The history of gold mining in Ethiopia stretches back more than three millennia, when the precious metal was excavated and transported to Egypt for the benefit of the pharaohs. Since that time, gold mining activity in Ethiopia has waxed and waned.
According to the Ethiopia Ministry of Mines (MOM), despite a long mining history commercial and large-scale mining is still in its early stages in the country, with the mining sector providing significant potential for the nation’s future economy.
MOM, which is aggressively looking to attract new mining investment into the country, says Ethiopia’s virtually untapped, diverse, and vast mineral resources offer huge potential opportunities for exploration and development. These include tantalum, potash, gemstones, gold, iron ore and various industrial, energy and construction minerals, and many more.
MOM says this potential coupled with improving government policies and regulations means Ethiopia is fast becoming a destination of choice for international mining investors and developers.
Traditionally a gold producing nation, Ethiopia has seen an exponential increase in industrial mineral production in recent years, with the Ministry of Mines and Petroleum prioritizing the development of industrial minerals, construction minerals, gold, potash, and gemstones.
Reforming the mining sector
The government of Ethiopia has set out a clear “Pathway to Prosperity” through its newest Home-Grown Economic Reform Agenda, enabling Ethiopia to reach the status of a middle-income country by 2030.
Considerable progress has already been made. Double digit growth and over six-fold increase per capita during 2004-18 led to a 15 percentage points decline in the rate of poverty in Ethiopia (poverty headcount ratio of 39% of the population in 2004 to 24% of the population in 2018), according to the government.
A vital part of this ambitious agenda for the country, says MOM, is encouraging private sector investment, streamlining bureaucratic and regulatory procedures, updating policies, and building institutional capacity. This is especially true of the mining sector, which is a priority area for the reforms.
Specific reforms for the mining sector that are currently underway are:
- Formalize and support artisanal and small-scale mining
- Review gold pricing to reduce incentives for contraband trade
- Address political and legal issues with local communities and incentivizing miners to engage and invest in local communities
- Address technical and institutional barriers against large-scale mining projects
- Develop policies and institutional capacities to create a sustainable and inclusive mining sector with strengthened geological information and diversified product base with industrial input focus
- Streamlining bureaucratic and regulatory procedures
The government has identified that an efficient, functioning, transparent, and user-friendly system is vital to supporting mining investment. Ethiopia has recently introduced a digital mining cadastre system, the first of its kind in Africa, which handles all license applications and provides users with vital mining-related information.
High quality geodata
- Several reforms in the Ministry of Mines and Petroleum and the Geological Survey of Ethiopia (GSE) are focused on strengthening the generation and dissemination of geoscience data, which is so critical for mineral exploration and investment promotion.
- The GSE already has a wealth of useful information available to any investor right now in its online GIS Portal. In total there are over 5,000 items in the GIS portal, all of them searchable.
Golden opportunity
Ethiopia’s gold deposits are clustered in a Proterozoic basement, which covers about 18% of the country. A considerable part of this area has already been surveyed by aerial geophysical surveys and geochemical mapping.
Significant gold mineralization has been found in three regions:
The Western greenstone belts
The presence of gold mineralization in these areas has been known since the early 1930s, and several of the belts host gold. The most promising gold occurrences are located in the Tulu-Kapi and Ankore areas.
The Northern greenstone belts
The most promising discovery in this greenstone belt is the Terakimiti prospect where trenching and drilling has revealed grades of up to 16g/t. The deposit contains an estimated total of 20Mt of ore with a grade of 0.29g/t and there is also 6Mt of ore that contain 2.24% copper.
The Southern greenstone belts
There are already two gold mines in the Southern greenstone belt. The Lega Dembi mine in the Oromia region has two active sites already in production – one open pit and an underground gold mine. The Sakaro mine is an underground mine in the Gujji zone in Oromia region which is still under development.
MOM says there are additional opportunities for investors in epithermal gold. The East African Rift Valley transecting Ethiopia hosts many geothermal fields which are used for power generation, and a low-grade epithermal gold deposit was discovered at Tendaho in the Afar region. Geothermal drilling revealed highly silicified zones returning gold grades of 1.0g/t.
MOM says that currently, investors are intensively exploring to better define the pockets of epithermal gold around the northern part of the country.
Tantalum
Ethiopia is already the sixth biggest producer of tantalum in the world with the potential to dramatically increase its standing.
Adola in southern Ethiopia is the most exciting region for tantalum. It is known to host a long and linear belt of this rare metal occurrence of tantalum and niobium in its Kenticha Belt, which extends for over 100km and covers an area of more than 250km.
The government says there is currently an opportunity to develop the Kenticha Mine – which, given the quality of the resource, could be one of the best opportunities on the market.
The Kenticha mine appears to be located on one of the world’s largest tantalum resources. It is estimated to have a probable reserve of 17,000t and to have the potential to produce as much as 9,000t of processed tantalum products over the next 15 years.
KEFI Copper and Gold
One company which has a major focus on Ethiopia’s potential is AIM-listed KEFI (AIM: KEFI). The gold exploration and development company recently unveiled updated US$320M Tulu Kapi Gold Project costings and a new finance plan, which has been agreed by all the Tulu Kapi syndicate lead contractors, investors, and lenders. It is currently being processed for final reviews and entry into definitive documentation to be signed as soon as possible.
KEFI executive chairman, Harry Anagnostaras-Adams, said the Tulu Kapi Gold Project is designed to world-leading standards technically, socially, environmentally and, in terms of financing arrangements, acceptable to international capital markets.
“Ethiopia’s readiness for foreign direct investment has continued to improve since early 2022 and recent well-publicized positive developments have only served to reinforce that. The company is confident that we can lift the work programmes to full construction in the new year and be in full production from the open pit in 2025 and from the combined open pit-underground operation a few years later.
“We have been long-standing and resilient supporters of the Ethiopian government’s efforts to develop its minerals sector and we feel a great sense of responsibility and honour to now be able to push forward at a time which is particularly important for all stakeholders.”
The company says development plans now contemplate an enlarged Tulu Kapi operation, integrating both an open pit and underground mine, with consequential increases in planned gold exports to US$300Mpa (at current gold prices when both mines are in production) and with combined mine production extended from eight to 10 years starting in 2025.
KEFI says it will also request permission from the Ethiopian Ministry of Mines to recommence district exploration during construction to further extend the mine life to well over 10 years for the benefit of all stakeholders.
Initial project development activities have already started and include camp upgrading for construction, local recruitment, community resettlement, plant procurement engineering and work programmes and legal formalities to satisfy the many standard conditions precedent for finance drawdowns.
An official project launch is planned for early 2023, and the timing to be determined with the Ministry of Mines.
