Ethiopia – Mining is Opening Up
Gold is Ethiopia’s main mineral export and has been mined since ancient times, primarily as alluvial or free gold. At present, Ethiopia has a single large-scale gold mine, Lega Dembi, in the southern area of the country, owned by Midroc (98%) and the Ethiopian government (2%). Another advanced project is located at Tulu Kapi, in the west central area of the country, owned by Nyota Minerals Limited. The IFC, a member of the Work Bank Group, has made a £3.4M investment in Nyota to help finance development of the property.
In addition to gold, Ethiopia has reserves of platinum, copper, potash, natural gas and hydropower. However, the mineral industry is not a significant sector of the economy, contributing less that 1% to GDP. On a global scale, Ethiopia is a significant producer of tantalum, producing 7% of the world’s supply in 2007. Other key minerals produced in Ethiopia include niobium, platinum, tantalite, cement, salt and gypsum, clay and shale, and soda ash.
During the 1990s the Ethiopian government revamped mining law and regulations and began upgrading infrastructure to support mining. In 1993 the Mining Proclamation and the Mining Tax Proclamation was put in place to provide for a legal regulatory framework to promote investment in mineral exploration and production in the country. These Proclamations were followed by additional amendment proclamations until 1996, marking a major shift from the government monopolized mining sector that existed prior to 1993. The proclamations allow for business incentives that include security of tenure, the right to sell minerals, preferential duty and tax provisions on equipment and machinery, a 5 to 8 % production royalty (revised in Proclamation 678/2010), a 35 % income tax on taxable income, and a structuring to allow for repatriation of profits.