Ethiopia’s unexploited mineral resources can be used to make the mining sector the biggest contributor to GDP, Rahel Getachew, CEO of the Ethiopian Minerals Corporation (EMC), tells The Africa Report.

“The mining sector will transform the Ethiopian economy over the next five years,” Getachew says. “Mining can become the largest share of GDP. It won’t be overnight but we are on the right track.”

Parts of Ethiopia fall within the Arabian-Nubian Shield, which extends from Saudi Arabia into Yemen, Egypt, Sudan, Eritrea and Kenya, and is considered a high potential zone for mining exploration. Mining in Ethiopia currently accounts for only about 2% of GDP, though that estimate is out of date and is in the process of being revised, Getachew says.

Key to increasing mining’s contribution will be full geological mapping through an airborne geo-data programme which will be launched with an unnamed international partner in 2025, Getachew says. The project, which aims to achieve 100% coverage of potential mining areas in Ethiopia, will use a known and internationally accepted technology, she says. “It’s the fastest way of getting there.”

Governance of the mining sector in Ethiopia was historically “very bureaucratic” but has been streamlined in recent years, Getachew says, pointing to the creation of an online mining cadastre system in 2019.  Ethiopia has also opened up its mineral testing laboratories and drilling services capacity to foreign players. Previously samples gathered by foreign miners had to be sent abroad for testing, adding time and expense. Since September 2023, local lab tests meeting industry standards have been available in Ethiopia, Getachew says.

Maintenance capability for project equipment has been a further obstacle. A maintenance facility using “state of the art” equipment for heavy-duty mining machinery now exists in Oromia, Getachew adds.

Diversified resources

A central bank directive in September 2023 allows the birr to be converted into hard currency for strategic foreign investments in mining and energy public-private partnerships, the first time such a guarantee has been given. The directive also authorises the use of offshore bank accounts for such projects.

KEFI Gold and Copper, which is listed on London’s AIM market, said in March that financing worth $320m for its Tulu Kapi gold project in Ethiopia has been sourced, and that members of the investment syndicate are now going through their final approval processes. The project will be Ethiopia’s first industrial-scale mining project this century. Exemptions on foreign exchange rules and an increase in the maximum permitted debt-to-equity ratio from 70:30 to 80:20 are among regulatory changes which are supporting the project, KEFI says.

Getachew defines the EMC as the “business wing” of the state-owned mining sector which seeks to provide a gateway for international investment. The agency carries out its own gold exploration, and has been processing the industrial mineral kaolin for over 30 years.

Foreign interest in the sector, Getachew says, is currently coming from Canada and Australia, as well as from African, US and Chinese companies. An advantage for Ethiopia, she argues, is the diversified nature of its deposits compared with single-mineral concentrations in other jurisdictions.

Resources include gold, tantalum, platinum, iron ore, potash, phosphate and salt, as well as gemstones including opals, emeralds and sapphires. Getachew expects “two or three” new gold mines to start operating in Ethiopia this year, and another one in 2025.