIONOFTHEMININGSECTORTODOMESTICTAXREVENUEMAYBEMORELIMITEDTHANOURESTIMATESINDICATE
CF3ECTION 

8.3.  Transparency  initiatives  in  the  extractive  sector  

!STHE%THIOPIANGOVERNMENTPLANSFORTHEMININGSECTORTOGROWINSIZEANDIMPORTANCEOVERTHENEXTDECADES
THEREISACONCOMITANTWISHTOADDRESSISSUESRELATEDTOPOSSIBLECORRUPTIONANDTHEMISMANAGEMENTOF
REVENUESFROMNATURALRESOURCES!PARTFROMTHEMININGSECTORTHEOILANDGASSECTORAREALSOSEENTOHAVE
STRONGPOSSIBILITIESFORGROWTH)NTHISCONTEXTTHESTATEEMBARKEDONAPROCESSTOJOINTHE%)4)INWITH
%)4)CANDIDACYSTATUSAWARDEDIN-ARCH4HECURRENT%)4)CANDIDACYSTATUSANDEFFORTSTOACHIEVE
COMPLIANCEWILLENHANCETHEPROlLEANDTHECREDIBILITYOFTHECOUNTRYANDMAYASSISTINATTRACTINGFOREIGN
INVESTMENTSINTHEEXTRACTIVESECTORS

4HEGOVERNMENTLAUNCHEDITSCOMMITMENTTOTHE%)4)PROCESSWITHTHE-INISTRYOF-INESDELEGATEDTOLEAD
THECANDIDACYANDCOMPLIANCEPROCESS!N%THIOPIAN%)4).ATIONALSTEERINGCOMMITTEEWASCONSTITUTED
COMPRISINGOFGOVERNMENTOFlCIALSCIVILSOCIETYREPRESENTATIVESANDPRIVATECOMPANIES4HECOMMITTEE
FOCUSEDONDESIGNINGFRAMEWORKSFORENGAGEMENTANDOTHERIMPLEMENTATIONISSUES3TAKEHOLDERENGAGEMENT
INCLUDINGFOUREXTENSIVEWORKSHOPSANDTRAININGSESSIONSBOTHWITHMININGCOMPANIESANDCIVILSOCIETY
ORGANIZATIONSHAVEBEENCARRIEDOUTBETWEENANDASPARTOFTHE-O-SINITIATIVETOPROMOTE
TRANSPARENCY

56 FINAL  REPORT
 "YTHEENDOFEXTRACTIVECOMPANIESHAVEJOINEDTHEINITIATIVEINCLUDINGGOLDANDPOTASHPRODUCERS
ASWELLASTHOSEFORINDUSTRIALMINERALSSALTANDMARBLE/FTHESECOMPANIESWEREINCLUDEDINTHElRST
INCOMEPAYMENTRECONCILIATIONREPORTBASEDONlGURESWITHREPORTEDREVENUESOF53$
MILLIONEXPECTEDTOBEPUBLISHEDINEARLY!CANDIDATUREASSESSMENTFOR%THIOPIAWASRELEASEDBY
THE%)4)ONTH&EBRUARYANDCANDIDACYSTATUSWASAWARDEDIN-ARCHOFTHESAMEYEAR

4HEMAJORHURDLEFORTHEGRANTINGOFCANDIDACYSTATUSHADBEENTHECIVILSOCIETYLEGISLATIONPARTICULARLYTHE
CLAUSELIMITINGFOREIGNFUNDINGTOFORORGANIZATIONSINVOLVEDINADVOCACY#ONCERNSHADBEENRAISED
THATTHELEGISLATIONDOESNOTALLOWFORTHECIVILSOCIETYGROUPSTOBESUFlCIENTLYINDEPENDENTANDTHEREFORE
MEANINGFULLYPARTICIPATEINTHEPROCESS4HEGOVERNMENTHASSUCCESSFULLYARGUEDTHATTHELEGISLATIONISNOT
MEANTTORESTRICTTHEOPERATIONSOFCHARITIESANDCIVILSOCIETYORGANIZATIONSBUTTOOFFERAFRAMEWORKFORTHEIR
OPERATIONSTHATDIDNOTEXISTINTHELEGISLATIONBEFORE4HEYFURTHERARGUEDTHATTHELEGISLATIONISSETUPTOALLOW
CHARITIESANDSOCIETIESTOENGAGEININCOMEGENERATINGACTIVITIESCREATETRANSPARENCYANDACCOUNTABILITY
OFTHEIRACTIVITIESANDALLOWACLEARLYDElNEDRELATIONSHIPTOEXISTBETWEENTHE3TATEANDTHEORGANIZATIONS
4HEGOALNOWSHOULDBETOCONTINUEPURSUINGMULTI STAKEHOLDERENGAGEMENTANDENSURETHEINVOLVEMENT
OFCIVILSOCIETYORGANISATIONSINTHEEXTRACTIVESECTORASTHISISLIKELYTOREMAINTHEKEYISSUEFORACHIEVING
COMPLIANCESTATUS

4HECONTENTOFMININGINVESTMENTRELATEDCONTRACTSARENOTMADEPUBLICIN%THIOPIA4HEREAREFURTHERMORE
NOSIGNSTHATSUCHINFORMATIONWILLBEMADEPUBLICINTHEFUTUREINTHEWAYTHATISCURRENTLYCONSIDERED
INCOUNTRIESSUCHAS,IBERIA3IERRA,EONEAND'UINEA 4HEREASONSMAYBERELATEDTOAWISHTOMAINTAIN
INVESTORCONlDENTIALITY(OWEVERSTATEMENTSMADEBYGOVERNMENTOFlCIALSALSOIMPLYTHATTHISAPPROACH
MAYALSOBEASSOCIATEDWITHAPREFERENCETOREGULATECONDITIONSINLAWSANDREGULATIONSRATHERTHANTODO
SOINSEPARATECONTRACTAGREEMENTWITHINVESTORS

%THIOPIAISALSOASIGNATORYTOTHE7ORLD"ANKS)NTERNATIONAL#ONVENTIONON3ETTLEMENTOF)NVESTMENT$ISPUTES
BETWEENTHE3TATESAND.ATIONALSOF/THER3TATESASWELLASBEINGAMEMBEROFTHE-ULTILATERAL)NVESTMENT
'UARANTEE!GENCY3UCHAGREEMENTSAREINDICATIVEOFTHEWILLINGNESSOFTHEGOVERNMENTTOBESUBJECTTO
INTERNATIONALARBITRATIONANDSTANDARDS4HEREHASBEENNOSPECIlCMININGSECTORDISPUTETHATHASREQUIRED
INTERNATIONALARBITRATIONATTHISTIME

8.4.  Recommendations
)NDESIGNINGlSCALPOLICYINTHEMININGSECTORANYGOVERNMENTNEEDSlRSTTOSTRIVETOMAINTAINCONSISTENCY
INITSAPPROACHASTOOFREQUENTCHANGESINTAXATIONRATESANDREGULATIONSGOVERNINGPRIVATEINVESTMENTS
WILLDISCOURAGEINVESTORS4HEOBJECTIVESHOULDBETOARRIVEATAPOLICYWHICHISSEENASFAIRBYALLPARTIES
ANDWHICHFURTHERISSTABLEANDMAYCONTINUETOFUNCTIONALSOINTHECASEOFA@WORLDCLASSMINEBEING
DISCOVEREDANDCOMMISSIONED&URTHERWITHREGARDSTOEXPORTABLECOMMODITIESSUCHASGOLDTHESEMAY
HAVEAVOLATILEPRICECYCLEREQUIRINGREGULATORYEFFORTSTOPROTECTTHEDOMESTICECONOMYFROMSUCHVARIATIONS

3ECONDLYGOVERNMENTSSHOULDLOOKATTHEOVERALLREVENUESTHATITRECEIVESFROMTHEMININGSECTORANDNOT
SOLELYATROYALTYRATESANDCORPORATEINCOMETAX)TISTHEEFFECTIVERATEOFTAXATIONIETHERATEPAIDBYTHE
MININGCOMPANYCOMBININGALLTAXATIONANDDEDUCTIONSTHATDETERMINESWHETHERTHESTATEISGETTINGA@FAIR
SHAREFROMTHEEXTRACTIONOFITSNATURALRESOURCES!BENCHMARKINGSTUDYSHOULDBEUNDERTAKENWHERETHE
CURRENT%THIOPIANlSCALPOLICIESARECOMPAREDTOTHESITUATIONINNEIGHBOURINGCOUNTRIESANDWITHRELEVANT
COUNTRIESELSEWHERE

4HEREARENO@CORRECTSYSTEMSFORRESOURCEREVENUEALLOCATIONANDDIFFERENTSYSTEMSWILLBENElTDIFFERENT
COUNTRIESCFBOXBELOW !RESOURCEREALLOCATIONPLANMAYTAKEINTOCONSIDERATIONTHELEVELOFREGIONAL
DISPARITYWITHINACOUNTRYASWELLASTHECAPACITYOFREGIONALANDSUB REGIONALGOVERNMENTSTOCOLLECTTAXES
ANDROYALTIESASWELLASABSORBTHEMANDSPACEFORLOCALCOMMUNITIESMOSTIMPACTEDBYMININGOPERATIONS
TOSHAREINTHEBENElTSOFMINING$IFFERENTOPTIONSAREAVAILABLETHATMAYNOTONLYINCLUDESHARINGREVENUES
BETWEENTHEFEDERALGOVERNMENTANDTHEREGIONALSTATESWHERETHENATURALRESOURCESAREBEINGEXTRACTEDBUT
THATALSOCOVEROTHERNON RESOURCEPRODUCINGREGIONALSTATES4HELATTERMAYWELLlNDTHEIRREVENUESDECLINE
INRELATIONTOTHERESOURCEPRODUCINGPROVINCEWHICHISGENERATINGRESOURCEREVENUESFORTHEMSELVES 4HE
GOALOFACHIEVING(ORIZONTAL&ISCAL%QUALIZATIONISFORREVENUESHARINGTOFACILITATEFOREACHREGIONALSTATES
GIVENITSOWNREVENUERAISINGCAPACITYANDEFlCIENCY TOPROVIDEASIMILARLEVELOFSERVICES

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 57

 Box  4:  Fiscal  equalization  and  the  sharing  of  resource  revenues

Minerals  may  be  either  the  property  of  the  landowner  (as  in  the  case  of  the  United  States)  or,  more  
commonly,  the  state  on  behalf  of  the  people.  A  general  principle  is  that  when  mining  takes  place,  
the  owner  should  be  compensated  for  the  loss  of  the  mineral  asset.  Therefore  royalties  are  seen  as  
compensation  to  the  owner  of  the  minerals.  There  are  few  countries,  such  as  Sweden  and  Mexico,  which  
levy  no  royalties.

The  revenue  generated  from  taxation  and  royalties  from  mining  activity  may  be  allocated  in  different  
ways,  for  example  between  land  owners,  federal,  provincial  and  regional  state  levels.  For  example,  
in  many  countries  (e.g.  Chile,  Sweden,  Tanzania)  mining  related  revenues  enter  the  federal  budget  
and  there  is  thereafter  no  special  treatment  of  these  revenues.  In  contrast,  in  Indonesia,  the  1999  law  
stipulated  that  20%  of  the  royalties  would  go  to  the  central  government,  and  80%  to  the  region.  Within  
the  region,  this  would  be  further  subdivided  between  the  regencies  (64%)  and  the  provincial  government  
(16%).  In  Peru,  while  the  federal  government  collects  the  corporate  income  tax  from  the  mining  sector,  
through  the  state  mechanism,  50%  of  such  tax  collected  is  returned  to  the  sub-­national  government.  
Also  in  Peru,  the  royalty  payments  collected  are  distributed  between  the  district  municipalities  (20%),  the  
regional  government  (15%)  and  the  regional  national  universities  (5%).  In  Ghana,  20%  of  the  royalties  
collected  from  the  mining  sector  are  spent  on  the  regions  where  mining  takes  place.  The  remaining  
money  is  put  into  a  ‘Consolidated  Fund’  for  general  public  expenditures.

In  Australia  and  Canada,  the  federal  state  does  not  impose  any  mining  royalties  (apart  from  the  MMRT  
IN!USTRALIAAPPLICABLEONTHESUPERPROlTSOFIRONOREANDCOAL )NSTEADROYALTYRATESARELEFTTOTHE
discretion  of  the  individual  province,  which  can  design  and  collect  its  own  royalty  scheme.  In  Canada,  
provincial  mining  royalties  are  tax  deductible  against  the  federal  corporate  income  tax.

Another  approach  towards  resource  rents  is  to  allow  control  over  the  spending  of  such  revenue  to  the  
local  communities  that  are  directly  affected  by  mining.  For  example,  in  Papua  New  Guinea,  the  scheme  
developed  between  the  mining  company,  central  and  provincial  governments  allows  for  the  indigenous  
LAND OWNERCOMMUNITIESTODECIDEONPROJECTSTHATSHOULDBElNANCEDBYMININGRELATEDINCOMESSUCH
as  roads,  education  and  health  facilities.  In  this  country,  a  certain  proportion  of  the  gross  taxable  income  
of  the  mining  project  is  earmarked  for  such  project.

7HENTHEMINERALSECTORHASGROWNCONSIDERABLYTHEGOVERNMENTMAYCONSIDERESTABLISHINGASOVEREIGN
WEALTHFUNDORAGENERATIONFUND WHEREPARTOFTHECOMMODITYREVENUESGENERATEDCANBESAVEDSERVING
BOTHASACAPITALRESOURCEFORFUTUREGENERATIONSASWELLASLIMITINGTHEDETRIMENTALIMPACTh$UTCHDISEASEv
7HILEITMAYBEARGUEDTHATACOMPARATIVELY@POORCOUNTRYCANNOTAFFORDTOBANKREVENUESFORTHEFUTURE
ITMAYLIKEWISEBEARGUEDTHATTHISISAGOODMEASUREOFPROTECTIONOFFUNDSINAlNANCIALSYSTEMWHERE
OPTIMALlSCALMANAGEMENTISNOTINPLACE!NINmOWOFRESOURCEREVENUESCANRESULTINALARGERCAPITAL
POOLFORTHEBANKSTOLENDFROM)FTHECAPITALISMADEAVAILABLEFORMANUFACTURINGORBUSINESSESITCAN
ADDTOTHEDOMESTICGROWTHOFTHEECONOMY(OWEVERIFSUCHOPPORTUNITIESARENOTADEQUATETHECAPITAL
MAYINSTEADmOWINTOOTHERPARTSOFTHEECONOMYFOREXAMPLETHEPROPERTYMARKETANDTHUSCREATINGA
HOUSINGBUBBLEWITHINmATINGPRICES!SOVEREIGNWEALTHFUNDALLOWSFORPARTOFTHERESOURCEREVENUESTHAT
THEECONOMYCANNOTABSORBTOBELOCATEDININTERNATIONALASSETMARKETSFROMWHICHTHESTATEEARNSA
RETURN4HESERETURNSCANBEUTILISEDINNATIONALBUDGETSOREARMARKEDFORDEVELOPMENTPROJECTSSUCHAS
HEALTHEDUCATIONANDINFRASTRUCTURE!STHEABSORPTIVECAPACITYOFTHEECONOMYINCREASESMOREANDMORE
OFTHEFUNDSCANTHENBEBROUGHTINTOTHEECONOMY'ENERATIONFUNDSAREINCREASINGLYBEINGDISCUSSEDIN
RELATIONTOMINERALRESOURCEREVENUESWHILETHEYHAVEBEENMORECOMMONLYAPPLIEDWITHINTHEOILSECTOR
4HE.ORWEGIAN'OVERNMENT0ENSION&UNDFOREXAMPLETAKESTHEPROCEEDSFROMTHEOILSECTORANDINVESTS
THEMINASSETSACROSSTHEWORLD4HERETURNSFROMTHESEINVESTMENTSAREUSEDTOlLLTHENATIONALBUDGET
DElCIT'HANAS2EVENUE-ANAGEMENT!CT WASENACTEDAYEARAFTEROILREVENUESBEGANTOmOWFROM
ITS*UBILEE&IELDSIN4HE!CTCLEARLYOUTLINESTHEMECHANISMSFORTHECOLLECTIONANDDISTRIBUTIONOF
THEPETROLEUMREVENUESTHATACCRUETOTHESTATE4HEBILLDIVIDESTHEREVENUESINTOA(ERITAGE&UNDANDA
3TABILISATION&UND4HELATTERISTOBEUSEDTOENSUREASTABLELEVELOFBUDGETARYSUPPORTINCLUDINGSPENDING
ONINFRASTRUCTURE4HE-INISTRYOF&INANCEAND%CONOMIC0LANNINGISRESPONSIBLEFORINVESTINGTHEPROCEEDS
REmECTINGTHEIRROLEASTHE4REASURY4HE#ENTRAL"ANKOF'HANAISRESPONSIBLEFORMANAGINGTHEFUNDS

58 FINAL  REPORT
2ISKMANAGEMENTPARTICULARLYWHENMINERALEXPORTSARESUBJECTTOVOLATILEINTERNATIONALPRICESISIMPORTANT
/NEOFTHEMAJORVECTORSOFTHE@RESOURCECURSEISTHEIMPACTONSTATEBUDGETSFORDEVELOPINGCOUNTRIESINTHE
FACEOFCOMMODITYPRICESLUMPS3OME,ATIN!MERICANCOUNTRIESDEVISEDCOUNTERCYCLICMONETARYPOLICIES
WHICHWEREPUTTOGOODEFFECTINFACEOFTHElNANCIALCRISISTOCOUNTERTHEEFFECTSOFTHECOMMODITY
PRICEmUCTUATIONS/THERCOUNTRIESSUCHAS-EXICOWITHITSOILPRODUCTIONHAVEUSEDFORWARDCONTRACTSTO
ENSUREADEQUATEFUTUREINCOMESFORTHEIREXPORTS

7ITHTHEGRANTINGOF%)4)CANDIDACYSTATUSTHEEXTRACTIVESECTORISGOINGTOCOMEUNDERINCREASEDSCRUTINY
ANDCOMMENTARYFROMAVARIETYOFINTERNATIONALACTORSANDORGANISATIONS1UESTIONSOFTRANSPARENCYIN
LICENSINGOPERATIONSOFTHE-O-ITSELFANDOFTAXESANDREVENUESARELIKELYTOINCREASE4HE-O-NEEDS
TOPREPAREFORADDRESSINGNEWDEMANDFORSUCHINFORMATIONASWELLASFURTHERDEVELOPITSPUBLICRELATIONS
CAPACITY'REATERTRANSPARENCYINTHEEXTRACTIVEINDUSTRYHASGAINEDPOLITICALMOMENTUMINRECENTYEARS
ANDEFFORTSTHATSHOWCASE%THIOPIASCOMMITMENTSTOSUCHANINITIATIVEWILLBEWELCOMEDBYINVESTORSAND
CIVILSOCIETYORGANISATIONS'IVENTHE@RENTSEEKINGANDCORRUPTIONTHATISSOMETIMESASSOCIATEDWITHTHE
EXTRACTIVESECTORDISCLOSUREOFRESOURCEREVENUESALLOWSFORTHEDEVELOPMENTOFATRANSPARENTMININGSECTOR
3UCHINFORMATIONWILLALSOBEOFUSETOLOCALCOMMUNITIESWHOCANDETERMINETHEEXTENTOFBENElTSTHEY
RECEIVEINRELATIONTOTHEMININGOPERATIONSINTHEIRREGIONS

!NOTHERISSUERELATEDTORESOURCEREVENUESISTHEPOSSIBILITYOF$UTCHDISEASEWHICHREFERSTOTHEMARGINALISATION
OFTHEDOMESTICMANUFACTURINGSECTORWHENNATURALRESOURCESBECOMEADOMINANTEXPORT&OREXAMPLEIF
%THIOPIAWASTODISCOVERALARGEGOLDDEPOSITANDGOLDDOMINATEDITSEXPORTREVENUESTHE%THIOPIA"IRRIS
LIKELYTOAPPRECIATEINVALUE7HILETHATWOULDINCREASETHEFOREIGNEXCHANGEEARNEDBYTHECOUNTRYITCOULD
HAVEADETRIMENTALEFFECTONITSAGRICULTURALEXPORTSASTHESEWOULDNOWBECOMEMOREEXPENSIVEINTHE
INTERNATIONALMARKETS ASWELLASONTHEDOMESTICMANUFACTURINGSECTORWHICHCOULDBECOMEUNCOMPETITIVE
INTERNALLYANDINTERNATIONALLYASWAGESANDCOSTOFCAPITALWOULDRISE 4HEREFOREINTHEMEDIUMTERMAS
MINERALEXPORTSPICKUPTHE-INISTRYOF&INANCEAND%CONOMIC$EVELOPMENTINCOORDINATIONWITHTHE
.ATIONAL"ANKOF%THIOPIANEEDSTOPLANAHEADTODEVISETHEAPPROPRIATEMEASURESINITSMONETARYPOLICY

7HILEGENERATIONFUNDSANDlSCALEQUALISATIONMECHANISMSDISCUSSTHESAVINGANDDISTRIBUTIONMECHANISMS
FORRESOURCEREVENUESTHESPENDINGMECHANISMSFORSUCHREVENUESSHOULDALSOBETAKENINTOCONSIDERATION
BYTHESTATE4HE7ORLD"ANK RECOMMENDSTHATMININGREVENUESTHATAREPLACEDINFOUNDATIONS
TRUSTSORFUNDS&4& BEmEXIBLEWITHINEACHCOUNTRYCONTEXT(OWEVERTHEREARETHREECRITERIATHATCAN
CONTRIBUTETOMAKINGDECISIONSONTHESPENDINGOFSUCHFUNDS

A #OMPLEXITYSHOULDBEPROPORTIONATETOTHEFUNDINGANDCAPACITYOFTHEOPERATINGENVIRONMENT

B #ONTEXTEXTENSIVESOCIALASSESSMENTTOBECARRIEDOUTTODElNEVISIONBENElCIARIESANDPROJECTSTOBE

SUPPORTEDBYTHE&4&AND

C )NTEGRATIONWITHOTHERLOCALANDREGIONALDEVELOPMENTPLANS

(UMANRESOURCESATTHE-INISTRYOF-INESNEEDTOBEDEVELOPEDFURTHERTOINCREASETHEIRCAPACITYTOAUDIT
MONITORANDCALCULATETHEREVENUESDUETOTHESTATEASWELLASENSURINGTHATCOMPANIESMEETTHEIROTHER
EXPENDITUREANDSPENDINGREQUIREMENTS7HILETHEMININGTAXCODESANDOTHERlSCALHEADSMAYBECLEARLY
OUTLINEDINREGULATIONSTHEIROPERATIONALIZATIONISHIGHLYIMPACTEDBYTHEABILITYOFGOVERNMENTPERSONNELTO
INTERPRETUNDERSTANDANDENFORCE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 59

 ©  Yara  Dallol  BV

9.   MINERAL  LICENSING  MANAGEMENT

9.1.  Background
 4HEEXISTENCEOFAMODERNANDWELL FUNCTIONING-INING#ADASTREAND2EGISTRY3YSTEMISAKEYFEATUREFOR
THEPROMOTIONOFINVESTMENTSINTHEMININGSECTOR0OTENTIALINVESTORSBOTHLOCALANDINTERNATIONALAREMUCH
MORELIKELYTOINVESTINACOUNTRYWHERESUCHASYSTEMISFOUNDTOBEOFAHIGHQUALITYANDTRANSPARENT
NATURE.OTONLYMUSTTHE-INING,AWITSELFGUARANTEETHISSECURITYBUTTHEADMINISTRATIONOFTHE,AWMUST
BETRANSPARENTDECISIVEANDEFlCIENT&ORTHEINVESTORTHE-INING#ADASTRE3YSTEMISOFTENPERCEIVEDAS
THESUBSTANCEOFTHE-INING,AWANDTHEREFOREEXTREMELYIMPORTANTTOFORMINGANOPINIONONSECURITYOF
TENUREASWELLASONTHE'OVERNMENTSDESIRETOPROMOTEMINING&ORTHE3TATEANEFlCIENT-INING#ADASTRE
3YSTEMADMINISTRATIONGUARANTEESTHATTHEINTENTIONSOFTHE-INING,AWARECARRIEDOUTINPRACTICEAND
PROVIDESFEEDBACKTHATSHOULDINmUENCEPOLICYMAKING

 %THIOPIARECENTLYBENElTTEDFROMA7ORLD"ANKFUNDEDPROJECTWHEREAMODERNFULLYCOMPUTERISEDMINING

CADASTREWASDEVELOPEDANDCOMMISSIONED4HESYSTEMWASBASEDONTHEhlRSTCOMElRSTSERVEDvPROVISION
OFTHE-INING0ROCLAMATIONANDITWASFURTHERINSTALLEDTOWORKBOTHATTHEFEDERALANDREGIONALLEVELS4HE
SOFTWAREUSEDWAS&LEXI#ADASTREASOFTWAREWHICHISTAILORMADEFORMININGCADASTRERELATEDAPPLICATIONSAND
WHICHISUSEDBYMANYGOVERNMENTSANDMULTINATIONALCOMPANIESAROUNDTHEWORLDCFSPATIALDIMENSION
COZA 4HEPROJECTWASCOMPLETEDINATWHICHTIMETHESYSTEMWASFULLYFUNCTIONINGBUTSINCEITHAS
PARTLYFALLENINTODISUSEANDDURINGPARTOFITHASNOTBEENFUNCTIONING4HEREASONSFORTHEPARTIAL
NON FUNCTIONINGOFTHEEXISTINGSYSTEMISPARTLYREPORTEDTOBEDUETOSOFTWAREPROBLEMSANDTHEABSENCE
OFABUDGETTOPERFORMNECESSARYUPDATESANDPERFORMhBUGlXESvANDPARTLYDUETOTHEGOVERNMENTS
CHANGEINPOLICIESWITHREGARDSTOHOWLICENCESFORMININGANDEXPLORATIONSHOULDBEAWARDED

9.2.  Administrative  procedures

 4HE-INERAL0ROCLAMATIONPROVIDESFORSIXTYPESOFLICENSESSUMMARIZEDINTHETABLEBELOW

Table  9.1.     Types  of  mineral  licenses  issued  in  Ethiopia,  with  reference  to  articles  of  the  2010  Mining  Proclamation.
Type  of  License Scope Duration Conditions 3TATUS#HARACTERISTICS
4OCARRYOUT
RECONNAISSANCE
WHENEVERTHE For  the  period  
WORKPROGRAM SPECIlEDINTHE
2ECONNAISSANCE .ON EXCLUSIVENON
DOESNOTINVOLVE LICENSEWHICH
,ICENSE RENEWABLE
GEOLOGICALWORK SHALLNOTEXCEED
that  could   MONTHS
DISTURBTHEEARTH
SURFACE

60 FINAL  REPORT
 For  the  period  
SPECIlEDINTHE %XCLUSIVERENEWABLE
LICENSEWHICH %VIDENCEOFlNANCIAL TWICEIFAPPLICANTFULlLS
SHALLNOTEXCEED ANDTECHNICALRESOURCES ALLCONDITIONSINCLUDING
4OCARRYOUT
THREEYEARS)T TOCONDUCTEXPLORATION NOTINBREACHWITHANY
EXPLORATION
CANBERENEWED ACCORDINGTOTHEWORK APPLICABLEPROVISION
ACCORDINGTOTHE
TWICEFORAPERIOD PROGRAMMEEXPLORATION UPONRELINQUISMENT
RELEVANTWORK
%XPLORATION NOTEXCEEDING EXPENDITURECONSISTENT OFNOLESSTHANONE
PROGRAMME
,ICENSE ONEYEAREACH WITHMINIMUMANDWORK FOURTHOFTHELICENSE
ANDTOAPPLY
%XTENSIONOF PLANENVIRONMENTAL AREA6ARIATIONSTO
FORMINING
RENEWALMIGHT IMPACTPLANAPPROVED THEEXPLORATIONWORK
ANDRETENTION
BEALLOWED APPLICANNOTINBREACH PROGRAMMEHAVETOBE
LICENSES
BYLICENSING WITHOBLIGATIONSUNDER APPROVED.OPAYMENT
AUTHORITYNOT RECONNAISSANCELICENSE FEEUPONAPPLICATIONIS
BEYONDlVE PROVIDED
YEARS
7HERETHEAPPLICANTHAS
DEMONSTRATEDDISCOVERY
WITHINEXPLORATIONAREA
For  the  period   OFPOTENTIALCOMMERCIAL
SPECIlEDINTHE SIGNIlCANCEBUT
)TGRANTSTHE
LICENSEWHICH CANNOTBEDEVELOPED
RIGHTTOHOLD
SHALLNOTEXCEED IMMEDIATELYBECAUSE
THEEXPLORATION
THREEYEARS)T ADVERSEMARKET
2ETENTION LICENSEANDTO
CANBERENEWED CONDITIONSOTHER
,ICENSE BEGRANTEDA
ONCEFORTHE ECONOMICFACTORSOR
MININGLICENSE
SAMEPERIODIF UNAVAILABLE
IMPLICITFROM
CONDITIONSFOR
!RT 
GRANTINGLICENSE PROCESSINGTECHNOLOGIES
REMAIN OFATEMPORARYCHARACTER
!RT /BLIGATIONTO
SUBMITANNUALPROGRESS
REPORT!RT
2IGHTSTOMARKETANDSELL
!PPROVALOFWORK MINERALSPRODUCED!RT
For  the  period   PROGRAMMEAND%)!  
SPECIlEDINTHE ACCESSTOlNANCIAL
)MPLICITLYTO
LICENSEWHICH RESOURCESANDTECHNICAL !CCORDINGTO!RTICLE
CARRYOUTMINING
SHALLNOTEXCEED ABILITYNOTCONTRAVENTION CTHELICENSING
ASDElNED
TWENTYYEARS)T WITHANYOBLIGATIONSOF AUTHORITYCANNEGOTIATE
,ARGE 3CALE UNDERTHE
CANBERENEWED THEEXPLORATIONLICENSE A-INING!GREEMENT
-INING,ICENSE 0ROCLAMATION
FORYEARS IFANY!RT  WHATINPRACTICEOCCURS
WITHTHERIGHTS
IFCONTINUED /BLIGATIONTOCOMMENCE TOGETGRANTEDTHESE
RECOGNISED
ECONOMIC OPERATIONSWITHINONE LICENSES4HE--!
UNDER!RT
VIABILITYISPROVED YEARASFROMLICENSE INCLUDESPROVISIONSON
!RT  BECOMESEFFECTIVE!RT TRANSFERSURRENDERAND
  TERMINATIONOFMINING
RIGHTS
!PPROVALOFWORK
For  the  period  
PROGRAMMEAND%)!
SPECIlEDINTHE
)MPLICITLYTO ACCESSTOlNANCIAL
LICENSEWHICH
CARRYOUTMINING RESOURCESANDTECHNICAL
SHALLNOTEXCEED
ASDElNED ABILITYNOTCONTRAVENTION
TENYEARS)TCAN 2IGHTSTOMARKETANDSELL
3MALL SCALE UNDERTHE WITHANYOBLIGATIONSOF
BERENEWED MINERALSPRODUCED!RT
-INING,ICENSE 0ROCLAMATION THEEXPLORATIONLICENSEIF
FORYEARS  
WITHTHERIGHTS ANY!RT /BLIGATION
IFCONTINUED
RECOGNISED TOCOMMENCEOPERATIONS
ECONOMIC
UNDER!RT WITHINONEYEARASFROM
VIABILITYPROVED
LICENSEBECOMESEFFECTIVE
!RT 
!RT 

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 61

 For  the  period  
)MPLICITLYTO
SPECIlEDINTHE .OREQUIREMENTOF
CARRYOUTMINING
LICENSEWHICH lNANCIALTECHNICALOR
ASDElNED
SHALLNOTEXCEED PROFESSIONALRESOURCES
!RTISANAL UNDERTHE
THREEYEARS)T /NLYGRANTEDTO%THIOPIAN %XCLUSIVE
-INING,ICENSE 0ROCLAMATION
CANBERENEWED CITIZENSOAGROUPOF
WITHTHERIGHTS
TWICEFORTREE PEOPLEREGISTEREDASA
RECOGNISED
YEARSEACH!RT COOPERATIVESOCIETY
UNDER!RT
 

 4HEISSUINGOFLICENSESISDONEBYEITHERTHEREGIONALSTATESORTHEFEDERALGOVERNMENT-INERAL,ICENSING
!DMINISTRATION$IRECTORATE-O- 4HEFORMERAREMANDATEDTOISSUEA ARTISANALMININGLICENSESB TO
DOMESTICINVESTORS RECONNAISSANCEEXPLORATIONANDRETENTIONLICENSESWITHRESPECTTOCONSTRUCTIONAND
INDUSTRIALMINERALSC TODOMESTICINVESTORS SMALLSCALEMININGLICENSESFORINDUSTRIALMINERALSANDSMALL
ANDLARGESCALEMININGLICENSESFORCONSTRUCTIONMINERALS4HEFEDERALGOVERNMENTISSUESRECONNAISSANCE
EXPLORATIONRETENTIONANDMININGLICENSESOTHERTHANTHOSETOBEISSUEDBYREGIONALSTATES

 !RTICLEOFTHE-INING/PERATIONS0ROCLAMATIONPROVIDESTHATLICENSEHOLDERSPAYANNUALLYINADVANCE
SURFACERENTALSFORTHELICENSEAREAANDFORTHEAREACOVEREDBYALEASETHISPRESUMABLEREFERSTOLEASES
OFAREASOUTSIDETHELICENSEAREABUTREQUIREDFORTHEMININGOPERATIONS 4HEPAYMENTOFLICENSESISMADE
TOTHERESPECTIVEAUTHORITIESRESPONSIBLEFORTHEGRANTINGOFTHELICENSESATTHEFEDERALANDREGIONALLEVELSOF
ADMINISTRATION

 $UETOALACKOFCAPACITYATTHEFEDERALOFlCETOHANDLEMINERALLICENSEAPPLICATIONSTHEREWASAMORATORIUM

ONTHEACCEPTANCEOFEXPLORATIONLICENSEAPPLICATIONSFOROVERAYEARUPTOTHEBEGINNINGOF!LSO
DUETOALACKOFCAPACITYDURINGTHEFOCUSHASBEENENTIRELYONTHEEVALUATIONOFMININGLICENSEAND
LICENSETRANSFERAPPLICATIONSANDTHEREISALARGEBACKLOGWITHREGARDSTOEXPLORATIONLICENSES

 4HECURRENTLYAPPLIEDPROCESSFORTHEASSESSMENTOFEXPLORATIONLICENSEAPPLICATIONSISTOGROUPANDEVALUATE
THESEONAMONTHLYBASISINACCORDANCEWITHTHEPROVISIONSOFTHE-INERAL,ICENSE!PPLICATION0ROCESSING
$IRECTIVE3ECTIONPARAGRAPH )NPRACTICETHUSATECHNICALCOMMITTEESELECTSTHESUCCESSFUL
APPLICANTONTHEBASISOFCRITERIASETOUTINTHEDIRECTIVE

 4HEREISANAPPARENTSCOPEFORBIASEDORCOMPROMISEDHANDLINGOFEXPLORATIONLICENSINGUNDERTHISLICENSING
ADMINISTRATIONESPECIALLYASNORECEIPTISGIVENONTHESUBMISSIONOFAPPLICATIONS%VENWITHAPERFECTLY
TRANSPARENTEVALUATIONOFAPPLICATIONSTHESYSTEMSTILLIMPLIESTHATOBJECTIVECRITERIAFORSELECTINGONElRM
EXISTANDTHATTHECOMMITTEEHASADEQUATEINFORMATIONONlRMSANDEXPERTISETOAPPLYTHECRITERIA

 4HEINTERVIEWSCARRIEDOUTAMONGGOVERNMENTOFlCERSCONSISTENTLYEMPHASIZEDTHEUSEOFTHISALTERNATIVE
SYSTEMINPRACTICEBECAUSETHEGOVERNMENTINTENDSTODISCOURAGESPECULATIVEAPPLICATIONS4HEYALSO
POINTEDATTHECRITICALCAPACITYCONSTRAINTSOFTHELICENSINGAUTHORITYTOASSESSAPPLICATIONSONTIME)NAFUTURE
REFORMPROCESSTHEMANAGEMENTATTHEMINERALLICENSINGOFlCEPOINTEDOUTTHATTHEYWOULDRATHERWORK
ONADDRESSINGTHEINSTITUTIONALCONSTRAINTSFORTHEEFFECTIVEIMPLEMENTATIONOFTHISSYSTEMTHANSTREAMLINING
THEPROCESSFORAPURELY@lRSTCOME lRSTSERVEDCRITERIA

!LTERNATIVEMETHODSTODISCOURAGESPECULATIONCOULDINCLUDERAISINGAPPLICABLEFEESSEERECOMMENDATIONS
BELOW ASTHECOSTSFORHOLDINGLANDFOREXPLORATIONANDESPECIALLYFORMININGIN%THIOPIAARELOWINCOMPARISON
WITHSOMENEIGHBOURINGCOUNTRIESANDSELECTEDMININGNATIONS4ABLE )TISNOTEDTHATTHE%THIOPIAN
APPROACHTOCHARGINGFORTHEREGISTRATIONOFAPPLICATIONSTHATISPERPAGEAPPEARSTOBEFAIRLYUNIQUE)TIS
ALSONOTEDTHAT%THIOPIAISTHEONLYCOUNTRYTHATHASASPECIlCh,ICENSEFEEv

4ECHNICALANDlNANCIALCOMPLIANCEMONITORINGALSOFALLSUNDERTHEDUTIESOFTHELICENSINGANDADMINISTRATION
DIRECTORATE-ONITORINGISNOTADEQUATEDUETOALACKOFCAPACITYANDAHIGHNUMBEROFEXPLORATIONLICENSES
APPARENTLYHAVEEXPIREDORSHOULDBEREVOKEDDUETONON COMPLIANCEBUTONLYVERYFEWHAVEBEENREVOKED

&ROMTHEINTERVIEWSCARRIEDOUTWITH-O-STAFFWITHINTHISPROJECT-O-MAYALSOCHOSENOTTORELINQUISH
GROUNDINCASESOFNON CONFORMANCEORWHERECOMPANIESHAVELEFTFOROTHERREASONSASTHE3TATEMAYWISH
TOTAKETHEAREAINQUESTIONTOBIDDING3TILLINOTHERCASESGEOGRAPHICALAREASARERESERVEDFORSTATEINTEREST
ANDISTHUSNOTOPENFORAPPLICATIONSSUCHASINTHECASEOFTHE%THIO #HINESEJOINTVENTUREFORWHICHLARGE
AREASOFSOUTHWESTERN%THIOPIAARERESERVED4OGETHERWITHTHEPROCESSFORTHEASSESSMENTOFEXPLORATION
LICENSEAPPLICATIONSPARAGRAPHS ABOVE THISCREATESASYSTEMTHATISUNCLEARANDRATHERUNCERTAINFOR
INVESTORS7HILETHEPOLICYFRAMEWORKENVISIONSTHEGOVERNMENTTOFACILITATEPROMOTEANDREGULATETHEMINERAL
SECTORTHE-INING0ROCLAMATIONDOESPROVIDEFORANENTREPRENEURIALROLEFORTHEGOVERNMENTINMINING
SEE#HAPTERPARAGRAPHS ANDFORPOLICYANDLEGALPROVISIONSANDRELATEDDISCUSSIONS 

62 FINAL  REPORT
4HECADASTRESYSTEMATTHECENTRALLICENSINGOFlCEFORRECORDINGANDMANAGEMENTOFMINERALLICENSES
HASNOTBEENWORKINGFORSOMETIMEWHICHISREPORTEDTOBEDUETOALACKOFFUNDSFORSOFTWAREUPGRADING
ANDTECHNICALSUPPORT4HEORIGINALINTENTIONATIMPLEMENTATIONWASFORASYSTEMWHERETHEFEDERALOFlCE
ISCONNECTEDTOREGIONALOFlCES4HISWASNOTFULLYACHIEVEDRESULTINGINARISKOFISSUEDLICENSESTOOVERLAP
SPATIALLYANDWHICHEMPHASIZESTHENEEDTOCOORDINATETHEFUNCTIONINGOFREGIONALANDFEDERALOFlCES
REGARDINGTHECADASTREANDREGISTRATIONOFLICENSES

Table  9.2.     Comparison  of  costs  of  holding  ground  for  exploration  and  mining  in  Ethiopia  with  some  neighbouring  countries,  
and  selected  mining  nations.  Note  that  these  types  of  comparisons  can  only  be  approximate,  as  no  two  mining  
laws  and  associated  regulations  are  identical,  and  detailed  stipulations  differ  from  country  to  country  (data  from  
Ethiopian  mining  regulations  No.  182/1994,  and  Spatial  Dimension,  2013).
Appr.  USD   South  
Ethiopia   Botswana   Sweden   Kenya   Tanzania   Zambia   Rwanda  
equivalents,   Sudan  
    PROP   
3EPT PROP
Reconnaissance  
license
!PPLICATION
  
PROCESSINGFEE  
2EGISTRATIONFEE  
,ICENSEFEE 
!NNUALRENTKM 
Exploration  license
!PPLICATION
    
PROCESSINGFEE  
2EGISTRATIONFEE     
,ICENSEFEE 
!NNUALRENTKM        
Small-­scale  mining  
license;  precious  
minerals
!PPLICATION
  
PROCESSINGFEE
2EGISTRATIONFEE   
,ICENSEFEE 
!NNUALRENTKM    
Small-­scale  mining  
license;  other  
minerals
!PPLICATION

PROCESSINGFEE
2EGISTRATIONFEE  SEEABOVE SEEABOVE SEEABOVE
,ICENSEFEE 
!NNUALRENTKM 
Large-­scale  mining  
license
!PPLICATION
 
PROCESSINGFEE    
2EGISTRATIONFEE  
,ICENSEFEE 
!NNUALRENTKM       
 "ASEDONTHEMININGREGULATIONSWHICHAREAPPLIEDTODAY,ICENSEFEESAREPERMININGBLOCKnMAXIMUMLICENSEAREAS 
WHICHSIZESAREDElNEDINTHEREGULATIONS
 #HARGEDPERPAGEOFTHELICENSEAPPLICATIONDOCUMENT
 9EAR THEREAFTERRENTSESCALATE
 EAR THEREAFTERRENTSESCALATE
 'OLDKIMBERLITICDIAMONDSANDGEMSTONESOTHERMINERALSIS53$KM

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 63

9.3.  Recommendations
)NTHESHORT TERMTHE-O-MAYCONSIDEROUTSOURCINGORBRINGINGINEXPERTISETOSUPPORTTHEEVALUATIONOF
THELARGENUMBEROFEXPLORATIONLICENSEAPPLICATIONSNOWPENDINGEVALUATION3UCHAMEASURECOULDBE
COMBINEDWITHCAPACITYBUILDINGANDTRAININGOFSTAFFINPARTICULARINTHEAREASOFTECHNICALANDlNANCIAL
EVALUATIONOFFEASIBILITYSTUDIES#ONCURRENTLYASSISTANCECOULDBEPROVIDEDINTHEAREAOFCOMPLIANCE
MONITORING

'RANTINGOFLICENSESOUTSIDETHELEGISLATEDPROCEDURESFORAPPLICATIONANDEVALUATIONISAPRIMARYDETERRENT
TOINVESTMENTINTHEINDUSTRY4HEESTABLISHMENTOFRULESANDPROCEDURESFORDISCRETIONARYGRANTINGOF
EXPLORATIONORMININGLICENSESMAYTHUSBECONSIDERED

!LTERNATIVEMETHODSFORREDUCINGSPECULATIONWHICHISGIVENASTHEMAINREASONFORTHEDISCRETIONARY
EVALUATIONOFLICENSEAPPLICATIONSDOEXISTEG !MORERIGOROUSEXAMINATIONOFTHECRITERIAALREADYIN
THELAWCONCERNINGTECHNICALANDlNANCIALCAPACITYFOREXPLORATIONANDSTRICTAPPLICATIONOFTHESETOEACH
INDIVIDUALAPPLICATION 2AISINGFEESFORLICENSESANDHOLDINGGROUNDTOALEVELUNSUSTAINABLEEXCEPTBY
lRMSSERIOUSLYCOMMITTEDTOINVESTMENTANDEXPLORATION)NTHISRESPECTACOMPARATIVESTUDYOFTHECOSTS
FORMINERALRIGHTSAPPLICATIONSANDTHECOSTSOFHOLDINGGROUNDISRECOMMENDED

!PERMANENTSOLUTIONFORADEQUATEBUDGETSUPPORTFORTHEMININGCADASTRESYSTEMWOULDSUPPORTITS
CONTINUOUSOPERATION3OFTWARESUPPORTANDMAINTENANCECONTRACTSARESTANDARDINALLCUSTOMISEDSOFTWARE
IMPLEMENTATIONSANDADEQUATEBUDGETINGFORHARDWAREANDNETWORKMAINTENANCEISNECESSARY!FUNCTIONING
CADASTRESYSTEMCOMPRISINGSTAFFCAPACITYSOFTWAREHARDWARENETWORKANDCOMMUNICATIONSSOLUTIONSAND
)4SUPPORTISCRITICALFORADEQUATEREGULATIONANDFAILUREOFTHESYSTEMCANHAVEMAJORNEGATIVEIMPACTSON
INVESTORCONlDENCETRANSPARENCYINLICENSING-O-WORKLOADANDULTIMATELYINACHIEVINGSECTORGROWTH
TARGETS&ORINCREASEDACCESSTOINTERESTEDPARTIESINVESTORSNON COREAUTHORITIESCIVILSOCIETYETC THE
CADASTRECOULDBEPUBLISHEDONLINEANDUPDATEDONAFREQUENTBASISINREALTIMEORATLEASTDAILY 

4HEREISANEEDTOCOORDINATETHEFUNCTIONINGOFTHECADASTREATFEDERALANDATREGIONALSTATESLEVEL)FTHERE
ARESPATIALOVERLAPSINLICENSEAREASBETWEENLICENSESGRANTEDATTHEREGIONALORSUB REGIONALLEVELSAND
THOSEGRANTEDATTHE-O-THENPROCEDURESSHOULDBEMODIlEDSOTHATSUCHOVERLAPSAREIMPOSSIBLETO
CREATE

)NSOMEJURISDICTIONSTHELICENSESFEESAREUSEDTOWARDSTHECOSTSOFTHECADASTREMAINTENANCE4HISMAYNOT
POSSIBLEUNDERTHECURRENTINSTITUTIONALSET UPMINERALLICENSINGADMINBEINGPARTOFTHE-O-STRUCTURE 
BUTTHEPOSSIBILITYFORTHISMAYBEINVESTIGATEDUNDERAREVISEDORGANIZATIONALSET UPSEE3ECTION 

64 FINAL  REPORT
 ©  The  Swedish  Geological  AB

 !24)3!.!,-).).'-!.!'%-%.4
 !RTISANALANDSMALLSCALEMININGOPERATIONSEXISTINMANYDEVELOPINGCOUNTRIES4HISPARTOFTHEMINING
SECTORHASBEENSTUDIEDRATHERINTENSELYINTHELASTCOUPLEOFDECADESANDTHEREISANOVERALLAGREEMENTTHAT
ALTHOUGHTHESETYPESOFACTIVITIESMAYBECOMEASOURCEFORTHEDEVELOPMENTOFLOCALENTREPRENEURSHIPAND
OVERALLECONOMICDEVELOPMENTITISALSOASECTORWHICHISASSOCIATEDWITHSIGNIlCANTNEGATIVEENVIRONMENTAL
IMPACTSANDOFTENWITHPOORSOCIALCONDITIONSCF&IGURE &URTHER!3-ISOFTENPERFORMEDINREMOTE
AREASWHICHGOVERNMENTAGENCIESMAYHAVEDIFlCULTIESINACCESSINGMAKINGSUPERVISIONANDCONTROLOFTHE
SECTORASIGNIlCANTCHALLENGE

 !RTISANALMINESITESGENERALLYSHAREANUMBEROFCHARACTERISTICS4HUSMININGISMAINLYBEINGDONEBYHAND

USINGSIMPLETECHNOLOGYINTHEFORMOFSHOVELSPICKSANDWHEELBARROWS4HEOREACCESSEDISEXCAVATED
FROMSURlCIALDEPOSITS4HEREISGENERALLYNEITHERDRILLINGEQUIPMENTNORANYEXPLOSIVESUSEDANDTHEREIS
NOEARTHMOVINGMACHINERYEMPLOYED4HEACTIVITIESARESOMETIMESOREVENOFTENCARRIEDOUTWITHOUTVALID
PERMITSFORCONDUCTINGTHEACTIVITIESANDTHEREISALACKOFlNANCEFORDEVELOPMENT4HEKNOWLEDGEOFTHE
GEOLOGYORDEPOSITSBEINGMINEDISLIMITEDLEADINGTOANACTIVITYWITHAVERYSHORTPLANNINGHORIZON

 4HEREHAVEBEENAGROWINGNUMBEROFINITIATIVESTAKENBYINSTITUTIONSSUCHASTHE7ORLD"ANKTHE%$&

THROUGH393-). ANDBILATERALDEVELOPMENTAGENCIES#O3UDE$ANIDA3IDA$&!4$ETC CONCERNEDWITH
SUPPORTINGANDBETTERORGANISINGTHE!3-SECTOR4HESEINITIATIVESHAVEBEENMETWITHVARYINGLEVELSOF
SUCCESS%NCOURAGEMENTANDSUPPORTFORINFORMALMINERSTOFORMCOOPERATIVESORFORMALCOMPANIESHAVE
INSOMECASESLEDTOCONSIDERABLEIMPROVEMENTSWITHREGARDSTOTHEABILITYOFTHEAUTHORITIESTOUNDERSTAND
THESECTORANDTHUSTOSUPERVISEANDCONTROLIT#ONVERSELYTHEREARENOPUBLISHEDEXAMPLESOFSUCCESSFUL
ATTEMPTSTOPROVIDEMICROlNANCESCHEMESTOTHESECTORALTHOUGHEXAMPLESOFTOTALORPARTIALFAILURESARE
GROWING0ROJECTSRELATEDTOBUILDINGTHECAPACITYOF!3-MINERSINTERMSOFTECHNICALECONOMICANDOR
ENVIRONMENTALMANAGEMENTSKILLSHAVEOFTENBEENWELLRECEIVEDALTHOUGHLASTINGBENElTSREMAINDIFlCULT
TOPROVE
MINERS: Inadequate
techniques

Low recovery Inability to

and productivity invest
Figure  10.1.    Illustration  of  the  two  cycles  
of  cause  and  effect  that   Low income
commonly  affect  ASM  and  the   and savings
authorities  which  attempt  to  
Poor health and safety,
control  them.  If  these  cycles   environmental damage
are  not  broken,  they  often  lead  
to  poor  environmental  and   AUTHORITIES: Inadequate
operational
social  performance. resources

Inability to Insufficient
control sector income

Inability to
collect taxes
or royalties
Poor health and safety,
environmental damage,
illegal operations

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 65

  /NGOINGCONmICTSBETWEEN!3-ANDLARGERSCALEFORMALMININGOPERATIONSHAVEBEENREPORTEDINMANY
DEVELOPINGCOUNTRIESEG0APUA.EW'UINEA0.' 4ANZANIA:AMBIA'HANA$2#%CUADORETC 4HE
ISSUESAREGENERALLYNOTCLEARCUTOREASILYRESOLVED4HE!3-MINERSMAYINSOMECASESBETHEONESTHAT
INITIALLYDISCOVEREDTHEMINEBUTINSOMECASES!3-MINERSMAYBEINFRINGINGONLEGALLYUNASSAILABLERIGHTS
4HEREHAVEBEENANUMBEROFATTEMPTSTOBROKERAGREEMENTSBETWEENLARGEROPERATIONSAND!3-AND
THEREISAGROWINGLITERATUREONHOWSUCHAGREEMENTSCANBEPUTINPLACEEGTHE#!3-#OMM$EV)#--
PUBLICATIONh7ORKINGTOGETHERv (OWEVERINALLCASESTHEPRESENCEOFANUNREGULATEDANDUNPREDICTABLE
!3-SECTORATASITEORINACOUNTRYREPRESENTSASIGNIlCANTDISINCENTIVEFORINVESTMENTSMADEBYLARGER
SCALEMININGOPERATORS

 !RTISANALANDSMALL SCALEACTIVITIESFORMANIMPORTANTPARTOFTHE%THIOPIANMININGSECTOR-OST!3-ISCARRIED

OUTINREMOTEAREASANDSINCEATLEASTASIGNIlCANTPARTOFTHESEACTIVITIESAREINFORMALTHESECTORREMAINS
POORLYUNDERSTOOD)NLATERYEARS-O-HASBEENACTIVEINSTUDYINGANDSUPPORTINGTHESECTORANDTHEBODY
OFKNOWLEDGEISGROWING&URTHERTHE-O-HASWITHTHESUPPORTOFTHE*APANESE3OCIAL$EVELOPMENT&UND
*3$& ADMINISTEREDBYTHE7ORLD"ANKCOMMISSIONEDANUMBEROFSTUDIESTHATWILLLEADTOANIMPROVED
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RECENTLYBEENPUBLISHED3U$#!$EVELOPMENT#ONSULTANTS ANDMOREWORKISTOBEDONE&URTHER
WITHINTHEPRESENTPROJECT3!-3 HALFADOZEN!3-SITESINSOUTHERNANDWESTERN%THIOPIAHAVEBEEN
VISITEDANDSTUDIED

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IMPORTANCEGOLDGEMSSAPPHIREOPAL SALTTANTALUMANDDIMENSIONSTONE4HEPRODUCTIONOFTHESE
COMMODITIESTHROUGH!3-ISSIGNIlCANTANDISREPORTEDTOHAVEGROWNRAPIDLYINTHELASTFEWYEARSESPECIALLY
WITHREGARDSTOGOLDBUTALSOGEMSSPECIlCALLYOPAL)NTHEPRODUCTIONFROM!3-WASREPORTEDTO
BEMOREIMPORTANTTHANLARGE SCALEOPERATIONSFORMOSTMETALSANDMINERALSMINEDANDALSOINTERMSOF
EMPLOYMENTGENERATION

10.1.  Governance  of  ASM

 %THIOPIANLAWMAKESADISTINCTIONBETWEENARTISANALANDSMALLSCALEMINING4HUSARTISANALMININGISDElNED
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ATLEASTPARTLYMECHANISED4HEREARESEPARATELEGALLICENSESAVAILABLETOARTISANALMININGANDSMALLSCALE
MINING

O !NARTISANALMININGLICENSEISAPPLIEDFORATTHE2EGIONAL-INING"UREAUS)TMAYBEGRANTEDONLYTO%THIOPIAN
INDIVIDUALSORORGANISATIONSCOMMONLYCOOPERATIVES 4HELICENSEPROVIDESANEXCLUSIVERIGHTTOEXPLORE
ANDMINEFORTHEMINERALSWITHINTHELICENSEAREA)TISVALIDFORYEARSANDMAYNOTBERENEWED4HE
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THANMVERTICALDEPTH4HEREISNONEEDTOHAVEANYSPECIlEDlNANCIALRESOURCESTECHNICALCOMPETENCE
PROFESSIONALSKILLSANDEXPERIENCETOACQUIREANARTISANALMININGLICENSE

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GOLDPLATINUMSILVERANDOTHERPRECIOUSANDSEMI PRECIOUSMINERALSTHATISMORTONS 
4HISLICENSEISVALIDFORUPTOYEARSINITIALLYANDTHEREAFTERFORAFURTHERYEARSATATIME

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ANDSOCIALISSUES4HEHOLDEROFANARTISANALLICENSEISOBLIGEDTOUNDERTAKEMININGOPERATIONSACCORDINGTO
THEENVIRONMENTALHEALTHANDSAFETYSTANDARDSPRESCRIBEDFORARTISANALMININGINTHERELEVANTLAWS!GAIN
ASMALLSCALEMININGOPERATORONTHEOTHERHANDFOLLOWSTHESAMELAWSASWOULDABIGOPERATION

 !TTHEREGIONALSTATESLEVELLICENSINGOFARTISANALMININGISMANAGEDBYTHE2EGIONAL-INING"UREAUS

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-INING"UREAUBUTAREEXEMPTFROMOTHERTAXES!SMALLSCALEMININGOPERATORFOLLOWSTHESAMELAWSAS
BIGOPERATIONSDOANDSHOULDTHUSPERFORMAN%)!BEFORESTARTINGOPERATIONSANDSUBMITYEARLYTECHNICAL
ANDlNANCIALREPORTSTOTHEAUTHORITIES

4HE.ATIONAL"ANKISCHARGEDWITHBUYINGTHEGOLDPRODUCEDBYARTISANALMINERSANDITISCHARGEDWITHDOING
SOWITHAINCREMENTCOMPAREDTOTHEDAILYOFlCIALGOLDPRICEAROYALTYISPAYABLETOTHESTATE 4HIS
GOLDBUYINGMECHANISMISRATHERUNIQUEANDITHASRECEIVEDQUITEABITOFATTENTIONFROMOTHERCOUNTRIES
ANDORGANISATIONSTHATARECONCERNEDWITH!3-MANAGEMENT(OWEVERASDESCRIBEDBELOWPARAGRAPH
 THESYSTEMISNOTFULLYEFFECTIVE

66 FINAL  REPORT
+EYlNDINGS
%THIOPIAHASALONGTRADITIONOFARTISANALGOLDANDGEMMINING4HESECTORREMAINSIMPORTANTAND-O-
 ESTIMATESTHATATOTALOFABOUTMILLIONPEOPLEAREDIRECTLYENGAGEDIN!3-IN%THIOPIAABOUTA
THIRDOFWHICHARECONCERNEDWITHGOLDMINING(OWEVERITNEEDSTOBEKEPTINMINDTHATITISDIFlCULTTO
ESTIMATETHENUMBEROFARTISANALMINERSANDTHATSUCHESTIMATESMUSTBEINTERPRETEDWITHSOMECAUTION
0ROBLEMSWITHPROVIDINGESTIMATESRELATETOTHEFACTTHATTHESEACTIVITIESARETOALARGEEXTENTINFORMALAND
UNREGISTEREDTHETERRAINISOFTENDIFlCULTTOACCESSANDMANYMINERSARENOTFULL TIMEMINERSBUTCOMBINE
MININGWITHOTHERLIVELIHOODSSEEBOX 

Box  5:  How  many  Artisanal  and  Small  scale  (ASM)  gold  miners  are  there?

Estimates  of  the  number  of  people  involved  in  ASM  often  provide  large  numbers  but  these  are  generally  
not  based  on  reliable  census  work.  

)FACOUNTRYHASBOTHAFORMALANDANINFORMALGOLDSECTORTHENTHEDIFFERENCEBETWEENTHEOFlCIAL
production  by  companies,  and  the  total  gold  produced,  is  used  to  estimate  the  number  of  artisanal  
miners.  An  often  used  method  to  estimate  the  number  of  ASM  miners  is  based  on  the  supposition  that  a  
typical  artisanal  gold  miner  produces,  say,  0.5-­1g  gold  per  day.  If  a  miner  works  200  days/year  then  1kg  
gold  produced  corresponds  to  5-­10  miners.  

For  example,  in  2009  in  Tanzania,  total  gold  produced  was  about  40  tons,  of  which  36  tons  derived  from  
formal  mines.  If  the  “missing”  4  tons  are  apportioned  to  ASM  activities,  then  this  corresponds  to  20-­
40,000  miners.

Problems  and  uncertainties  with  these  types  of  estimates  include  the  fact  that  artisanal  miners  may  work  
only  part  time  as  miners,  whereas  their  main  occupation  could  be,  for  example,  subsistence  agriculture;  
and  that  gold  deriving  from  undisclosed  sources  may  be  apportioned  to  ASM  activities,  thereby  
legitimising  its  origins.

Gold  mining
4HEAMOUNTOFGOLDPRODUCEDBY!3-ISREPORTEDTOHAVEINCREASEDDRAMATICALLYINRECENTYEARSFROMA
BITMORETHANKGOZ INTOINTHEEXCESSOFKILOSOZ IN
4HELATTERAMOUNTISREMARKABLYLARGEANDWELLINEXCESSOFTHEGOLDPRODUCEDBY!3-MINERSINSUCH
ESTABLISHEDGOLDMININGCOUNTRIESAS'HANAOR4ANZANIA&URTHERTHElNDINGSOFTHEADMITTEDLY FEWlELD
VISITSPERFORMEDDURING3TRATEGIC!SSESSMENTOF-INERAL3ECTOR3!-3 SEEBOX SUGGESTTHATTHE!3-
GOLDSECTORMAYBERATHERLESSDEVELOPEDTHANTHEIMPRESSIVEPRODUCTIONlGURESINDICATE

"OX3UMMARYlNDINGSON!3-DURINGlELDVISITS
PERFORMEDDURING3!-3

$OLOVIA/DO3HAKISO7OREDA/ROMIAnSOUTH

Located  2  km  southwest  of  the  Lega  Dembi  mine,  it  is  
the  largest  ASM  site  in  the  area.  Gold  bearing  quartz  
veins  are  reached  through  the  manual  sinking  up  to  
25  m  deep  shafts,  followed  by  manual  crushing  and  
washing  of  ore.  Dolovia  is  controlled  by  a  cooperative,  
which  has  some  50  members  and  which,  in  turn,  
employs  hundreds  of  temporary  miners  and  workers.  
According  to  the  cooperative,  the  production  is  100  
g  –  200  g  gold/month,  and  more  than  3  tons  of  ore  
is  crushed  daily.  The  operations  are  run  in  a  strict  
©  The  Swedish  Geological  AB hierarchic  system  with  cooperative  managers  at  the  
top,  and  foremen  managing  the  operations  on  site.  The  workforce  is  almost  entirely  comprised  of  
young  men;  some  women  are  providing  food  and  other  provisions  to  the  workers.  A  small  but  thriving  
mining  settlement,  referred  to  as  “Rock  City”  has  arisen  next  to  the  mining  site.  The  Dolovia  cooperative  
requests  assistance  in  mechanically  removing  topsoil  and  waste  rock,  so  that  the  ore  may  be  more  easily  
accessed.

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 67

 ASM  for  alluvial  gold  is  ongoing  in  waterways,  some  
of  which  is  within  the  Nyota  project’s  license  area.  
Individuals  or  teams  of  two  do  the  mining  and  in  all  
there  may  be  up  to  500  active  miners;  none  of  these  are  
organized  in  cooperatives  or  in  other  ways  licensed.  The  
miners  are  mostly  young  men,  although  some  women  
are  also  involved.  Miners  report  that  that  they  may  each  
produce  up  to  4-­5  g  gold/month.  Some  of  the  gold  is  
sold  to  licensed  traders,  but  most  appears  to  be  sold  
THROUGHILLICITCHANNELS4HEREARECONmICTSWITHLOCAL
FARMERSANDSIGNIlCANTENVIRONMENTALIMPACTSINTHE
form  of  riverbank  erosion  and  sedimentation.  

Yubdo  Woreda  (Oromia  –  west)

©  The  Swedish  Geological  AB
The  area  has  a  long  history  of  ASM,  mostly  for  alluvial  
gold  but  also  to  lesser  extent,  platinum.  Miners  work  in  
pairs,  and  almost  entirely  without  being  licensed;  one  
cooperative  exists  but  it  is  dormant.  There  may  be  up  to  
100  active  miners,  most  of  them  farmers  that  gain  an  
EXTRAINCOMETHISWAY4HEGOLDISTOASIGNIlCANTEXTENT
sold  outside  the  formal  and  controlled  channels.

Nejo  Woreda  (Oromia  –  west)

This  area  also  has  a  history  of  ASM,  targeting  alluvial  

gold.  There  are  three  licensed  cooperatives  in  the  area,  
but  these  were  inactive  in  late  2013.  There  may  be  up  
to  700  miners,  and  reportedly  they  produce  up  to  some  
4-­5  g  gold/month  each.  The  gold  is  to  a  large  extent  sold  
©  The  Swedish  Geological  AB
through  illicit  channels.  Environmental  and  social  issues  
OFNOTEINCLUDECHILDLABOURLANDCONmICTWITHFARMERS
and  erosion  and  sedimentation  in  rivers.

Menge  Woreda  (Benshangul-­Gumuz)

Most  woredas  in  the  region  have  ASM  activity,  and  

the  majority  is  alluvial  gold  mining.  There  are  some  
74  associations  in  the  region,  as  well  as  56  licensed  
traders.  Associations  mainly  produce  the  artisanal  gold,  
but  there  are  also  individual  artisanal  miners  who  also  
play  important  roles  in  gold  production.  Women  appear  
to  take  a  greater  part  in  the  activities  here,  compared  
to  elsewhere  in  Ethiopia.  There  is  a  shortage  of  water,  
as  the  rivers  dry  up  in  the  dry  season.  During  this  
period,  soil  is  brought  to  house  to  be  washed  using  the  
domestic  supply.
©  The  Swedish  Geological  AB

4HEPRODUCTIVITYOF!3-GOLDMINERSVARIES(OWEVERINTHEMAINLYPLACERBASEDGOLDDEPOSITSOFWESTERN
%THIOPIASURVEYSSUGGESTTHATONAVERAGEONEMINERPRODUCESSOMEnGGOLDPERMONTHDEPENDING
UPONWHETHERTHEMININGISCONDUCTEDPART ORFULLTIME!TTHESITEINSOUTHERN/ROMIA$OLOVIAWHICHIS
REPORTEDLYTHELARGEST!3-COOPERATIVEINTHATREGION WHEREPRIMARYOREISBEINGEXPLOITEDAWELLORGANISED
COOPERATIVEOPERATIONWITHSOMEMEMBERSISPRODUCINGSOMEnGGOLDMONTHWHICHTRANSLATES
TOABOUTnGGOLDPERMEMBERANDMONTH)FTHESEPRODUCTIONlGURESAREREPRESENTATIVEOFTHE!3-
SECTORASAWHOLETHENTHISWOULDIMPLYTHATTHEREPORTED!3-PRODUCTIONOFGOLDDURING
KILOSOROZ REQUIREWELLINEXCESSOFONEMILLIONINDIVIDUALMINERSORALTERNATIVELYTHEEXISTENCEOF
MORETHANCOOPERATIVESOFTHESIZEOFTHE$OLOVIACOOPERATIVE

68 FINAL  REPORT
4HESMUGGLINGANDILLICITSALESOFGOLDTONON LICENSEDBUYERSISREPORTEDTOBERATHERWIDESPREADAND
THISHASOCCURREDINSPITEOFTHEGOVERNMENTPOLICYOFPAYINGAPREMIUMOVERTHEDAILYGOLDPRICE4HE
REASONSBEHINDTHESEILLICITSALESINCLUDEAWISHTOAVOIDPAYINGROYALTY ANDABELIEFTHATTHEPRICE
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THATFURTHERSTUDIESAREREQUIRED

!3-ACTIVITIESREQUIREWATERANDTHEYARETHEREFOREOCCURRINGNEARWATERSOURCES7ITHREGARDSTOALLUVIAL
GOLDTHESOURCEISGENERALLYARIVERORSTREAM!T$OLOVIAWHEREMININGOFPRIMARYOREISCONDUCTEDTHE
MATERIALISBROUGHTTOANEARBYRIVERFORPROCESSING!SALLPROCESSINGACTIVITIESAREDEPENDENTONWATERAND
ASTHEREAREUSUALLYNOFACILITIESFORPUMPINGWATERTHISDEPENDENCYONWATERISCRUCIALANDISLIMITINGTHE
RESOURCESTHATMAYBEUTILISEDBY!3-MINERS

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SOMECASESSEENTOBESUITABLEFORTHEUNDER AGEDANDTHEREAREREPORTSOFCHILDLABOUR

!CCESSTOSAFEDRINKINGWATERISSCARCEINMANYOFTHE!3-MININGAREAS&URTHERTHELIMITEDAVAILABILITY
OFSAFEWATERPLACESASEVERESTRAINONTHEMINERSANDPARTICULARLYONTHEWOMENWHOARERESPONSIBLEFOR
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TIMEBUTTHATTHELOCALWOREDAADMINISTRATIONISEFFECTIVEINMANAGINGANDCONTROLLINGTHISPROBLEMWITHTHE
RESULTTHATTHISISNOTCONSIDEREDBYTHEMINETOBEAMAJORPROBLEM

!3-SITESAREUSUALLYSITUATEDINREMOTEAREASWHEREACCESSTOROADSISLIMITEDANDELECTRICITYDOESNOTEXIST
3U$#!$EVELOPMENT#ONSULTANTS NOTESTHATTHESITUATIONISSEVEREINREMOTEPARTSOF"ENISHANGUL
'UMUZREGIONWHEREMININGISCOMPARATIVELYMOREIMPORTANTASASOURCEOFINCOMEPROVIDINGOPPORTUNITIES
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3U$#!$EVELOPMENT#ONSULTANTS NOTESTHATCROPFARMINGISTHEMOSTIMPORTANTALTERNATIVELIVELIHOODS
FORMOSTMINERSFOLLOWEDBYLIVESTOCKREARING,ANDCOMPETITIONBETWEENMININGANDAGRICULTUREISAN
ISSUEINSOMEPLACESALTHOUGHSURVEYSINDICATETHATACCESSTOLANDFORMININGINMOSTAREASISNOTAGREAT
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SUCHASTHESPREADOFDISEASEINCLUDING()6!)$3 DRUGABUSEANDSOCIALCONmICTSBETWEENLOCALSAND
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AREASWASSEENREPORTEDATTHE$OLOVIASITESEEBOX AND3U$#!$EVELOPMENT#ONSULTANTS REPORT
ITTOALSOBERATHERCOMMONPLACEIN"ENISHANGUL 'UMUZ

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 69

 Gemstones
4HEMOSTIMPORTANTGEMINTERMSOFVALUEISOPALWHICHISMAINLYBEINGMINEDATONELOCALITYINTHE.ORTH
7OLLO:ONENORTHEASTOF!DDIS!BABA/PALFROMTHISLOCALITYISOFMUCHHIGHERQUALITYTHANTHOSEOFOTHER
AREASIN%THIOPIAANDTHESOCALLEDh7OLLO/PALvHASGAINEDPOPULARITYINTHEWIDERGLOBALMARKETSSINCE
-OSTOFTHEOTHERTYPESOFGEMSMINEDAREFOUNDININTHESOUTHOFTHECOUNTRY

4HE-O-ESTIMATESTHATTHEREWEREABOUTPEOPLEINASSOCIATIONSINVOLVEDINGEMSTONEPRODUCTION
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OF-O-TOPERFORMAMARKETVALUATIONOFTHESESTONESISHOWEVERNOTYETWELLDEVELOPED

!SOF.OVEMBERTHE-INISTRYOF-INESISNOTACCEPTINGLICENSEAPPLICATIONSFORGEMSTONES)TISTOO
EARLYTOASSESSHOWTHISWILLAFFECTTHECURRENTARTISANALMININGCOMMUNITIES

/PALPRODUCTIONINCREASEDFROMJUSTKGINTOKGBYWITHPRODUCTIONlGURES

BEINGMUCHHIGHERTHANTHETARGETSSETINTHE'404ABLE 

Table  10.1    Opal  production  over  the  last  six  years  (source:  Ministry  of  Mines).
      
0RODUCTION
     
KG
'40TARGET
    
KG

3CALINGUPOFPRODUCTIONFOROPALISLIMITEDBYTHETECHNICALITIESOFPRODUCTIONTHEYARESUITEDTOARTISANAL
ANDSMALLSCALEMINING!USTRALIAWHICHISCURRENTLYTHELARGESTGLOBALSUPPLIEROFOPALSTONESESTIMATEDTO
ACCOUNTFORAROUNDOFTHEGLOBALMARKET PRODUCESSTONESTHROUGHARTISANALMININGASWELLASSMALL
SCALEPRODUCTION/PEN CUTOPERATIONSCANBEUSEDTOEXPANDTHESCALEOFOPERATIONSBUTDOESREQUIRE
MACHINERYINTHEFORMOFBULLDOZERS TOREMOVETHEOVERBURDEN

#REATINGGREATERVALUEFROMTHEROUGHSTONESHASBEENRECOGNIZEDBYTHE3TATEANDEFFORTSHAVEBEENMADE
TOENCOURAGEVALUEADDITIONACTIVITIESIN%THIOPIA7ITHTHISINMINDTHE-INISTRYOF-INESANNOUNCEDABAN
ONEXPORTSOFROUGHOPALSIN*ANUARYTOCOMEINTOFORCEIN*UNEOFTHESAMEYEAR4HEBANWASNOT
ACTUALLYIMPOSEDANDHADBEENDISCARDEDBYTHEENDOF

#URRENTLYTHEREARENOPOLISHEDOPALPRODUCERSINTHECOUNTRY)NDIANlRMS)NDIABEINGTHELARGESTDESTINATION
FOR%THIOPIANOPALEXPORTS HAVESHOWNINTERESTINSETTINGUPPOLISHINGPLANTSWITHINTHECOUNTRYTHESE
INVESTMENTPLANSAREATAFEASIBILITYSTAGEATTHETIMEOFWRITINGOFTHISREPORT,OCALPRODUCERSHAVEALSO
SHOWNINTERESTINSETTINGUPPOLISHINGFACILITIESEQUIPMENTCANCOSTBETWEENTO"RTO
53$ 'EMSTONEPOLISHINGlRMSAREUSUALLYSMALLTOMEDIUMSIZEDBETWEENTOPEOPLE AND
ARENOTENERGYINTENSIVE4HEMAJORREQUIREMENTISOFSKILLEDGEMSTONECUTTERSANDPOLISHERS7HILETHE
ADDITIONINVALUEBYMOVINGFROMROUGHTOPOLISHEDSTONESCANBEHIGHTHISISDEPENDENTONSKILLEDCUTTING
ANDPOLISHINGTECHNIQUES

%XPORTREVENUESFROMOPALSHAVEBEENINCREASINGOVERTHEPASTFEWYEARSWITHTHEOPALSSOLDTHROUGH
LICENSEDEXPORTERS%XPORTERSAREREQUIREDTOREPATRIATE53$KGFORlRSTGRADEROUGHSTONES53$
KGFORSECONDGRADEAND53$KGFORTHIRDGRADEOPALS4HE-INISTRYOF-INESISENTITLEDTOREVISE
THEREPATRIATEDAMOUNTINCONSIDERATIONWITHINTERNATIONALPRICES&ORPOLISHEDOPALEXPORTERSAREREQUIRED
TOREPATRIATE53$KG4HEREAREINDICATIONSTHATOPALSARENOTALWAYSSOLDTHROUGHLICENSEDAGENTS

/PALSHAVEBEENASIGNIlCANTSOURCEOFFOREIGNEXCHANGEACCOUNTINGFOROVEROFTHEPRECIOUSSTONE
EXPORTREVENUESEARNEDIN53$MILLION AND53$MILLION 4HELARGESTDESTINATION
FORUNWORKEDSTONESWAS)NDIAWHILETHE53WASTHEMAINDESTINATIONFORPOLISHEDSTONES

4HEPOTENTIALFORTHEOPALSECTORIN%THIOPIATOCONTRIBUTETOWARDSFOREIGNEXCHANGEEARNINGSDOMESTIC
REVENUEANDEMPLOYMENTWITHINTHECOUNTRYISDEPENDENTONTHEABILITYOFTHE3TATETOMOVETHESECTOR
TOWARDVALUEADDITION!USTRALIAAND)NDIANEXPORTSOFUNWORKEDPRECIOUSSTONESINCLUDINGMORETHANJUST
OPAL WEREVALUEDAT53$MILLIONAND53$MILLIONRESPECTIVELYWITHlNISHEDSTONESAT53$MILLION
AND53$BILLIONRESPECTIVELYIN

 HTTPADDISFORTUNENETARTICLESROUGH CUT BAN U TURN IN BID TO BOOST MINING REVENUE

70 FINAL  REPORT
 4HEGEMSTONESECTORISMAINLYARTISANALMINERSWITHLIMITEDTONOABILITYTOGENERATEBACKWARDLINKAGES
WITHSOMEPOSSIBILITYOFVALUEADDITION4HEGOVERNMENTHASMADEPOLICYOVERTURESTOWARDSDEVELOPINGA
GEMSTONEPOLISHINGSECTORWHICHWILLCONTRIBUTETOJOBCREATIONANDSECONDARYINCOMEGENERATIONBUTTHIS
LINKAGEWILLBELIMITED0OLISHINGUNITSAREUSUALLYMEDIUMTOSMALLSCALElRMSANDTHUSTHENUMBEROF
JOBSCREATEDISLIMITEDFROMTOINEACHlRM&ORTHEGEMSTONESECTORTOMAKELARGERCONTRIBUTIONSTO
THEECONOMYTHESECTORREQUIRESACOMPREHENSIVESTRATEGICASSESSMENTWHEREVALUECHAINSFROMROUGH
STONESTOHIGHVALUEADDITIONSUCHASJEWELRY CANBEMAPPED&OREXAMPLEINTHEDIAMONDVALUECHAIN
IFROUGHGEMSTONESARETAKENTOHAVEAVALUEOFCUTTINGANDPOLISHINGCANTAKETHEVALUEUPTO
JEWELRYMANUFACTURINGTOANDMARKETINGANDRETAILTO4HUSlSCALLINKAGESCANBETHEBIGGESTGAIN
MADEBYTHECOUNTRYFROMTHEGEMSTONESECTOR

7HILETHEREISPOTENTIALWITHINTHEOPALSECTORGIVENTHECURRENTCIRCUMSTANCESTHEOVERALLCONTRIBUTION

TOWARDSTODOMESTICREVENUEWILLBELIMITEDGIVENTHATBOTHOPALMININGANDPOLISHINGOPERATIONSTENDTO
BESMALLSCALE!RTISANALOPALPRODUCTIONISEXPECTEDTOCONTINUEAROUNDKGMARKINTHENEARFUTURE
$EPENDENTONTHESUCCESSINPOLISHINGlRMSBEINGSETUPPOLISHEDSTONEPRODUCTIONCANEXPECTTOBE
AROUNDTOKG&URTHERMORESKILLSFORPOLISHINGANDCUTTINGARENOTLOCALIZEDATTHISTIME'IVENTHAT
INVESTMENTSINPOLISHINGFACILITIESARESTILLATAFEASIBILITYSTAGEITISNOTPOSSIBLETOASSESSTHECONSTRAINTS
THATMAYEMERGEINTHESECTORATTHISTIME

10.3.  Recommendations
!RTISANALMININGACTIVITIESAREDRIVENBYTHEOPPORTUNITYTHATTHEPRECIOUSMINERALSPROVIDEBUTALSOBY
POVERTYANDTHELACKOFOTHERECONOMICPOSSIBILITIES4HUSTHEACTIVITIESWILLCONTINUETOEXISTASLONGAS
THEREISALACKOFALTERNATIVELIVELIHOODS4HISSUGGESTSTHATTHEONLYWAYTOINTHELONGERTERMAVOIDTHE
ENVIRONMENTALSOCIALANDHUMANHEALTHPROBLEMSTHATAREINTIMATELYASSOCIATEDWITHTHISTYPEOFACTIVITYIS
TOENSUREANOVERALLPOSITIVEECONOMICDEVELOPMENTOFTHE%THIOPIANECONOMY

)NTHEMEANTIMEPROBLEMSCAUSEDBY!3-PERSISTANDTHEREISANURGENTNEEDTOMITIGATEMANAGETHEM

!TTHESAMETIME!3-ACTIVITIESAREINHERENTLYDIFlCULTTOCONTROL!TPRESENTNORELIABLEDATAEXISTSON
THENUMBEROFMINERSINCOMESANDBENElTSTOTHELOCALECONOMYANDTHESERIOUSNESSOFTHEIRASSOCIATED
ENVIRONMENTALIMPACTS%STIMATESOFTHENUMBEROFPEOPLEINVOLVEDIN!3-AREUNRELIABLEANDARENOTAN
ADEQUATEBASISFORMAKINGPOLICYANDMANAGEMENTDECISIONS7ITHOUTGOODBASELINEDATAEFFORTSTOMANAGE
ENVIRONMENTALIMPACTSAREUNLIKELYTOBESUCCESSFUL4HElRSTPRIORITYISTHEREFORETOCARRYOUTAPROPER
CENSUSANDBASELINESTUDYTOASSESSTHESITUATION3UCHSTUDIESWOULDNEEDTOBEFOLLOWEDUPREGULARLYTO
PROVIDEAGOODENOUGHBASISFORMANAGEMENTDECISIONS

'OVERNMENTEFFORTSTOENCOURAGEINDIVIDUALMINERTOCOMETOGETHERTOFORMMININGASSOCIATIONSANDTHENTO
JOINTLYAPPLYFORMININGCERTIlCATESHASMETWITHSOMESUCCESS%NCOURAGEMENTTOFORMMININGCOOPERATIVES
SHOULDBEASSOCIATEDWITHTHEPROVISIONOFTRAININGONTECHNICALlNANCIALANDENVIRONMENTALISSUES4HIS
MAYTHENLEADTOASITUATIONWHERETHEREISABETTERANDCLOSERRELATIONSHIPBETWEENGOVERNMENTOFlCIALS
ANDMINERSANDWHERETHEN-O-STAFFCANBETTERINmUENCETHEBEHAVIOURANDPERFORMANCEOFINDIVIDUAL
MINERS)TISTHEREFORERECOMMENDEDTHATSUCHEFFORTSAREPROMOTED!SPECIALEFFORTCOULDBESPENTON
TRAININGMINERSTOBECOMEMOREENVIRONMENTALLYAWAREANDRESPONSIBLE(OWEVERONENEEDSTOBEMINDFUL
OFTHEFACTTHATSUPPLYINGINDIVIDUALSANDORASSOCIATIONSWITHTECHNICALSKILLSANDCAPACITYMAYLEADTO
INCREASEDMECHANISATIONANDTOENVIRONMENTALIMPACTSBECOMINGMORESEVERE

%FFORTSTOSUPPORT!3-MUSTBEACCOMPANIEDWITHASTRENGTHENEDCOMMITMENTANDCAPACITYBYTHE
AUTHORITIESTOSUPERVISECONTROLANDENFORCEEXISTINGLAWSANDREGULATIONS)TISOFSPECIALIMPORTANCETHAT
CASESWHERE!3-ACTIVITIESAREINTERFERINGWITHLARGEANDFORTHEWHOLECOUNTRYIMPORTANTPROJECTAREWELL
MANAGEDANDCONTROLLED)FTHATISNOTACHIEVED%THIOPIARISKSBECOMINGLESSATTRACTIVEASADESTINATIONFOR
MININGRELATEDINVESTMENTS!TTHESAMETIMEITISVITALTHATWHATEVERMEASURESARETAKENTOCONTROLSUCH
PROBLEMSTHATTHEBASICHUMANRIGHTSOFTHE!3-MINERSAREPROTECTEDANDTHATATTEMPTSAREMADETO
lNDALTERNATIVELIVELIHOODSFORTHOSEWHOMAYHAVELOSTOPPORTUNITIESWITHINTHE!3-SECTOR

'EMSTONEMARKETSARELIMITEDMAINLYTOJEWELRYANDORNAMENTDEMAND4HE7OLLO/PALHASRECEIVEDGOOD
PUBLICITYINTHEGEMSTONEMARKETSSOFARANDCOULDBEFURTHERDEVELOPEDASABRANDNAME)NORDERTO
COMPETEINTHEINTERNATIONALMARKETACOMPREHENSIVESTRATEGYNOTJUSTTOWARDSENCOURAGINGVALUEADDITION
WITHINTHECOUNTRYBUTALSOTOWARDSBRANDINGMARKETINGANDPROMOTIONNEEDSTOBEUNDERTAKEN

&URTHERRECOMMENDATIONSTOREALIZETHEFULLPOTENTIALOFTHEOPALSECTORINCLUDECOMMISSIONINGAFULLSTRATEGIC
ASSESSMENTOFTHEPRODUCTIONPOTENTIALANDCAPABILITIESWITHINTHECOUNTRY

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 71

 ©  Allana  Potash  Afar  Plc.

 %.6)2/.-%.4!,!.$3/#)/%#/./-)#-!.!'%-%.4
11.1.  Legislation  and  regulation
 4HEREARENOCOMPREHENSIVELEGALINSTRUMENTSFORMANAGINGENVIRONMENTALANDSOCIALASPECTSANDTHOSETHAT
EXISTHAVELITTLEINWAYOFDETAILEDPROVISIONS4HEKEYINSTRUMENTFORENVIRONMENTALANDSOCIALMANAGEMENT
ISTHE%)!0ROCLAMATION.O4HE%)!PROCLAMATIONISAFRAMEWORKLAWTHATREQUIREREGULATIONS
ANDORDIRECTIVESTOGIVEBETTEREFFECTTOTHEPROCLAMATIONNONEOFWHICHEXISTS4HUSTHEREISTOACERTAIN
EXTENTALACKOFLEGALBASISFORTHEPROPERENFORCEMENTOFTHE%)!0ROCLAMATION4HE%NVIRONMENTALAND
#OMMUNITY$EVELOPMENT$IRECTORATEOF-O-ISRESPONSIBLEFORTHEENFORCEMENTOFTHE%)!0ROCLAMATION
FORMINERALSECTORPROJECTSANDTHECAPACITYOFTHEDIRECTORATEISDISCUSSEDIN3ECTIONPARAGRAPH

 4HE-INING0ROCLAMATION INCLUDESBRIEFPROVISIONSONTHEREQUIREMENTFOR%)!STHENEEDFORAPPROVAL

OFTHE%)!FROMTHERELEVANTAUTHORITYTHEALLOCATIONOFFUNDSTOCOVERREHABILITATIONCOSTSANDTHEALLOCATION
OFFUNDSFORCOMMUNITYDEVELOPMENT

 4HE-ODEL-INING!GREEMENT--!ALSODESCRIBEDIN3ECTION ESTABLISHESSIMILARPROVISIONSTOTHE

-INING0ROCLAMATIONBUTTHESEAREOFSUCHGENERALNATURETHATTHEYAPPEARDIFlCULTTOENFORCE4HE--!
FURTHERCONTEMPLATESAROLEFORLOCALADMINISTRATIONSINDEVELOPINGAPROPOSALFORCOMMUNITYDEVELOPMENTIN
CONSULTATIONWITHTHELOCALCOMMUNITYANDWITHTHEINVOLVEMENTOFTHELICENSEE4HUSCOMMUNITYDEVELOPMENT
ISMANDATORYBUTTHEDETAILSOFWHATSHOULDBEDONEARELEFTOPENFORNEGOTIATION&ROMINTERVIEWSWITHIN
THISPROJECTITAPPEARSASIFNEGOTIATIONSFORMININGAGREEMENTSASYETHAVEBEENALMOSTENTIRELYFOCUSED
ONTHETECHNICALWORKPLANANDGOVERNMENTALPARTICIPATIONWITHMUCHLESSEFFORTSPENTONISSUESRELATEDTO
COMMUNITYDEVELOPMENTANDENVIRONMENTALMANAGEMENT4HUSTHEREEXISTCONSIDERABLESCOPETOELABORATE
AMOREDETAILED--!WHICHALSOINCLUDESSTIPULATIONSOFENVIRONMENTALANDSOCIALREQUIREMENTSTOBEMET
BYMININGCOMPANIES

 0ROVISIONSFORSTAKEHOLDERCONSULTATIONANDPUBLICPARTICIPATIONINTHE%)!0ROCLAMATIONAREGENERALINNATURE
4HE%)!0ROCLAMATIONREQUIRESTHE%)!TOBEMADEACCESSIBLETOTHEPUBLICANDTHECOMMENTSMADEBY
THEPUBLICTOBEINCLUDEDINTHE%)!REPORTANDITSEVALUATION0UBLICCONSULTATIONISALSOPARTOFTHE%)!
'UIDELINEFOR-INERALAND0ETROLEUM/PERATION0ROJECTS BUTTHESEDONOTPRESCRIBEPROCEDURESIN
DETAIL)TISTHECONSULTANTSIMPRESSIONTHATTHEAUTHORITIESGENERALLYREGARDACOMPANYSPRESENTATIONOFA
PROJECTTONEARBYAFFECTEDCOMMUNITIESANDTHEINCORPORATIONOFMEETINGMINUTESINTHE%)!TOBESUFlCIENT
INTERMSOFHAVINGCOMPLETEDASTAKEHOLDERCONSULTATION

 )NDUSTRIAL%MISSION3TANDARDS AND'UIDELINE!MBIENT%NVIRONMENT3TANDARDSFOR%THIOPIA 

WEREISSUEDINRESPONSETOTHE%NVIRONMENTAL0OLLUTION#ONTROL0ROCLAMATION 4HESESTANDARDSCOULD
BEUSEDFORREGULATIONANDESPECIALLYTHE'UIDELINE!MBIENT%NVIRONMENT3TANDARDSARECONCISEANDREFER
TOTHEIMPORTANCEOFENVIRONMENTALBACKGROUNDDATAANDINCLUDEINFORMATIONONFOREXAMPLEENVIRONMENTAL
SAMPLINGTHATCOULDBEUSEFULTOINCLUDEINGUIDELINEDOCUMENTSCFBELOW 

 !CCESSTOLANDFORMININGISBASEDONTHEFACTTHATTHE3TATEOWNSALLLANDANDTHATCOMPENSATIONFORPROPERTY
ISPROVIDEDTOLANDHOLDERSIFPRIORITYISGIVENTOMININGPROJECTS4HE#ONSTITUTIONSPECIlESTHATTHERIGHTTO
OWNERSHIPOFLANDASWELLASOFALLNATURALRESOURCESISEXCLUSIVELYVESTEDINTHE3TATEANDINTHEPEOPLESOF
%THIOPIAANDLANDSHALLNOTBESUBJECTTOSALEOROTHERMEANSOFEXCHANGE)TFURTHERACKNOWLEDGESTHERIGHT
OFPEASANTSTOOBTAINLANDWITHOUTPAYMENTANDTOBEPROTECTEDAGAINSTEVICTIONFROMTHEIRPOSSESSIONAS
WELLASTHERIGHTOFPASTORALISTSTOhFREELANDFORGRAZINGANDCULTIVATIONASWELLASTHERIGHTNOTTOBEDISPLACED
FROMTHEIROWNLANDSv

 !SAGENERALRULEALLLANDIN%THIOPIAISAVAILABLEFORMININGOPERATIONSEXCEPTFORTYPICALLIMITATIONSASLAND

RESERVEDFORCEMETERIESRELIGIOUSCULTURALANDHISTORICALSITESINFRASTRUCTURENATIONALPARKSANDNATURAL

72 FINAL  REPORT
 HABITATSVILLAGESWATERRESERVOIRSANDDAMSSITESETC4HE'OVERNMENTCANHOWEVERRESERVEANYLAND
FORMININGOPERATIONSIFCONSIDEREDTOBETHEBESTINTERESTOFTHECOUNTRYANDTHE-INISTRYCANAUTHORIZE
EXCEPTIONSFORMININGINTHOSEPROTECTEDSITES

 4HE-INERAL0ROCLAMATION!MENDMENTPROVIDESTHEDETERMINATIONOFCOMPENSATIONANDRELATEDCOMPLAINTS
ANDAPPEALS PURSUANTTO0ROCLAMATION.OCALLED%XPROPRIATIONOF,ANDHOLDINGSFOR0UBLIC0URPOSES
AND0AYMENTOF#OMPENSATION0ROCLAMATION 0ROCLAMATION.OISCURRENTLYINUSESUBSTITUTING
!RTICLEOFTHE#IVIL#ODE4HEPROCLAMATIONLAYSDOWNPRINCIPLESTOCOMPENSATELANDHOLDERSFORPROPERTY
SITUATEDONTHELANDANDFORPERMANENTIMPROVEMENTSMADEONSUCHLANDONTHEBASISOFREPLACEMENT
COSTS

 4HE0ROCLAMATIONTO0ROVIDEFORTHE$EVELOPMENT#ONSERVATIONAND5TILIZATIONOF7ILDLIFE.O 
ESTABLISHESVARIOUSTYPESOFWILDLIFECONSERVATIONAREAS4ABLE 

Table  11.1    Categories  of  wildlife  conservation  areas  in  Ethiopia.

Type Purpose Management
4OCONSERVEWILDLIFEANDASSOCIATED
NATURALRESOURCESTOPRESERVETHESCENIC 7ILDLIFE$EVELOPMENTAND#ONSERVATION
.ATIONALPARK ANDSCIENTIlCVALUEOFTHEAREAWHICH !UTHORITYANDSOMEBYREGIONAL
MAYINCLUDELAKESANDOTHERAQUATIC GOVERNMENTS
AREAS
4OCONSERVEONEORMORESPECIESOF 7ILDLIFE$EVELOPMENTAND#ONSERVATION
7ILDLIFESANCTUARY WILDLIFETHATREQUIRESHIGHCONSERVATION !UTHORITYANDSOMEBYREGIONAL
PRIORITY GOVERNMENTS
4OCONSERVEWILDLIFEWHEREINDIGENOUS
7ILDLIFERESERVE LOCALCOMMUNITIESAREALLOWEDTOLIVE 2EGIONALGOVERNMENTS
TOGETHERWITHANDCONSERVETHEWILDLIFE

!CCORDINGTOTHE2EGULATIONTO0ROVIDEFOR7ILDLIFE$EVELOPMENT#ONSERVATIONAND5TILIZATION.O 
ARTICLEH EXPLORATIONANDMININGAREEXPLICITLYPROHIBITEDWITHIN.ATIONALPARKSWILDLIFESANCTUARIES
ANDWILDLIFERESERVES(OWEVERARTICLEF PROVIDESFOR@MININGANDOTHERDEVELOPMENTACTIVITIESTOBE
UNDERTAKEN@INACCORDANCEWITHWILDLIFEDEVELOPMENTPROTECTIONANDUTILIZATIONACTIVITIES&URTHERMOREAS
MENTIONEDABOVETHE-INING0ROCLAMATIONPROVIDESFORTHE'OVERNMENTTOOPENANYPROTECTEDOR
RESERVEDAREAFOREXPLORATIONANDMININGWHENCONSIDEREDTOBEOFNATIONALINTERESTSEEFURTHERPARAGRAPH
 

&ORESTDEVELOPMENTCONSERVATIONANDUTILIZATIONISPROVIDEDFORTHROUGH0ROCLAMATION.O!RTICLE
 DElNESA@PROTECTEDFORESTASAFORESTTOBECONSERVEDANDDEVELOPEDFREEFROMHUMANORANIMAL
INTERFERENCEFORTHEPURPOSEOFWATERSHADEMANAGEMENTANDTHECONSERVATIONOFGENETICRESOURCES
BIODIVERSITYANDTHEENVIRONMENTINGENERALASWELLASFORTHEPURPOSEOFTRAININGANDRESEARCH

%VENTHOUGH@PROTECTEDFORESTISDElNED!RTICLE STATESTHATFORESTSINGENERALANDNOTONLY@PROTECTED

FORESTS SHALLBEPROTECTEDFROMMININGACTIVITIESAMONGOTHERTHINGS!RTICLE FURTHERPROVIDES
FORPROHIBITIONAGAINSTTHECUTTINGOFTREESREMOVALOFNATURALRESOURCESETCWHICHINESSENCEPROHIBITS
EXPLORATIONANDMININGACTIVITIES4HEFOLLOWINGARTICLEHOWEVERDElNESMININGASONEOFTHEACTIVITIESTHAT
CANBEUNDERTAKENAFTERAPPROVALFROMTHE-INISTRYOF!GRICULTUREAND2URAL$EVELOPMENT !SINTHECASE
OFWILDLIFEPROTECTIONTHE-INING0ROCLAMATIONINANYCASEPROVIDESFORTHE'OVERNMENTTOAPPROVE
EXPLORATIONANDMININGINANYRESERVEDAREAIFITISCONSIDEREDTOBEOFNATIONALINTEREST

!SDESCRIBEDIN#HAPTERTHE%NVIRONMENTALAND#OMMUNITY$EVELOPMENT$IRECTORATEOF-O-ISRESPONSIBLE
FORSUPERVISINGCONTROLLINGANDCOMPLIANCEMONITORINGOFTHE%)!PROCESS(OWEVERTHEDIRECTORATECURRENTLY
LACKSSTAFFWITHEXTENSIVEEXPERIENCEANDSUFlCIENTQUALIlCATIONSINTHElELDSREQUIREDMININGENVIRONMENT
SOCIOECONOMICSCOMMUNITYDEVELOPMENTAND/(3 

!DDITIONALTOOLSANDORGUIDELINESTHATSUPPORTENVIRONMENTALANDSOCIALMANAGEMENTOFTHESECTORISLIMITED
TOTHREEGUIDELINESI %NVIRONMENTAL)MPACT!SSESSMENT0ROCEDURAL'UIDELINE nDESCRIBINGTHE%)!
PROCESSROLESANDRESPONSIBILITIESANDLISTSDIFFERENTTYPESOFPROJECTSREQUIRINGAN%)!II 4HE'UIDELINES
3ERIES$OCUMENTSFOR2EVIEWING%NVIRONMENTAL)MPACT3TUDY2EPORTS nAIMEDTOASSISTSECTORAL
AUTHORITIESINASSESSING%)!SAND4HE%)!'UIDELINEFOR-INERALAND0ETROLEUM/PERATION0ROJECTS 
nAIMEDTOASSISTINVESTORS!LLGUIDELINESARESTILLINDRAFTFORM7HILETHElRSTGUIDELINEPROVIDESUSEFUL
INFORMATIONONTHE%)!PROCESSTHELATTERTWOARESTILL@WORKINGDOCUMENTSTHATNEEDIMPROVEMENTBOTHIN
STRUCTURETOMAKETHEDOCUMENTSMOREEASILYACCESSIBLEFORTHEREADERANDINCONTENTDETAILSTOMAKETHEM
COMPLETEANDUPDATED4HEMODESTQUALITYOFTHETWOLATTERGUIDELINESMAYSUGGESTATALACKOFCAPACITY
ANDEXPERIENCEINTHEAREAOFMINERALSECTORENVIRONMENTALANDSOCIALMANAGEMENT

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 73

11.2.  Environmental  and  social  baseline
4HEMAJORGEOGRAPHICFEATURESOF%THIOPIAARETHEMASSIVEHIGHLANDCOMPLEXINTHECENTRALPARTSTHE'REAT
2IFT6ALLEYDIVIDINGTHEHIGHLANDSANDTHESURROUNDINGLOWLANDS4HE2IFT6ALLEYBISECTSCENTRAL%THIOPIA
INTOTHENORTHWESTERNANDSOUTHEASTERNHIGHLANDPLATEAUS&IGURE WHICHARECHARACTERISEDBYRUGGED
MOUNTAINSREACHINGABOVEMASL ANDDEEPVALLEYS4HEHIGHLANDSARETHEMAJORCATCHMENTAREAS
FORTHEMAJORRIVERSINCLUDINGFOREXAMPLE!BAY"LUE.ILE AND!WASH4HENORTHERNPARTOFTHE2IFT6ALLEY
IN%THIOPIABROADENSTOWARDSTHENORTHEASTWHERETHETOPOGRAPHICALLYLOWESTPOINTAT MISFOUNDINTHE
$ANAKILDEPRESSION

4HEMAINCATCHMENTAREASFORlVEMAJORTRANSBOUNDARYRIVERSARELOCATEDIN%THIOPIATHE.ILEmOWINGINTO
3UDANTHE-AREBOR'ASH CONSTITUTINGPARTOFTHEBORDERTO%RITREAANDmOWINGINTO%RITREATHE!WASH
mOWINGINTO$JIBOUTIANDTHE*UBAAND3HEBELEBOTHmOWINGINTO3OMALIA

Figure  11.1.  Topographic  map  of  Ethiopia  (source:  Wikipedia  Commons).

4HEDIVERSETOPOGRAPHICFEATURESOF%THIOPIAANDTHESEASONALMOVEMENTOFTHE)NTER TROPICALCONVERGENCE
ZONE)#4: PRODUCEWIDEVARIATIONSINCLIMATEASWELLASINTHEDISTRIBUTIONOFNATURALVEGETATIONANDSOIL
CONDITIONS7HILETHEAVERAGEANNUALRAINFALLISRATHERHIGHATAROUNDMMTHEREAREEXTREMEVARIATIONS
SPATIALLYANDBETWEENDIFFERENTYEARSWITHSIGNIlCANTDROUGHTANDmOODEVENTSOCCURRINGEVERY YEARS
7ORLD"ANK !VERAGEANNUALRAINFALLVARIESFROMMMINNORTHEASTANDEASTERNPARTSTOMM
INTHECENTRALHIGHLANDSANDTHERAINFALLISHIGHLYSEASONABLEWITHMOSTRAINFALLINGINASINGLEANDSHORT
SEASONOFTENPRODUCINGHIGH INTENSITYSTORMS

4HERUGGEDTOPOGRAPHYOFLARGEPARTSOF%THIOPIAANDITSLONGHISTORYOFHUMANIMPACTCOUPLEDWITHTHE
EXTREMEVARIATIONSINRAINFALLHAVERESULTEDINSIGNIlCANTIMPACTONTHENATURAL@BACKGROUNDENVIRONMENT
(UMANACTIVITIESHAVELEDTOSIGNIlCANTDEFORESTATIONHISTORICALLYTHEFORESTCOVEROF%THIOPIAISBELIEVEDTO
HAVEBEENABOUTWHILEABOUTOFTHECOUNTRYISNOWCOVEREDBYFOREST2EUSING HAVE
SHOWNTHATINTHESNATURALHIGHFORESTCOVEREDONLYOFTHECOUNTRYANDTHISISNOWREDUCEDTO
OFWHICHTHEDOMINANTPARTISCONlNEDTOTHE.ATIONAL0RIORITY&OREST!REASSEEBELOW 

)NORDERTOENSURESOMELEVELOFFORESTRESOURCESCONSERVATIONINCLUDINGGENETICRESOURCESANDBIODIVERSITY
.ATIONAL0RIORITY&OREST!REAS.0&!S WEREDELINEATEDWITHINTHE%THIOPIAN&ORESTRY!CTION
0ROGRAM4HETOTALORIGINALAREAOFTHESE.0&!SWASMILLIONHECTAREABOUTOF%THIOPIASTOTALLAND
AREA BUTTHESIZESOFTHESE.0&!SHAVEDIMINISHEDDUETOHUMANSETTLEMENTDUETOPOPULATIONGROWTH 
ANDAGRICULTURALENCROACHMENTS.0&!SAREDISTRIBUTEDACROSSTHECOUNTRYSEEEXAMPLESIN&IGURE 

74 FINAL  REPORT
 ANDCOVERMOSTOFTHEECOSYSTEMSVEGETATIONZONES&IGURE 4HE.0&!SAREALSOINPLACETOPROTECT
BIODIVERSITYANDENDEMICPLANTSPECIES4HETOTALPLANTDIVERSITYOF%THIOPIAISABOUTSPECIESANDABOUT
OFTHESPECIESAREENDEMIC4HESEENDEMICPLANTSPECIESAREDISTRIBUTEDACROSSVARIOUSECOSYSTEMS
VEGETATIONTYPESOF%THIOPIA&LORAOF%THIOPIAVOLUMES 

4HEREAREANUMBEROF7ILDLIFE#ONSERVATION!REASIN%THIOPIA!SMENTIONEDIN3ECTIONNATIONAL
PARKSWILDLIFESANCTUARIESWILDLIFERESERVESAND.0&!S&IGURE AREPROTECTEDFROMEXPLORATIONAND
MININGBYLAWWHILETHE'OVERNMENTMAYMAKEEXEMPTIONS#OMMUNITYCONSERVATIONAREASWHERELOCAL
COMMUNITIESMAYUTILIZEWILDLIFERESOURCESANDCONTROLLEDHUNTINGAREAS&IGURE DONOTCARRYTHE
SAMELEVELOFPROTECTION.ATIONALPARKSWEREESTABLISHEDMAINLYTOPROTECTmAGSHIPSPECIESEG7ALIAIBEX
-OUNTAIN.YALAANDTHE%THIOPIANWOLF3IMILARLYTHEWILDLIFESANCTUARIESWEREMEANTTOPROTECTTHREATENED
SPECIESSUCHAS3WAYNES(ARTEBEESTANDANELEPHANTSUBSPECIES"ABILE%LEPHANT3ANCTUARY 4HEFAUNA
DIVERSITYOF%THIOPIAHASNOTBEENSYSTEMATICALLYDOCUMENTED(OWEVERVARIOUSSTUDIESSHOWTHATTHEREARE
ATLEASTSPECIESOFMAMMALSOFWHICHSPECIESAREENDEMIC

"IRDLIFE)NTERNATIONALHASRECOGNISED)MPORTANT"IRD!REAS)"! IN%THIOPIABYUSINGBIRDSASINDICATORS
FORBIODIVERSITYCONSERVATION)NCONTRASTTO.0&!SAND7ILDLIFE#ONSERVATION!REAS)"!SDONOTCARRYANY
ENVIRONMENTALPROTECTIONBYLAWUNLESSTHEYFALLWITHINWILDLIFEORFORESTPROTECTEDAREAS-OST)"!SARE
LOCATEDOUTSIDETHE0ROTEROZOICAREASWHEREANYFUTURELARGE SCALEMININGISEXPECTEDTOOCCUR%THIOPIA
HASAHIGHDIVERSITYOFBIRDOVERSPECIES ANDTHIRTY ONESPECIESHAVEBEENIDENTIlEDTOBEOFGLOBAL
CONSERVATIONCONCERNWWWBIRDLIFEINTERNATIONALORG 

7ETLANDSAREIMPORTANTASAFRESHWATERRESOURCEBECAUSETHEIRBIODIVERSITYANDASTHEYFUNCTIONASNATURES

OWN@WATERTREATMENTPLANT7ETLANDSAREOFTENTHREATENEDANDTHISISTHECASEALSOIN%THIOPIAPRIMARILY
DUETOINCREASEDHUMANPRESSUREAROUNDTHEWETLANDSANDINTHEIRCATCHMENTAREAS(ILLMANAND!BEBE
 ESTIMATETHATWETLANDSCOVEROFTHETOTALLANDMASSOF%THIOPIAANDMANY)"!SAREINTHE
WETLANDAREAS4HEWETLANDSALMOSTEXCLUSIVELYOCCUROUTSIDETHE0ROTEROZOICTERRAINSBUTMANYWETLANDS
ARELOCATEDINTHE2IFT6ALLEYWHEREMININGOFINDUSTRIALMINERALSOCCURINSOMEPLACES
36°E 40°E 44°E 48°E
ERITREA
R
E
D

Kefta  Shiraro 14°N

  S

14°N YEMEN
E
A

Shire  lowlands
Dessa'a  forest

SUDAN Simen  Mountains

Lake  A shenge
Legend
Hugumburda
Alatish Important  Bird  Areas
Mille  Serdo G U L F   O F Proterozoic  terrains
ADEN
DJIBOUTI License  Areas
Protected  Areas
Yangudi  Rassa
Awi Community  Conservation  Areas
Gewane
Conservation  Areas 10°N
10°N
Controled  Hunting  Areas
Sanctuary
Wildlife  Reserve
Babile  Elephant  Sanctuary

Metu-­Gore-­Tepi  forests
Abijjata-­Shalla  Lakes

6°N 6°N

S O U T H   S U D A N Omo
Mago
Anferara  Forest
Liben  plains
Mankubsa  welenso  forest
Chelbi
Arero  Forest
Yabello  Sanctuary

¹
SOMALIA
Dawa-­Wachile Gerale

Km
K E N YA
0 50 100 200 300

UGANDA 36°E 40°E 44°E 48°E

Figure  11.3.    Wildlife  conservation  areas  and  important  bird  areas  in  relation  to  late  Proterozoic  terrains  and  exploration  and  
KE NYA
UGANDA
mining  licenses  issued  during  2005-­2012.  Examples  (names)  of  NPFAs  are  also  indicated.

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 75

 36°E 40°E 44°E 48°E
ERITREA
Legend

R
E
D
14°N

  S
14°N YProterozoic  terrains
EMEN

E
A
License  Areas
Potential  Natural  Vegetation
SUDAN
Dry  Evergreen  Afromontane  forest  
Combretum-­Terminalia  Woodland  
Afroalpine  Vegetation
G U L F   O F Moist  Evergreen  Afromontane  Forest
ADEN
DJIBOUTI Transitional  Rainforest
Salt  Lakes-­  Open  Water  Vegetation
Acecia-­Commiphora  Woodland  
Acecia  Wooded  Grassland  
10°N 10°N
Desert  and  Semi-­desertScrubland
Ericaceous  Belt
Freshwater  marshes  and  swamps
Salt  Pans
Wooded  Grassland

6°N 6°N

S O U T H   S U D A N

¹
SOMALIA

Km
K E N YA
0 50 100 200 300

UGANDA 36°E 40°E 44°E 48°E

Figure  11.4.    Potential  ecosystems/vegetation  zones  of  Ethiopia  (ref)  in  relation  to  late  Proterozoic  terrains  and  exploration  and  
mining  licenses  issued  during  2005-­2012.

!SCANBESEENIN&IGUREMOSTWILDLIFECONSERVATIONAREASAND)"!SARELOCATEDOUTSIDETHE0ROTEROZOIC
TERRAINSWHICHARETHEMOSTPROSPECTIVEFORMINERALSANDTHUSTHEMOSTLIKELYTOBEIMPACTEDBYEXPLORATION
ANDMININGACTIVITIESINTHEFUTURE(OWEVERTHEREARECASESWHENCONSERVATIONANDEXPLORATIONLICENSE
AREASOVERLAPASEXEMPLIlEDBELOW7HEREASTHISMAYBEDUEACASE SPECIlCDECISIONSBYTHE'OVERNMENT
WHEREMININGHASBEENGIVENPRIORITYOVERCONSERVATIONINTERESTSCFPARAGRAPHANDABOVE INTERVIEWS
CARRIEDOUTWITHINTHISPROJECTINDICATETHATITMAYINSOMECASESBEDUEALACKOFSPATIALINFORMATIONON
CONSERVATIONAREASATTHE-INERAL,ICENSINGAND!DMINISTRATION$IRECTORATE4HEDIRECTORATEISNOWWORKING
ONINTEGRATINGTHISINFORMATIONINTOTHEMININGCADASTRESYSTEM

  !HANDFULLICENSESINTHENORTHFALLINSIDETHEREMNANTDRYAFROMONTANEFORESTSANDINPARTICULARWITHIN
THE$ESSAAAND(UGUMBRDA.0&!SWHICHAREHOMETOKEYBIODIVERSITYPLANTSPECIESANDECOLOGICAL
PROCESSESTHATAREVITALTOTHELIVELIHOODOFLOCALCOMMUNITIES)NTHEREWASALSOEXPLORATIONLICENSES
ISSUEDACROSSLARGEAREASOFTHE+EFTA3HIRARO.ATIONAL0ARKINTHEFARNORTHEAST&IGURE 

  )NTHEWESTERN0ROTEROZOICTERRAINSSOMELICENSESFALLINSIDETHE-ETU 'ORE 4EPI.0&!WHICHHOUSESFOR

EXAMPLETHEGENEPOOLSOFTHEWILD%THIOPIA!RABICACOFFEE4HIS.0&!ISWITHINTHE4RANSITIONAL2AINFOREST
ECOSYSTEM&IGURE WHICHCONSTITUTESONLYOFTHEECOSYSTEMSVEGETATIONTYPESOF%THIOPIA

  )NTHESOUTHERN0ROTEROZOICTERRAINTHEMOIST!FROMONTANEFORESTISREMNANTINNATUREANDCOVERSONLY
ASMALLPORTIONOFTHEHIGHLANDS3IMILARLYTHEDRY!FROMONTANEFORESTSAREFRAGMENTEDINNATUREAND
THREATENEDBYHUMANIMPACT3OMELICENSEAREASFALLINSIDE.0&!SEG!RERO!NFERARAAND-ANKUBSA
7ELENSOFORESTS WHICHAREALSOHOUSE)"!SWITHENDEMICANDRAREBIRDSPECIES3OMELICENSESALSO
COINCIDEWITHWILDLIFESANCTUARIESEG9ABELLO 

  )NTHENORTHEASTERNPARTOFTHE2IFT6ALLEYSOMELICENSEAREASFALLINSIDEWILDLIFERESERVEEG-ILLE3ERDO 

4HEGEOLOGICALLYMOSTPROSPECTIVEAREASAREINTHEMAINNOTSITUATEDINTHEMOSTDENSELYPOPULATEDPARTS

OFTHEHIGHLANDSWHICHIMPLIESLESSENEDRISKSFORSERIOUSCONmICTOVERLANDWITHOTHERPRODUCTIVESECTORS
CF&IGUREAND4ABLE 4HEAREASMOSTLIKELYTOBEIMPACTEDBYFUTUREMININGLEDDEVELOPMENT
ARETHESETHATAREGEOLOGICALLYMOSTPROSPECTIVEnTHATISINAREASWITH0ROTEROZOICAGEGEOLOGYnINTHE
NORTHWESTANDSOUTHIN"ENISHANGUL 'UMUZ4IGRAYNORTHWESTERNPARTS ANDTHEWESTERNANDSOUTHERN

76 FINAL  REPORT
 PARTSOF/ROMIA7EST7OLLEGAZONEAND'UJIZONE 4HESEAREASARECOMPARATIVELYSPARSELYPOPULATED
(OWEVERSOMEPARTSOFESPECIALLY4IGRAYANDSOUTHERN/ROMIAREPRESENTAREASWHEREHIGHPOPULATIONAND
PROSPECTIVEGEOLOGYINTERSECT

/VERALLDEMOGRAPHICANDHEALTHRELATEDINDICATORSSHOWTHATTHEAREASWITHPROSPECTIVEGEOLOGYARE
AREASTHATARELESSURBANISEDANDLESSWELLDEVELOPEDCOMPAREDTOTHENATIONALAVERAGE4HESEAREAS
AREEXPERIENCINGRAPIDPOPULATIONGROWTHANDAREASSOCIATEDWITHRATHERPERILOUSHEALTHSTATUSAMONGTHE
POPULATION4ABLE "ENISHANGUL 'UMUZISTHECOMPARATIVELYLEASTDEVELOPEDAREAAMONGTHETHREE
GEOLOGICALLYPROSPECTIVEAREAS

%THIOPIAISAVERYDIVERSECOUNTRYWITHMANYCULTURESANDLANGUAGESEXISTINGSIDEBYSIDE3OMEOFTHESE
COMMUNITIESARELESSNUMEROUSANDMAYBEMOREVULNERABLETOIMPACTSFROMMININGDEVELOPMENTSWHICH
MAYIFNOTMANAGEDCAREFULLYENDUPNEGATIVELYIMPACTINGONAVARIETYOFSOCIOCULTURALASPECTS)N4IGRAY
NEARLYALLRURALINHABITANTSARE4IGRAYANS3IMILARLYIN/ROMIAMOSTRURALDWELLERSARE/ROMOALTHOUGHIN
THESEAREASTHEREISALSOASIZEABLE!MHARICMINORITYPRESENT#ONVERSELYRURAL"ENISHANGUL 'UMUZISMORE
DIVERSEWITHTHEMOSTSIZEABLECOMMUNITIESBEING"ERTA'UMUZ!MHARA/ROMOAND
3HINASHA

)NHABITANTSIN"ENISHANGUL 'UMUZ/ROMIAAND4IGRAYAREMOSTLYFARMERSANDTOAMINOREXTENTPASTORALISTS

)N"ENISHANGUL 'UMUZREGIONOVERPERCENTOFTHEPOPULATIONISRELIANTONSUBSISTENCEAGRICULTURE
PRODUCINGGRAINVEGETABLESFRUITSANDROOTCROPS,IVESTOCKREARINGISCOMPARATIVELYLESSCOMMONANDWHEN
ITOCCURSITISOFTENDONEBYMIGRANTSETTLERSFROM!MHARAAND/ROMIAREGIONS!3-ACTIVITIESOCCURAND
THESEAREMAINLYPERFORMEDBYFARMERSWHOENGAGEINMININGDURINGTHEIRIDLETIMEORLANDLESSYOUTHSAND
MARGINALIZEDSECTIONSOFTHELOCALCOMMUNITIES)NMOSTWOREDASOF"ENISHANGUL 'UMUZMIGRANTMINERS
FROMOTHERREGIONSAREALSOPRESENT

Figure  11.5.    Map  showing  areas  of  prospective  geology  (Proterozoic)  as  well  as  mines  and  how  these  relate  to  areas  of  high  
population  density.

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 77

Table  11.2    Summary  of  some  demographic,  social  and  health  related  indicators  in  the  areas  of  Ethiopia  that  are  most  
prospective  for  mine  development  (Census  data,  2007)
5NDERYRS
Fertility  rate  
Region Population RURAL LITERACY morbidity  


"ENISHANGUL 'UMUZ     
/ROMIA     
 7EST7OLLEGA:ONE    
 'UJI:ONE    
4IGRAYREGION     
 .74IGRAYZONE    
National  total   40  

)N/ROMIAREGIONALSTATESOMEPERCENTOFTHETOTALPOPULATIONDEPENDSONTHEAGRICULTURALSECTORAND

ALMOSTALLOFTHISISINTHEFORMOFSUBSISTENCEAGRICULTURE4HEMAJORCROPSARECEREALSTEFFWHEATMAIZE
BARLEYANDSORGHUM VEGETABLESANDFRUITS)NTHE7EST7OLLEGAZONETHEREISALSOSOMELIVESTOCKREARING
ANDALSOCOFFEEPRODUCTION)NTHE!DOLLA7OREDAANDINTHE'UJIZONETHEREARESOME!3-GOLDMINERS
WHOMAINLYCOMEFROMOTHERREGIONS

)N4IGRAYREGIONALSTATESOMEOFTHEPOPULATIONISENGAGEDINSMALLHOLDERAGRICULTURALACTIVITIESMAINLY

PRODUCINGCROPSLIKETEFFWHEATANDBARLEYBUTALSOOTHERCROPSSUCHASBEANSLENTILSONIONSANDPOTATOES

11.3.  Potential  impacts  from  mining

4HE%THIOPIANMININGSECTORISBYNUMBEROFOPERATIONSASWELLASOUTPUTDOMINATEDBYARTISANALANDSMALL
SCALEOPERATIONS(OWEVERTHECURRENTPOLICYDIRECTIONAIMSATPROMOTINGPRIVATEINVESTMENTSANDINTHISWAY
ALSODEVELOPLARGERSCALEOPERATIONS)TISWELLKNOWNTHATMININGACTIVITIESMAYBEASSOCIATEDWITHNEGATIVE
ENVIRONMENTALANDSOCIALIMPACTS)NTERNATIONALLYSUCHISSUESAREBEINGTAKENMOREANDMORESERIOUSLY
ANDITISGENERALLYFELTTHATTHELONGERTERMVIABILITYOFTHEWHOLEMININGSECTORRESTSINREACHINGASITUATION
WHEREMININGISPERFORMEDINANENVIRONMENTALANDSOCIALLYRESPONSIBLEMANNER4HEIMPLEMENTATIONOFTHE
MINERALPOLICYREQUIRESASOUNDUNDERSTANDINGOFTHEPRESENTANDFUTUREIMPACTSOFMININGDEVELOPMENT
ONTHEENVIRONMENTANDSOCIETYCFBOXBELOW

Box  7:  Environmental  and  Social  Impacts  Related  to  Mining

IMPACT  SOURCE  OR  REASON

)NEFlCIENTUSEOFNATURALRESOURCES
Incomplete  recovery  of  ore  reserves  in  mine  or   Poor  mine  plans
deposit Inferior   beneficiation   methods   and/or   poor  
Poor   recovery   of   metals/minerals   in   the   optimization  of  processes
BENElCIATIONPROCESS Poor  management  and  work  routines  
Overconsumption  of  water  and  energy
2.    Effects  on  landscape  and  morphology
Visual  and  aesthetic  effects;  change  in  land  form Excavation  of  open  pit  mines
Land  use  in  competition  with  other  utilisation Establishment  of  industrial  areas  for  ore  dressing
Destruction  of  natural  habitat Design  of  tailings  dams  and  waste  rock  dumps
Land  subsidence Underground  mining
Land/soil  erosion;  changes  in  river  regime  due   Haulage  road  construction
TOSILTATIONANDmOWMODIlCATION Rehabilitation  after  closure
Abandoned   equipment,   plants,   buildings,  
excavations

78 FINAL  REPORT
3.    Accumulation/spread  of  solid  waste
Potential  threat  from  toxics  in  solid  waste Tailings  deposits
Sediment  runoff  from  mining  sites Waste  rock  heaps
Accidents   due   to   lack   of   stability   of   waste   Leaching  heaps
material;  tailings  dam  failures
4.    Water  use  and/or  pollution
Overexploitation  of  groundwater  sources Excessive  use  of  process  water
Changes  in  groundwater  table Discharge  of  contaminated  water  from  tailings  
Withdrawal  of  water  in  competition  with  other   dams  or  directly  from  plants
utilisation Acid  mine  drainage  (AMD)  from  mines
Contamination  of  surface  water  used  for  drinking,   AMD  from  tailings  and  waste  rock  disposals
irrigation,  aquaculture,  recreation Contamination   by   reagents   used   in   mineral  
Suspended  solids  in  drainage processing
Contamination  of  groundwater  wells  and  springs
5.    Air  pollution
3PREADOFlNEMINERALDUSTOFDETRIMENTALTO Dusting  from  dry  tailings  deposits
humans  and  nature SO2  emissions  from  smelters
!CIDIlCATIONOFWATERBODIESANDSOILFROMSMELTER Emissions  of  lead,  arsenic  and  other  substances  
gases through  smelter  gases
Contamination  from  air  transported  particles,   Release  of  methane  from  mines
metallic  compounds  and  gases
6.    Soil  pollution
The  contamination  of  agricultural  soil Transport  of  metals  and  other  substances  related  
Contamination  of  ground  in  inhabited  areas to  mining  operations  by  air,  water  or  vehicles
%FFECTSONmORAANDFAUNA
Destruction  of  natural  habitat The  combined  effect  of  contaminations  radiating  
Destruction  of  adjacent  habitat from  mining  operations
Disturbance  of  wildlife Deforestation  related  to  operations  or  the  activity  
of  intruding  settlers
)MPACTSONAQUATICLIFEmORAANDMICROFAUNA
8.    Noise  and  vibration
Effects  on  human  health Mine  blasting
Damage  to  buildings Operation  of  vehicles  and  other  heavy  equipment
9.    Radioactivity  and  uranium
Gamma  radiation Radiation  from  natural  sources
Uranium  as  a  toxic   Uranium  in  ores  being  exploited
10.  Environmental  emergencies
Catastrophic  failures  of  tailings  dams $ElCIENTDESIGNORMANAGEMENTOFTAILINGSOR
Collapse  of  underground  workings  and  their   other  waste  disposal  structures
consequences  at  the  surface The  use  of  unsafe  exploitation  methods
Accidental  spillage  of  toxic  substances Poor  facilities  for  storage  and  transport  of  toxics
11.  General  issues  in  industrial  establishments
Oil  and  fuel  spillages Vehicle  servicing
PCB Leaking  transformers
CFC Leakages   from   refrigeration   plants   and   air-­
Spread  of  scrap conditioning
Uncontrolled  spread  of  sewage $ElCIENTMATERIALSHANDLING

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 79

 12.  Socio-­economic  impacts
Impact   on   local   population’s   physical   and   3TART UPOFLARGE SCALEPROJECTSINREMOTEAREAS
economic  living  conditions OFLITTLEPREVIOUSCONTACTWITHMAJORINDUSTRIAL
Impact  on  local  culture  and  social  organization   operations
3OCIALTURMOILDUETOINmUXOFSETTLERSBOOM #LOSUREANDLOSSOFJOBOPPORTUNITIES
conditions)
13.  Occupational  safety  and  health
)NTOXICATIONBYINHALATIONCYANIDEMERCURY &UGITIVEEMISSIONSWITHINTHEPLANT
OTHERTOXICMATERIAL (ANDLINGOFCHEMICALSRESIDUESANDPRODUCTS
)NTOXICATIONBYPOLLUTEDWATER %XPLOSIVESHANDLING
Silicosis ,ACKOFADEQUATEEQUIPMENTSOUNDROUTINES
Gamma  radiation  and  radon   ANDSATISFACTORYSAFETYCONTROL
%XPOSURETOHEATNOISEVIBRATION Unsanitary  living  conditions
0HYSICALINJURIESDUETOACCIDENTS

Key  environmental  management  considerations

7HILEMANYOFTHEISSUESTHATNEEDTOBEMANAGEDSEEBOXABOVE AREMOREORLESSGENERICTOLARGESCALE
MININGPOTENTIALIMPACTSALSODIFFERGREATLYBETWEENDIFFERENTTYPESOFMINESANDALSOBETWEENDIFFERENT
NATURALANDHUMANENVIRONMENTS&OR%THIOPIAANYNEWMINESWITHINTHENEXT ARELIKELYTOBEFOR
GOLDANDBASEMETALSMINES#HAPTERAND 4HESETYPESOFMINESCOMMONLYPRODUCELARGEAMOUNTS
OFWASTEROCKANDTAILINGSMATERIALANDGOLDANDBASEMETALORESARESOMETIMESASSOCIATEDWITHMETALS
ORMETALLOIDSTHATMAYBETOXICTOHUMANSANDNATURESUCHAS#U0B!S#DETC&URTHERMORETHESE
ORESOFTENCARRYPYRITEAKEYCOMPONENTINTHEFORMATIONOF!CID-INE$RAINAGE!-$ 4HUSWATERAND
TAILINGSDAMSMANAGEMENTARELIKELYTOBEOFKEYIMPORTANCEINFUTUREMININGENVIRONMENTALMANAGEMENT
IN%THIOPIA

7ATERMANAGEMENTISOFTENAKEYISSUEINMININGASCOMPROMISINGWATERQUANTITYANDQUALITYMAYHAVE
EFFECTSFARDOWNSTREAMOFTHEOPERATION7ATERMANAGEMENTIN%THIOPIAISOFKEYCONCERNASITISAHIGHLY
VARIABLEANDOFTENSCARCERESOURCEAS%THIOPIANCATCHMENTSARETHEMAJORSOURCEFORSEVERALTRANSBOUNDARY
RIVERSANDASSILTINGOFWATERCOURSESISALREADYAPROBLEMINMANYPARTSOF%THIOPIADUETOTHEDEFORESTRATION
ANDTOPSOILLOSS)NPARTICULARPARTSOFTHESOUTHERNANDNORTHERN0ROTEROZOICTERRAINSARELOCATEDINDROUGHT
PRONEAREASTHATALSOHAVEMUCHHIGHERINTERANNUALVARIATIONINRAINFALLAMOUNT$EMEKE 

%THIOPIAHASANUMBEROFPLANTANDMAMMALENDEMICSPECIESWHILEAREASRESERVEDFORBIODIVERSITY
CONSERVATIONARERATHERLIMITEDANDTHESEAREASARENOTFULLYPROTECTEDFROMINDUSTRIALDEVELOPMENTBYTHE
LAW%VENIFMININGCOMMONLYIMPACTSRATHERSMALLAREASINCLUDINGASSOCIATEDINFRASTRUCTURECOMPAREDTO
FOREXAMPLEFORESTRYORAREASAFFECTEDBYDEFORESTRATIONINGENERAL ITISIMPORTANTTOCONSIDERTHECUMULATIVE
IMPACTOFALLINDUSTRIALANDCOMMUNITYDEVELOPMENTSINAPOTENTIALMININGAREAANDTOASSESSINDETAILTHE
BIODIVERSITYVALUEOFTHEAREA

4HELARGERANGEANDCOMPLEXITYOFPOTENTIALIMPACTSRELATEDTOMININGSEEBOXABOVE REQUIRESAPPROPRIATE
LEGISLATIONANDBROADCAPACITYFORSUPERVISIONANDREGULATIONBYTHEAUTHORITIES7ITHTHISNOTYETBEING
PLACE3ECTION ENVIRONMENTALMANAGEMENTWILLHAVETORELYONGOODCOMPANYPERFORMANCE&ROM
ASAMPLEOFMININGPROJECT%)!SREVIEWEDTHEQUALITYAPPEARSTOVARYSUBSTANTIALLY4HOSEUNDERTAKENBY
INTERNATIONALPUBLICCOMPANIESAREOFGOODINTERNATIONALSTANDARDANDTHISISOFTENTHECASEWORLD WIDE
ASTHEMARKETANDlNANCIERSEGTHE)&# SOREQUIRE4HESECOMPANIESASWELLAS-IDROC,EGA$EMBI
INVOLVEEXPERIENCEDINTERNATIONALCONSULTANCYlRMSTOASSISTWITHTHE%)!ANDENVIRONMENTALMANAGEMENT
(OWEVERTHEREVIEWED%)!SUNDERTAKENDOMESTICALLYFOREXAMPLEFORLIMESTONEANDCLAYMININGWERE
OFVERYPOORQUALITYWITHISSUESRANGINGFROMKEYPARTSSIMPLYMISSINGORTEXTSECTIONSBEINGUNRELATEDTO
HEADINGSTO%)!SWITHAREASONABLYGOODBASELINEDESCRIPTIONBUTBEINGLOWONHARDDATAFACTSANDWITH
MITIGATIONMEASURESANDMONITORINGPROCEDURESHAVINGASERIOUSLACKOFDETAIL

80 FINAL  REPORT
 0OTENTIALFORLANDUSECONmICTSRELATEDTOMINING
!LLLANDISCONTROLLEDBYTHE3TATEANDRESETTLEMENTTOMAKEROOMFORAMININGOROTHERTYPE PROJECTCAN
OCCURIFADEQUATECOMPENSATIONISMADE4HESEFACTSPROVIDEAGOODPLATFORMFORRESOLVINGLANDUSECONmICTS
THATTYPICALLYOCCURDURINGEXPLORATIONANDMINEDEVELOPMENT2ECENTEXPERIENCESRELATEDTOTHE4ULU+API
AND!LLANAPOTASHPROJECTSSUGGESTTHATLANDUSECONmICTSMAYBEADDRESSEDCONSTRUCTIVELYTHROUGHAND
WITHSOMESUCCESSBYUSINGOF)&#GUIDELINESONRESETTLEMENTANDCOMPENSATIONWHILECLEARLYTHISISA
VERYSENSITIVEANDCRUCIALISSUETHATNEEDSTOBECONSIDEREDFURTHERINFUTUREPROGRAMSANDPROJECTS4HISIS
EXEMPLIlEDBYTHE,EGA$EMBIOPERATIONSWHICHAREHAVINGSIGNIlCANTPROBLEMSINBEINGALLOWEDTOACCESS
LANDADJACENTTOTHEMINETHATISNOWUSEDBYFARMERSCOFFEE ANDWHICHISNEEDEDFOREXPLORATION4HIS
LIMITATIONISPREVENTINGEXPLORATIONTHATNEEDSTOTAKEPLACEIFTHELIFEOFMINEISTOBEEXTENDEDSEEBOX 

Box  8:  Land  use  –  does  mining  have  priority  at  Lega  Dembi?

At  the  Lega  Dembi  mine,  neighbouring  coffee  farmers  are  refusing  the  company  access  for  exploration  
activities  on  their  land,  thus  hindering  the  further  expansion  of  the  mine  eastwards.  According  to  
mine  staff,  mining  should  have  priority,  and  access  to  land  should  be  provided,  as  long  as  adequate  
compensation  is  made.  However,  there  are  contradictory  stipulations  in  the  mineral  legislation,  and  the  
laws  regulating  agricultural  activities.  This,  in  turn,  has  caused  an  impasse  where  neither  local,  regional  
nor  the  federal  authorities  have  been  willing  to  side  with  the  company,  and  resolve  the  situation  so  that  
mining  may  be  allowed  to  continue.  This  case,  where  the  presently  most  important  foreign  exchange  
earner  of  the  country  is  unable  to  expand  its  operation  due  to  a  number  of  small  farmers  resisting,  
provides  a  clear  example,  of  the  need  to  streamline  legislations  that  deals  with  land  use,  land  access  
for  exploration  and  mining,  as  well  as  to  a  need  for  local,  regional  and  federal  authorities  to  be  better  
coordinated  in  their  decision  making.  The  “Lega  Dembi  case”  shows  that  this  is  a  complex  issue  that  
needs  to  be  seriously  considered  in  all  future  plans,  programs  and  projects,  for  mining  to  be  sustained  
while  the  rights  of  landholders  are  protected.

Local  community  development

,EGISLATIONISINPLACETHATREQUIRESHOLDERSOFMINELICENSESTOENGAGEINCOMMUNITYDEVELOPMENT4HERE
AREALSOREQUIREMENTSTHATSUCHPLANSSHOULDBEELABORATEDINCONSULTATIONWITHTHECOMMUNITYANDWITH
LOCALAUTHORITIESANDISSUESTHATMAYBEINCLUDEDINSUCHPROGRAMMESINCLUDEHEALTHEDUCATIONANDWATER
FACILITIES4HUSWHILSTCOMMUNITYDEVELOPMENTISMANDATORYTHELEVELORDETAILSARENOTDElNED3TATEMENTS
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STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 81

 Box  9:  Key  elements  of  a  National  Environmental  and  Social  Management  System

Policy  –  strategy

  Development  of  an  environmental  policy,  including  the  establishment  of  operational  goals.

  Formulation  of  strategies,  including  the  choice  of  policy  instruments,  for  accomplishing  these  goals.

Legislation  

  Promulgation  of  a  principal  environmental  law,  an  ”umbrella  law”  consistent  with  existing  policies.

  %NACTMENTOFSPECIlCLAWSANDREGULATIONSSUCHASINCLUDINGTHEINTRODUCTIONOFCOMPLEMENTARY
legal  and  economic  instruments.

Standards

  Establishment  of  goals  for  environmental  quality  of  different  ecosystems,  related  to  both  pollutants  
and  the  protection  of  nature.  

  $ElNITIONOFBASELINECONDITIONS

  3ETTINGOFSTANDARDSFORINDUSTRIALEMISSIONSTOAIREFmUENTSTOWATERBODYANDDISCHARGEOFSOLID

material.  

Public  environmental  institutions  

  Establishment  of  public  organisations  for  environmental  and  social  management  and  law  enforcement.

  Building  of  human  capacity  for  environmental  and  social  management.  

  Introduction  of  work  standards  and  procedures  for  an  effective  public  environmental  management.

Tools  and  procedures  in  public  environmental  and  social  management

  The  introduction  of  the  concept  of  environmental  impact  assessment.

  Establishment  of  auditing,  inspection  and  reporting  as  tools  in  environmental  supervision.

  Guidelines  for  consultation  and  public  participation.

Industry-­oriented  initiatives

  Introduction  of  procedures  and  incentives  for  environmental  and  social  development  and  self-­
control  within  industry.

Environmental  communication  and  training

  Promotion  of  environmental  knowledge  and  information,  and  the  encouragement  of  public  
participation  in  environmental  matters.

82 FINAL  REPORT
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STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 83

 ©  Yara  Dallol  BV

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STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 85

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POTENTIALGIVENTHETYPICALDEMANDOFTHEMINERALSSECTORFORCOST COMPETITIVEEFlCIENTANDRELIABLETRANSPORT
ANDLOGISTICSSERVICESOVERLONGDISTANCES

0RIORTOTHE%THIOPIANRAILWAYSYSTEMCONSISTEDOFANOPERATIONALLINECONNECTING!DDIS!BABAWITH
THEPORTOF$JIBOUTIOVERADISTANCEOFKMWITHKMLOCATEDWITHIN%THIOPIAANDKMIN$JIBOUTI
!NARROWGAUGEMM LIGHTRAIL KGM WITHLOWPERMISSIBLEAXLELOADSLESSTHANT THISLINE
PEAKEDATATOTALFREIGHTVOLUMEOFMILLIONTPAWHICHWASINSUFlCIENTTOSUSTAINECONOMICALLYVIABLE
OPERATIONS$URINGTHEPERIODTOATTEMPTSTOCONCESSIONTHELINEWEREATTEMPTEDANDFAILEDAN
INITIATIVEDESIGNEDTOUPGRADETHELINETOHEAVIERAXLELOADSTOINCREASECAPACITYTOMILLIONTPAFAILEDTO
SECURElNANCINGANDTHEREAFTERACONTRACTTOCARRYOUTAPARTIALTRACKUPGRADEWASSTARTEDTHENABANDONED
LEADINGTOCLOSUREOFTHELINEFOROPERATIONS!NAPPROXIMATELYKMSECTIONBETWEEN$JIBOUTIAND$IRE$AWA
WASREOPENEDBUTLATERCLOSEDDUETOlNANCIALCONSTRAINTS4HISLINEREMAINSNON OPERATIONALTODAY

4HE'OVERNMENTOF%THIOPIAHASSUBSEQUENTLYDECIDEDTOPROCEEDWITHPLANNINGANDDEVELOPMENTOFANEW
MODERNSTATEOFTHEARTSTANDARDGAUGERAILWAYNETWORKMM WITHTHEOBJECTIVEOFACCELERATINGTHE
GROWTHOFTHEECONOMYASAWHOLEASOPPOSEDTOBEINGDRIVENBYDEMANDFROMASPECIlCECONOMICSECTOR
ORMAJORCUSTOMERS )NITSPLANNINGTHE%THIOPIAN2AILWAY#ORPORATIONESTABLISHEDINWITHAREMIT
TODEVELOPTHENATIONALRAILWAYNETWORKANDANURBANLIGHT RAILNETWORKIN!DDIS!BABAHASIDENTIlEDEIGHT
RAILWAYCORRIDORSWITHATOTALESTIMATEDLENGTHINCLUDINGBUFFERS OFKM

86 FINAL  REPORT
 Figure  12.1.  Ethiopian  railway  construction  plans.

4HESO CALLED.ATIONAL2AILWAY.ETWORKOF%THIOPIAISTOBEDEVELOPEDINTWOPHASES&IGURE 

Phase  1:
I  4HE!DDIS!BABA $JIBOUTI2AILWAY0ROJECT

II  -EKELE 7ELDYA(ARA 'EBEYA 3EMERA 4ADJOURAH2AILWAY0ROJECT

III 4HE!DDIS!BABA )JAJI *IMMA $IMAINCLUDING*IMMA "EDELE 2AILWAY0ROJECT

IV 4HE!WASH +OMBOLCHA (ARA 'EBEYA2AILWAY0ROJECT

V  4HE-OJO 3HASHEME !RBANINICH 7EYTO2AILWAY0ROJECT

Phase  2:
I  *IMMA 'URAFERDA $IMADIRECTEDTO"OMA

II  )JAJI .EKEMET !SSOSA +UMURUK

III -EKELE 3HIRE

IV &ENOTESELAM "AHIRDAR 7ERETA 7ELDIA

V  7ERETA !ZAZO -ETEMA

VI !DAMA )NDETO 'ASSERA 'INIR

)TISUNCLEARWHETHERTHEPROJECTEDTRAFlCVOLUMESUNDERLYINGPROPOSALSFORTHEDEVELOPMENTOFTHE%THIOPIAN
RAILNETWORKBASEDINANYWAYONACONSIDERATIONOFPOTENTIALMINERALSCOMMODITYTRAFlC)TISALSOUNCLEAR
IFANYASSUMPTIONSHAVEBEENMADEREGARDINGTHEEXPECTEDSHIFTOFTRAFlCFROMROADTORAIL!TTHISTIME
GIVENTHESMALLSCALEOFTHEMININGSECTORTHERESEEMSTOBELITTLEALIGNMENTOFRAILWAYLINESANDORPHASING
COINCIDEWITHPRIORITYMINERALSECTORDEVELOPMENTS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 87

 !LLANA0OTASHTHEMAJORMININGOPERATIONTOCOMEONLINETHATWILLREQUIRELANDTRANSPORTINITIALLYPLANSON
USINGTHEROADNETWORKTO$JIBOUTIPORT!STHERAILNETWORKEXPANDSINTHEREGIONTHEROADDISTANCEWILL
BECUTDOWNBYHALFWITHPRODUCTBEINGLOADEDONTORAILTRACKSMIDWAYOFTHECURRENTDISTANCE/FITSTOTAL
PROJECTEDCAPITALEXPENDITUREOF53$MILLION53$MILLIONAREBEINGSPENTONTRANSPORTATIONAND
ANOTHER53$MILLIONONDEVELOPINGTHEPORTIN$JIBOUTI/FTHEPROJECTEDTOTALOPERATIONALEXPENDITURES
OF53$TON53$TONARETRANSPORTANDPORTEXPENDITURES

4HEGOVERNMENTHASALREADYBUILTTHEPAVEDROADFROM!FDERATO4ADJOURAANDHASCOMMITTEDTOEXTENDING
TOEXTENDINGTHEPAVEDROADTO$ALLOLMINESITE (OWEVERTHECOMPANYHASINCLUDEDCONTINGENCYFUNDING
FORKMOFHAULROADCLOSESTTOTHEMINESITEIFTHECOMMITMENTFAILSTOMATERIALIZEONTIME4HEPROPOSED
RAILWAYTRACKANDITSIMPACTONTHEPROJECTARESHOWNIN&IGURE

Figure  12.2.  Proposed  railway  tracks  an  impacts  on  projects  (source:  Allana  Potash  company  presentation)

4HERELATIVEIMPORTANCEOFRAILANDROADTRANSPORTWILLBEDETERMINEDTOSOMEEXTENTBYTHETYPESOFCOMMODITIES
MINEDEXPORTVOLUMESDISTANCESTOPOINTSOFEXPORTANDTHEIRDOWNSTREAMBENElCIATIONPOTENTIAL&OR
EXAMPLEINTHECASEOFGOLDPOORTRANSPORTHASONLYHASAMARGINALIMPACTONTHECOSTOFTRANSPORTING
SMALLQUANTITIESOFHIGH VALUEMINERALOUTPUTTHOUGHITCANIMPACTNEGATIVELYONTHECOSTOFPRODUCTION
WHERETHEMININGINPUTSAREPROCUREDFROMSOURCESDISTANTFROMTHEMINE #ONTRASTTHISWITHMANYBASE
METALSWHEREPROJECTVIABILITYITSELFCANBEVERYSENSITIVETOTHECOSTPERTONNEKILOMETREOFEVACUATINGLARGE
QUANTITIESOFLOW VALUEHIGHMASSMINERALOUTPUT)NEXTREMECASESTHEVALUEOFTHEPRODUCTMINEDCAN
BEINSUFlCIENTTOMEETTHECOSTOFTRANSPORTOVERTHEDISTANCEFROMMINETOPOINTOFSALEOREXPORTSO CALLED
hSTRANDEDvMINERALDEPOSITS !LSOGIVENTHECURRENTDOMINANCEOFROADTRANSPORTFORTHEMOVEMENTOF
FREIGHTIN%THIOPIAITWILLBEIMPORTANTTOUNDERSTANDTHESCOPEFORMINERALSDEVELOPMENTTOSUPPORTFROM
THEPERSPECTIVEOFPOTENTIALLYPROVIDINGBANKABILITYFORTHERAILINVESTMENTBASEDONLONG TERMRAILTRANSPORT
AGREEMENTSFROMMINERALPROJECTDEVELOPERS THE'OVERNMENTOF%THIOPIASPLANSFORTHEDEVELOPMENTOF
RAILTRANSPORT

88 FINAL  REPORT
 Other  Infrastructure  Issues
4HEUNAVAILABILITYOFWATERTOSUPPLYTHENEEDSOFMININGANDMINERALPROCESSINGOPERATIONSCANREPRESENT
AFATALmAWFORTHEDEVELOPMENTOFCERTAINMININGPROJECTS'IVENTHATCERTAINAREASWITHIN%THIOPIACAN
BECONSIDEREDWATERRICHWHILEOTHERSAREWATERSCARCETHEHYDROLOGYOFTHECOUNTRYMAYWELLBEAMAJOR
DETERMINANTOFITSABILITYTOREALIZEIDENTIlEDMINERALDEVELOPMENTOPPORTUNITIES

4HEREHAVEBEENHEAVYINFRASTRUCTUREINVESTMENTSINTHECOUNTRYINRECENTYEARS#URRENTLYTHEREISNO
EVIDENCEOFPUBLICPRIVATEPARTNERSHIPSINTHEINFRASTRUCTURESECTOR4HESEINVESTMENTSHAVEBEENFUNDED
BYTHESTATEINCLUDINGTHEPROJECTSAWARDEDTO#HINAAND4URKISHlRMS%VENFORLARGEPROJECTSSUCHASTHE
MEGAWATT'RAND%THIOPIAN2ENAISSANCE$AMESTIMATEDTOCOST53$BILLIONTOBECOMPLETEDBY
THESTATEAIMSTOUSEITSOWNlNANCES#URRENTLYAPUBLICPRIVATEPARTNERSHIPPROCLAMATIONISBEING
DRAFTEDBYTHEGOVERNMENTANDTHEREFORECANNOTBEEVALUATEDATTHISSTAGE

%THIOPIACANLEARNFROMTHEEXPERIENCEOFOTHERCOUNTRIESINCREATINGSYNERGIESFORMININGLEDINFRASTRUCTURE
INVESTMENTS&OREXAMPLETHE-OZAMBIQUEGOVERNMENTINASSOCIATIONWITHMININGCOMPANIESUSED
PROGRESSIVEPOLICIESANDCREATEDTOUPGRADEINFRASTRUCTUREINTHE:AMBEZI6ALLEYSUCCESSFULLYLEVERAGING
MINERALINVESTMENTSTOENABLEDIVERSIlEDECONOMICDEVELOPMENTSEE0ERKINSAND2OBBINSFOR
DETAILS 

)NFRASTRUCTUREDEVELOPMENTISNOTMININGLEDATTHISTIMEWHICHISUNDERSTANDABLEDUETOTHELACKOFLARGESCALE
MININGOPERATIONS(OWEVERTOENCOURAGEBOTHEXPLORATIONACTIVITIESANDMININGOPERATIONSTHEINFRASTRUCTURE
NEEDSPARTICULARLYROADANDRAILWAYSWILLNEEDTOBEEXTENDEDBEYONDCURRENTROUTS&URTHERMOREWHILE
PUBLICPRIVATEPARTNERSHIPSFORINFRASTRUCTUREPROJECTSISNON EXISTENTATTHISTIME%THIOPIASHOULDCONSIDER
LEVERAGINGITSPOTENTIALRESOURCESTOSEEK@INFRASTRUCTUREFORCOMMODITIESDEALSWITHEMERGINGECONOMIES
SUCHAS#HINAAND"RAZILALBEITONLYONTERMSANDCONDITIONSTHATAREMUTUALLYADVANTAGEOUSANDNOTUNDER
ASCENARIOTHATUNDULYFAVOURSTHEPROVIDEROFINFRASTRUCTURETOTHERELATIVEDETRIMENTOFHOSTCOUNTRY 

12.2.  Recommendations
4HE%THIOPIANMININGSECTORISSTILLINITSEARLYSTAGESOFDEVELOPMENTGIVINGITAMPLESPACEANDTIMETO
DEVELOPACOMPREHENSIVEACTIONPLANTOBENElTFROMITSNATURALRESOURCES5SINGA@RESOURCECORRIDOR
APPROACHCANHELPDESIGNAHOLISTICACTIONPLANTOLEVERAGEINVESTMENTSINITSNATURALRESOURCESTOSTIMULATE
HARDSOFTINFRASTRUCTUREANDENCOURAGETHEPRODUCTIONOFGOODSANDSERVICESTHATCANBENElTTHEECONOMY
ATLARGEANDNOTJUSTTHEEXTRACTIVESECTOR2ESOURCECORRIDORSREQUIREBOTHSPATIALFOCUSINGFROMTHELOCAL
TOTHEREGIONALLEVELANDTEMPORALPLANNING!TTHETIMEBEINGTHELOCATIONOFFUTUREMININGPROJECTSARE
UNKNOWNAPARTFROM!LLANA0OTASHSPROJECTINTHE$ANAKHILDEPRESSIONPREVENTINGADETAILEDAREA SPECIlC
ASSESSMENTOFRESOURCECORRIDORDEVELOPMENT

#URRENTLYANATIONALLOGISTICALSTUDYISBEINGUNDERTAKENIN%THIOPIA7HENREADYTHE-INISTRYOF-INES
SHOULDEXAMINETHElNDINGSOFTHESTUDYANDENSURETHATFUTUREMININGNEEDSAREBEINGRECOGNISEDBYTHE
-INISTRYOF4RANSPORTANDOTHERCONCERNEDAUTHORITIES

/VERALLHARDINFRASTRUCTUREREQUIREMENTSSUCHASTHOSEFORTRANSPORTANDENERGYWILLDIFFERBYTHEMINERAL

BEINGEXTRACTED&OREXAMPLETHEROADANDRAILDEMANDFROMGOLDPROJECTSISNON EXISTENTWHILETHATFOR
POTASHPROJECTSISHIGH4HEREFOREDEVELOPINGSYNERGIESBETWEENDIFFERENTSECTORSTOCAPITALISEONTHE
@SCALEOFINFRASTRUCTUREINVESTMENTSISESSENTIALASOPPOSEDTOUSINGAFRAGMENTEDAPPROACHTOWARDSSUCH
DEVELOPMENTS-ININGINVESTMENTSTHATARESEPARATEDFROMINFRASTRUCTUREINVESTMENTSCANNOTBESUSTAINEDIN
THELONGRUNANDTOENCOURAGELONGERTERMECONOMICSTRUCTURALCHANGEMININGCOMPANIESANDGOVERNMENTS
MUSTCREATEGREATERSYNERGIES0ERKINSAND2OBBINS 

%THIOPIAMAYALSOCONSIDERTHEUSEOFPUBLICPRIVATEPARTNERSHIPINCLUDINGTHOSEWITHMININGCOMPANIES
TOUPGRADEEXISTINGINFRASTRUCTUREASWELLASCREATINGNEWONESTHATCANBEMULTIPLE USERANDENHANCE
ECONOMICDIVERSIlCATIONANDDEVELOPMENT4HEPOTENTIALFORSUCHPARTNERSHIPSAPPEARSTOBEUNDEREXPLORED
ATTHISTIME,OCALANDINTERNATIONALRESOURCESCANBEMOBILISEDTOAUGMENTDOMESTICCAPACITIESTODEVELOP
INFRASTRUCTURECORRIDORS

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 89

 ©  Allana  Potash  Afar  Plc.

 2%#/--%.$!4)/.3
 4HETABLEBELOWSUMMARIZESTHEMOREIMPORTANTRECOMMENDATIONSDEEMEDTOHAVEASIGNIlCANTIMPACTON
THESUSTAINABLEDEVELOPMENTOFTHE%THIOPIANMINERALSECTOR0RIORITIZATIONIESHORT TERMVSMEDIUM LONG
TERM ISBASEDONTHEVIEWTHATSOMEMEASURESARENEEDEDFORTHEAPPROPRIATEGOVERNANCEOFTHESECTOR
ASITSTANDSTODAYAREASONABLYACTIVEEXPLORATIONINDUSTRYASMALLLARGESCALESECTORANDALARGEARTISANAL
MININGSECTOR/THERMEASURESAREMOREIMPORTANTFORTHEDEVELOPMENTANDGOVERNANCEOFTHEMINERAL
SECTORINALONGERTIMEPERSPECTIVE&ORARANGEOFMOREDETAILEDRECOMMENDATIONSSEETHElNALSECTIONOF
EACHCHAPTER

 )NSUMMARYFORASIGNIlCANTDEVELOPMENTOFMININGIN%THIOPIAINTHENEARFUTUREEXPLORATIONACTIVITIES

NEEDTOINCREASE)NTHEABSENCEOF@SUCCESSSTORIESTHATWOULDAUTOMATICALLYDRAWINVESTORSINTERESTA
PROGRAMFORTHECOLLECTIONANDDISTRIBUTIONOFGEOLOGICALINFORMATIONANDDATAWOULDBEIMPORTANT)NPARALLEL
WITHANDAHEADOF THISARANGEOFMEASURESAREREQUIREDINTHEAREASOFPOLICYLEGALlSCALINSTITUTIONAL
DEVELOPMENTTOENSUREGOODGOVERNANCESUSTAINABLEDEVELOPMENTANDTOMAXIMIZETHEBENElTSTOTHE
NATIONALECONOMYANDLOCALECONOMIESFROMMININGDEVELOPMENT4HE!3-SECTORIN%THIOPIAISECONOMICALLY
SIGNIlCANTANDPROVIDESWORKANDINCOMETOALARGENUMBEROFPEOPLEANDITNEEDSTOBEGIVENCONTINUED
SUPPORTINPARALLELWITHTHEDEVELOPMENTOFTHELARGE SCALEMININGSECTOR

 !SGENDERINEQUALITIESOCCURACROSSDIFFERENTAREASOFTHEMINERALSECTORANDRELATEDEDUCATIONGENDER

ASPECTSNEEDTOBECONSIDEREDANDMAINSTREAMEDINTOALLRELEVANTSECTORDEVELOPMENTACTIVITIESWHILE
PARTICULARFOCUSINTHISRESPECTSHOULDBEPLACEDONEDUCATIONFORMINERALSECTORPROFESSIONALSTHE!3-
SECTORANDIMPACTSFROMMININGDEVELOPMENTTHATISSPECIlCTOWOMEN

Table  13.1   Summary  of  more  important  recommendations

Objective Action
3HORT TERMINITIATEDWITHINTHENEXT MONTHS
2EVIEWANDREVISIONOFDRAFTMINERALPOLICYANDPOLICYELEMENTSOFTHE-INING
0ROCLAMATION)NITIALLYTHEROLEOFTHE3TATEINMINERALSECTORDEVELOPMENTMAYBE
REVISITEDSTRICTLYREGULATORYORREGULATORYANDENTREPRENEURIAL 4HEIMPLEMENTATION
OFTHEGENERALLYCOMPREHENSIVEPOLICYCOULDBENElTFROMMOREDETAILEDDElNITION
OFMANYPOLICYACTIONSMEASURES4HEBROADSCOPEOFTHEPOLICYWOULDREQUIRE
)MPROVEDMINERAL INTER INSTITUTIONALCOLLABORATIONINMANYAREASEGEDUCATIONANDSKILLEDLABOUR
SECTORPROMOTION DEVELOPMENTINFRASTRUCTUREDEVELOPMENTLINKAGESTOOTHERINDUSTRIALSECTORSETC
SUPERVISIONAND %XTERNALASSISTANCEISRECOMMENDED
REGULATION 
)MPROVEMENTOFTHELEGALFRAMEWORKASFOLLOWS2EVISIONOFTHE-INING
3TRENGTHENINGOF
0ROCLAMATIONINCLUDINGTHEAMENDMENTTOTHEPROCLAMATION TOELIMINATE
THEPOLICYANDLEGAL
WHATCANBEPERCEIVEDASCONTRADICTORYPROVISIONS0REPARENEWMINERALREGULATIONS
FRAMEWORK
TOGIVEFURTHEREFFECTTOTHE-INING0ROCLAMATIONAND$EVELOPANEW-ODEL
-INING!GREEMENTBASEDONAREVISED-INING0ROCLAMATION%XTERNALASSISTANCEIS
RECOMMENDED
$RAFTINGOFENVIRONMENTALANDSOCIALREGULATIONS%XTERNALASSISTANCEIS
RECOMMENDED

90 FINAL  REPORT
 /RGANIZATIONALREVIEWOF-O-AND'3%4OADDRESSHIGHSTAFFTURNAROUNDANDFOR
INCREASEDEFlCIENCYINEXECUTINGCOREMANDATES4URNINGTHEMINERALLICENSING
ANDADMINISTRATIONDIRECTORATEANDTHEENVIRONMENTALSOCIALUNITOF-O-INTO
AUTONOMOUSGOVERNMENTALORGANSSIMILARTOTHE'3%MAYBECONSIDERED3CALING
DOWNOFORPRIVATIZINGTHE'3%LABORATORYANDDRILLINGUNITMAYALSOBECONSIDERED
3UPPORTANDCAPACITYBUILDING -INERAL,ICENSINGAND!DMINISTRATION$IRECTORATE
-O-!SSISTANCEWITHPROCESSINGANDADMINISTRATIONOFLICENSEAPPLICATIONS
)MPROVEDMINERAL COUPLEDWITHTRAININGINTHEASSESSMENTOFAPPLICATIONSANDFEASIBILITYSTUDIESANDIN
SECTORPROMOTION NEGOTIATINGCONTRACTSWITHMININGlRMS0ROPOSEDLONGERTERMEXTERNALASSISTANCEAT
SUPERVISIONAND LEASTEXPERTHALF TIMEOVERYEAR
REGULATIONn 3UPPORTANDCAPACITYBUILDING %NVIRONMENTALAND#OMMUNITY$EVELOPMENT
3TRENGTHENINGOF -ONITORING/FlCE-O-!SSISTANCEWITHONGOINGWORKINENVIRONMENTALSOCIAL
INSTITUTIONS REGULATIONDEVELOPMENTOFGUIDELINESANDFORMALTRAININGINENVIRONMENTALSOCIAL
/(3MANAGEMENTANDINDEVELOPINGSOCIALANDENVIRONMENTALREQUIREMENTSTOBE
INCLUDEDIN--!S0ROPOSEDLONGERTERMEXTERNALASSISTANCEATLEASTEXPERTHALF
TIMEOVERYEAR
3UPPORTAND#APACITYBUILDING !RTISANAL-INING4RANSACTION#OORDINATING
$IRECTORATE-O-!SSISTANCEWITHONGOINGWORKINMANAGINGANDFORMALISINGTHE
!3-SECTOR0ROPOSEDLONGERTERMEXTERNALASSISTANCEATLEASTEXPERTHALF TIMEOVER
YEAR
3TRENGTHENTHECOMMUNITYDEVELOPMENTPROVISIONSOFTHE--!INCLUDINGlNANCIAL
REQUIREMENTSANDMANAGEMENT4HISWOULDENSURETHATTHE#32ACTIVITIES
)MPROVED UNDERTAKENBYCOMPANIESBECOMEBETTERDElNEDANDFACILITATESTREAMLININGWITHTHE
SOCIO ECONOMIC RESPONSIBILITIESOFLOCALREGIONALANDFEDERALAUTHORITIES)NMANAGINGSUCHASPECTS
MANAGEMENTAND THEGUIDINGDOCUMENTSDEVELOPEDBYTHE)&#MAYBEUTILIZED#32MAYALSOBE
CONmICTPREVENTION CONSIDEREDINPOLICYANDPROCLAMATIONREVIEWSASTHEREISTODAYAGROWINGDISCUSSION
GLOBALLYAROUND@LEGISLATING#32ANDITWOULDALSORESULTINLESSNEEDFORNEGOTIATIONIN
THISAREA
#ONTINUEWORKTOWARDSACHIEVING%)4)COMPLIANCESTATUS!TTHESAMETIMEITWOULD
BEIMPORTANTTOPREPAREFORINCREASINGSTAKEHOLDERDEMANDFORINFORMATIONANDTO
FURTHERDEVELOP-O-SPUBLICRELATIONSCAPACITYINTHISRESPECT%XTERNALASSISTANCEIS
)MPROVEDlSCAL RECOMMENDED
MANAGEMENTlSCAL
EQUALIZATIONAND $EVELOPMENTOFSCHEMESANDMECHANISMSFORMINERALREVENUESHARING)F
CONmICTPREVENTION CONSIDERINGTHISTYPEOFREVENUEMANAGEMENT%THIOPIAMAYSTUDYANDLEARNFROM
ANUMBEROFCOUNTRIESWHEREMINERALREVENUESARESHAREDBETWEENTHECENTRAL
GOVERNMENTREGIONALGOVERNMENTSMUNICIPALITIESANDCOMMUNITIESIMPACTEDBY
MININGACTIVITIES(ORIZONTALlSCALEQUALIZATIONMAYALSOBECONSIDERED
0ROVISIONOFGEOLOGICALANDMININGRELATEDINFORMATIONONLINEINORDERTOATTRACT
INVESTORINTEREST!SELECTIONOFEXISTINGDATATHATRELATESTOASSESSINGGEOLOGICAL
PROSPECTIVENESSCOULDBEMADEAVAILABLEONAMAP BASEDSYSTEMWHICHISMADE
AVAILABLEONLINEANDAIMEDATINVESTORSANDOTHERINTERESTEDPARTIES
)NCREASEDPRIVATE $EVELOPMENTOFA2OAD-APTOGUIDEMINERALSECTORINVESTORSTHROUGHTHERELEVANT
SECTORINVESTMENTIN LEGISLATIONAPPLICATIONPROCESSESANDINSTITUTIONALCONTACTSThe  road  map  could  be  
THEMINERALSECTOR DEVELOPEDINAPROCESSTHATINVOLVESALLRELEVANTAUTHORITIESANDAGENCIESASWELLAS
PRIVATESECTOR.OTONLYWILLTHISPROCESSENDUPWITHAUSEFULPRODUCTTHEPROCESS
ITSELFWOULDCONTRIBUTETOABETTERUNDERSTANDINGBYALLRELEVANTPARTIESOFTHENEEDS
REQUIREMENTSANDCHALLENGESAREPRESENTEDBYTHEMININGSECTOR%XTERNALASSISTANCE
INLEADINGTHEPROCESSISRECOMMENDED
!COMPREHENSIVESTUDYOFTHE!3-SECTORINORDERTOUNDERSTANDTHESECTORAND
3USTAINABLE THEREBYBEABLETOPROPERLYMANAGETHESECTOR3UCHASTUDYMUSTBElELDBASED
DEVELOPMENTOFTHE ANDINCLUDETHECOLLECTIONOFDATAONTHENUMBEROFMINERSTHEIRWHEREABOUTS
ARTISANALMINING ANDTHEECONOMICANDSOCIALSTRUCTURETHATUNDERPINTHEACTIVITIES3UCHASTUDY
SECTOR WILLPROBABLYPOINTTOWARDWHETHERTHESTIPULATIONSINTHE-INING,AWANDDRAFT
REGULATIONSTHATAREAIMEDAT!3-ARERELEVANTANDORAPPROPRIATE

STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 91

-EDIUM TERMINITIATEDWITHIN MONTHS
#APACITYBUILDINGATTHE'EOSCIENCE$ATA#ENTRE'3%$EVELOPMENTANDUPGRADING
OFDATABASES')3DATABASERESOURCESANDTRAININGOFSTAFFDIGITIZINGOFINFORMATION
ANDMAKEDATABASESAVAILABLEON LINECURRENTON LINEDATABASESCONTAINONLYMETA
DATA )NVESTIGATETHEPOSSIBILITYOFCHARGINGELECTRONICALLYFORDATAPURCHASE
#OLLECTIONOFAIRBORNEGEOPHYSICALDATA4HISTYPEOFDATAISOFVERYHIGHINTERESTTOTHE
INDUSTRYANDSHOULDBECOLLECTEDACROSSTHE0ROTEROZOICTERRAINSORPARTSTHEREOF 
WHICHARETHEMOSTPROSPECTIVEFORMETALLICMINERALS
)NCREASEDPRIVATE )NTERPRETATIONOFAIRBORNEGEOPHYSICALDATAANDREGIONALGEOLOGICALMAPPINGAT
SECTORINVESTMENTIN THESCALE!LSOACROSSTHE0ROTEROZOICTERRAINSORPARTSTHEREOF4HISSHOULD
THEMINERALSECTOR PREFERABLYINCLUDEHUMANANDTECHNICALCAPACITYBUILDINGATTHE'3%'EOCHEMICAL
SURVEYSANDGROUNDGEOPHYSICALSURVEYSMAYALSOBECONSIDERED
$EVELOPMENTANDIMPLEMENTATIONOFANINVESTMENTPROMOTIONSTRATEGY!LONG
TERMIMPLEMENTATIONPERIODEGYEARS ISIMPORTANTTOLEAVEASTRONGMARKINTHE
INDUSTRYANDTHESTRATEGYSHOULDPREFERABLYBEBASEDONANINVESTORPERCEPTION
ANALYSIS0ARTOFTHEMATERIALPRODUCEDANDTHERESOURCESPROVIDEDCOULDBEAIMED
ATBUILDINGCAPACITYANDUNDERSTANDINGAMONGLOCALCOMMUNITIESINAREASOFHIGH
GEOLOGICALPROSPECTIVITY
$EVELOPMENTOFTHEQUALITYOFEDUCATIONANDTRAININGATUNIVERSITIESAND46%4  
#ATALYSTTO$EVELOPMENT RECOMMENDSASTRATEGYFORSUPPORTTOIMPROVETHE
QUALITYOFMINING RELATEDEDUCATIONIN%THIOPIA3PECIALEFFORTSAREREQUIREDTOATTRACT
,OCALSKILLS MOREFEMALESTOTHESECTOR
ENHANCEMENT
$EVELOPMENTOFOCCUPATIONALSTANDARDSFOR46%4$EVELOPMENTOFOCCUPATIONAL
FORINCREASED
STANDARDSFOR46%4ISA-O-RESPONSIBILITYACCORDINGTO%THIOPIAS46%4STRATEGYAND
EMPLOYMENT
THISMAYBECOMBINEDWITHTHEMONITORINGANDASSESSMENTOFINDUSTRYREQUIREMENTS
OPPORTUNITIESANDTO
FORINPUTINTOEDUCATIONPLANSQUALIlCATIONSANDNUMBEROFSTUDENTS 
ATTRACTINVESTMENT
!SSESSMENTOFTHEPOSSIBILITYOF'3%ANDMINERALINDUSTRYINVOLVEMENTINEDUCATION
ANDTRAINING4HESEACTORSHAVESIGNIlCANTCOMPETENCEINGEOLOGICALMAPPINGAND
EXPLORATIONWHICHWOULDMAKETHEIRACTIVEPARTICIPATIONINEDUCATIONUSEFUL
3TRENGTHENTHECAPACITYOF.'/#3/ANDIMPACTEDCOMMUNITIESTOUNDERSTANDTHE
POTENTIALBENElTSANDNEGATIVEIMPACTSTHATMAYBEASSOCIATEDWITHMININGPROJECTS
)MPROVEDPUBLIC
#APACITYDEVELOPMENTOFCIVILSOCIETYANDTRADITIONALORGANIZATIONSCOULDBEACHIEVED
AWARENESS
THROUGHTARGETEDWORKSHOPSANDTRAININGACTIVITIESANDTHESEORGANIZATIONSCOULD
SOCIO ECONOMIC
THENHAVEANIMPORTANTROLEINBUILDINGCAPACITYAMONGIMPACTEDCOMMUNITIES!S
MANAGEMENT
CONSIDERABLERESOURCESARENEEDEDFORSUCHWORKITISRECOMMENDEDTHATTHEEFFORTS
PREVENTIONOF
AREFOCUSEDONTHEAREASWITHANESPECIALLYGOODGEOLOGICALPOTENTIALANDTHOSEAREAS
POSSIBLECONmICTIN
WHEREMININGACTIVITIESAREALREADYONGOING4HECURRENTANDPOTENTIALROLEOFWOMEN
MININGAREAS
INMININGANDMININGCOMMUNITIESANDIMPACTSSPECIlCTOWOMENFROMMINING
DEVELOPMENTSHOULDBECENTRALINSUCHCAPACITYBUILDINGEFFORTS
!NALYSISOFTHEDOMESTICINDUSTRIALMINERALSMARKETANDSPECIlCATIONOFINDUSTRIAL
MINERALSQUALITIES4OSUPPORTTHEDEVELOPMENTOFINDUSTRIALMINERALSMININGAND
LINKAGESTODOMESTICINDUSTRY!MARKETANALYSISWOULDNEEDTOBEINITIATEDWHILE
QUALITYGRADINGTOESTABLISHFORWHICHPURPOSEDIFFERENTMINERALSMAYlTCANBUILDON
)MPORTSUBSTITUTION THESTUDIESALREADYUNDERTAKENBYTHE'3%INTHEPAST
ANDLINKAGESTOOTHER
INDUSTRIALSECTORS !NALYSISOFLOCALCAPACITIESFORSERVICINGTHEEXPLORATIONANDMININGSECTOR7HILETHE
-INISTRYOF-INESHASCONCENTRATEDONATTRACTIONEXPLORATIONANDMININGlRMSITMAY
LOOKMORETONEEDSOFTHEMININGSECTORINTERMSOFINPUTS#OORDINATIONWITHOTHER
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STRATEGIC  ASSESSMENT  OF  THE  ETHIOPIAN  MINERAL  SECTOR 93

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Back  Cover  pictures  courtesy  of:  Allana  Potash  Afar  Plc.,  The  Swedish  Geological  AB  and  Yara  Dallol  BV.
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Ministry  of  Mines  

Federal  Democratic  Republic  of  Ethiopia