(Reuters) – Ethiopia’s suspension in issuing new mining licences to foreign firms keen to tap a fledgling gold and base metals industry is only temporary, its mining minister said on Friday.
More than a hundred firms have been issued licences so far, but the Horn of Africa country put a stay on another 200 applications last month saying it needed time to “sort out” its mining sector.
The country is seeking time to strengthen its ability to regulate, administer and evaluate the companies already in the sector before they start letting new ones in.
“We will eventually (lift the suspension). We have no other intention because we believe that we have created a conducive environment for the private sector and it is the private sector that can be an engine for development with mutual benefit,” Sinkenesh Ejigu told Reuters on the sidelines of an African Union mining conference in the Ethiopian capital Addis Ababa.
“It is a good indication for us because many investors are applying but our task is not only giving licences, we also have to administer,” she told Reuters on Friday.
She did not say when the suspension would be lifted.
“We will also examine the performance (of existing companies) and what they have done with their licences while sorting out the profiles of new applicants,” she said
Ethiopia is part of the so-called Arabian-Nubian Shield, which stretches from Saudi Arabia and Yemen to Sudan and Egypt, and is home to rich gold and base metal deposits, though much of the seam is mined unofficially, by small-scale prospectors.
Though still reliant on commodities such as coffee for revenue, Ethiopia is expected to earn around $500 million from mining exports in the financial year to next July, according to the ministry.
It has targeted doubling that in the next five years.
The only gold miner in production so far is Ethiopian-Saudi Midroc, but London-listed Nyota is set to follow.
Nyota’s flagship project is Tulu Kapi, 500 km (310 miles) west of capital Addis Ababa, which has a total inferred resource of 1.2 million ounces of gold.
The number of companies seeking to venture into the Ethiopian market has shown a steady rise in the past few years.
“What I can say is many companies have reached advanced exploration stages. They have to do the development work that will take around two years by itself, and after three years we can say we may reach an advanced production stage,” Sinkinesh said. (Editing by Barry Malone)