Overview
Conflict between Ethiopia and Eritrea continues and this has a negative effect on foreign investment in these two countries. Ethiopia’s minerals sector contributes less than 1% to the country’s GDP. Ethiopia’s main mineral export is gold. The state-owned Ethiopian Mineral Resources Development Corporation (EMRDC) is involved with the development and production of mineral resources.
Even though modern mining in Ethiopia is recent, gold has traditionally been mined from alluvial and, to a lesser extent, primary free gold since ancient times. Modern gold mining methods have only been used since the 1930’s in the Bedakesa Valley of the Adola area in Southern Ethiopia. Later exploration has resulted in the discovery of the Lega Dembi deposit and other minerals.
Current mining activities also include the production of tantalite (50 t/year) and soda ash (20,000 t/year). The only formal tantalum mining operation is the Kenticha Mine, operated by Ethiopian Mines Development Share Company. Mining of kaolin, dimension stones (limestone, marble and granite) and small scale and artisanal mining of precious metals, gemstone, salt, industrial minerals and construction materials are the main mining activities in Ethiopia. Ethiopia has located some coal reserves in three separate areas in Ethiopia estimated at containing 61 Mt of coal (all lignite). Additional reserves have apparently been located in the Western part of the country.
Legal Framework
The Mining Proclamation 52/1993, Mining Income Tax Proclamation 53/1993, Mining Operations Regulation 182/1994, Proclamation 22/1996, Proclamation 23/1996, and the Investment Proclamation of June 1996 form the legal basis for mining in Ethiopia.
The Ethiopian government retains title to all land and mining operations, subject to national and governmental approval. The Government has the right to acquire a 2% interest in mining ventures as well as a 35% income tax levy on all mining operations. Mining royalties include 5% on precious metals and 3% on other minerals.
