(Bloomberg) — Ethiopia’s government is courting investors from at least four countries including China and Germany to buy a stake in the state-owned company that operates what it says ranks among the world’s top 10 tantalum producers.
The sale of part of the company will help fund the expansion of the Kenticha mine and construction of a factory to process the rare earth metal, Zerihun Desta, general manager of Ethiopian Mineral Development SC, or EMDSC, said in an interview yesterday in Addis Ababa, the capital. Tantalum is used in transistors for mobile phones, computers and digital cameras.
“We are looking for a potential partner who has technology for the value-adding factory and also the economic capability,” he said. Chinese, Swedish, German and South Korean companies are “aggressively looking” at entering into a joint venture with EMDSC, he said, without identifying them.
Ethiopia, Africa’s second-most populous nation, is seeking to diversify its economy to reduce its reliance on coffee and other agricultural commodities for most of its export earnings. Mining may become the biggest generator of foreign exchange in “a couple of years,” Zemen Bank, an Addis Ababa-based lender, said in September.
The expansion of Kenticha, 550 kilometers (342 miles) south of Addis Ababa, may quadruple annual tantalum-export revenue to $80 million, Zerihun said. The metal is inexpensive to mine in Ethiopia because of the softness of the rock around the deposit and “cheap” labor, he said. “If the price of tantalum goes down, we will be the last to close,” he said.
Exports to China
About 80 percent of the 220 metric tons of tantalite concentrate mined at Kenticha in the 12 months to July 7, the end of Ethiopia’s fiscal year, was shipped to China, said Zerihun.
“This material is highly needed because the market for electronic products is growing,” he said. “And the material itself is a rare metal. Accordingly, demand is always strong.”
A valuation of EMDSC, estimated to be worth $25 million 10 years ago, is currently under way and a partner may be selected by the Privatization and Public Enterprises Supervising Agency within five months, said Zerihun.
Kenticha may contain sufficient deposits to produce as much as 9,000 tons of processed tantalum products over “more than 15 years,” he said. The mine also contains quartz, feldspar, kaolin and dolomite that are sold in Ethiopia for industrial uses.
EMDSC, which was established in 1995, has concessions for gold, silver and copper exploration in other parts of the country, according to Zerihun.
The company is Ethiopia’s only commercial producer of tantalum and Kenticha ranks as the world’s sixth-biggest miner of the metal, according to Zerihun. Artisanal miners shipped about $5 million worth of the mineral last fiscal year, he said.
Ethiopia’s share of global tantalum production in 2009 was 6 percent, according to the U.S. Geological Survey’s website.
–Editors: Paul Richardson, Vernon Wessels.
To contact the reporter on this story: William Davison in Addis Ababa via Nairobi at email@example.com.