Ministry of Mines Revokes 56 Exploration Licenses

Tayitu 14th

The Ministry of Mines recently revoked 56 minerals exploration licenses of foreign and local mining companies on the ground that the companies did not undertake exploration activities. The companies were licensed to prospect for gold and base metals, iron ore and gemstones.

Reliable sources at the ministry told The Reporter that the companies did not fulfill their commitments in accordance with the agreement they entered into with the ministry. According to sources, the mining coming companies failed to execute the mineral exploration work according to schedule. “The mining companies were unable to undertake exploration activities due to their own problems. The companies kept the exploration areas idle for year,” sources said.

The communication directorate confirmed the measure taken against the mining companies but did not reveal further information.

The Ministry of Mines has granted 200 mineral exploration licenses since 1992. In 2011-2012 the mining sector earned 618 million dollars from mineral exports- 2/3 coming from artisanal mining. The mining sector is expected to generate 2 billion dollars by 2024 employing 8000 citizens.

The Ethiopian government aims at building and developing an essentially new economic sector – the large scale mineral sector. The current policy framework envisions the mineral sector to be the back bone of the industry by 2020-2023.

In a related news companies are complaining about the new mineral exploration licensing procedures the ministry introduced last year. The companies claim that the ministry is not issuing exploration licenses to mining companies. Some of them claim that they are waiting for three years after they submitted their application for exploration licenses. “The ministry issued only six mineral exploration licenses in the past six or seven months,” representatives of companies said.

The new mineral exploration directive requires companies to have a minimum of three years working experience in the mining sector. The mineral licensing and administration directorate evaluates the proposals submitted by companies and should get 75 percent grade to secure the license. Previous experience holds 35 percent of the grading.

A senior official at the Ministry of Mines told The Reporter that the Ministry of Mines put in place a new licensing procedure with the view of avoiding companies who trade exploration areas. “Most companies are brokers. They acquire exploration areas from the ministry. They do not have the experience and the required financial resource to execute the exploration projects. Some take the land and transfer it to other companies without adding any value on the concession. Others keep the exploration areas idle for years. So we took the measure after we made a thorough statement. We introduced the new licensing procedure to avoid companies who keep exploration areas idle for a long time. We grant licenses for companies that are committed to undertake exploration work. We need companies who have the expertise and adequate financial resource,” the official said.

The Ministry issued 209 exploration licenses and 63 mining licenses. Sixty of the licenses were owned by local companies, 68 by foreign companies and 36 by joint ventures.

A recent study undertaken by the World Bank on the Ethiopian mining sector identified hindrances in the licensing procedures of the Ministry of Mines. The strategic assessment of the Ethiopian mining sector issued last October says that there is currently a considerable back log in the assessment of exploration license applications, while the intention is to asses these on monthly basis. “This may in part be due to efforts to discourage speculative applications and or companies that do not have the necessary know how or resources. It is however also clear that there exist some critical capacity constraints that prevent the licensing authority to assess applications on time,” the report says. The report stated that ministry’s computerized mining cadastre system commissioned in 2011 has fallen into disuse.

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