Ethiopian MoM(Ministry Of Mines) sells 4.1 billion Br of gold in 10 months, more than 4,606kg planned for year

Platinum Exports Earn Country Unplanned $10,965
The Ministry of Mines (MoM) earned 10,965 dollars from the export of 640 grams of platinum over the past 10 months, the extraction of which was unplanned. “There is no one engaged in formal platinum extraction in Ethiopia,” Tamrat Mojo, head of traditional mines manufacturing and transactions at MoM, told Fortune. “As a result, we did not expect to export any.”
The platinum was obtained from individuals who used traditional mining methods to extract the metal.
“The platinum was not extracted with modern mining techniques,” Tamrat said. “As a result, it was not washed as well as it would be with machines, causing it to fetch a lower price than it otherwise might have.”

Yubdo Gold & Platinum (Yubdo Platinum), a United Kingdom (UK) based company, was the sole platinum miner in Ethiopia. The small-scale operation annually produced an average of 2.8kg from western Ethiopia at a site located 460km from the capital in Oromia Regional State.

“The company exported only 12kg of platinum during three years of operation, so it pulled out,” Tamrat explained.

This left the site, from which individuals have been obtaining the platinum, open. However, the area has since been cordoned off, pending an investigation by the ministry into how best to extract it.

“If it is found that traditional methods can be used to extract the platinum, we will establish mining associations,” Tamrat said. “Otherwise, the ministry plans to use mechanised mining methods to extract it.”  

While there are no associations extracting platinum, there are more than150 engaged in mining gold.

The ministry has sold 5,815kg of gold worth of 4.1 billion Br to National Bank of Ethiopia (NBE) over the past 10 months, more than the 3,616kg it initially planned to sell for the year.

With 2,045kg, 1,517kg, and 1,127kg, Oromia, Tigray, and Benishangul-Gumuz regional states were the top gold producers, respec over the past 10 months. Gold is also mined in Gambella, Southern, and Amhara regional states.

 

 
During the first six months of the fiscal year, MoM sold 3,942.2kg of gold to NBE, while it had planned to sell 2,703.3kg. As a result, it revised its annual plan in March 2011 to sell 4,606kg, an increase of 990kg that has already been achieved.

“The performance of the ministry was positively affected by the rise in the international price of gold, which encouraged people to engage in gold extraction,” Tamrat told Fortune.

The global average price of an ounce of gold was 1,478.30 dollars in 2010 while it stood at 1,510.90 dollars on Friday, May 20, 2011.

The rise in the international price is attributed by an economic expert to investors putting their money in assets other than the dollar.

Gold is Ethiopia’s third largest export commodity after coffee and oil seeds.

A total of 281 million dollars worth of gold was exported to Switzerland and South Africa, the only importers of Ethiopia’s gold, in 2009/10, according to research conducted by Access Capital. Out of the total, Switzerland imported 211.2 million dollars, the research showed.

The purchase of gold by Swiss banks in line with a worldwide pattern in gold trade between commercial or central banks that has contributed to the increase in gold exports, according to the expert.

The government plans to increase its gold exports from 3,907kg in 2009/10 to 8,700kg in five years’ time, an increment of 122pc.

For the past two years, NBE has been adding five per cent to the international market price when buying gold from miners in order to discourage its sale on the black market, according to Tamrat.

An independent unit responsible for gold transactions was also established in September 2010.

MoM used to perform geological tests on the metal produced for sale by miners to determine its authenticity. However, following the scandal in 2008 when the central bank bought alleged fake gold for 158 million Br, the bank started conducting the tests itself.

This decreased fraud and contributed to the ministry’s increased performance, according to Tamrat.

The hearing of a group of individuals charged by the Federal Ethics and Anti-corruption Commission (FEAC) for the sale is being heard by the Federal High Court, First Criminal Bench. Among the accused are four brothers: Kaf Mohammed, owner of Sofam Fashion; Sultan Mohammed, owner of Day & Night Multichoice Boutique; Fuad Mohammed, owner of WOW Fashion; and Nuredin Mohammed, owner of Nur Building.

Aside from gold, the ministry also exported precious stones and tantalum that, along with the platinum, amounted to two billion Birr over the past 10 months. It had initially aimed to export 7,315kg of precious stones and 105tn of tantalum this year.

During the first six months, it exported precious stones and tantalum worth 171.7 million dollars. While MoM had planned on 3,104kg and 43tn, it exported 6312.4kg and 85.6tn of precious stones and tantalum, respectively.

All the minerals were extracted using traditional mining methods. Like platinum, tantalum is extracted only in Oromia Regional State, while precious stones is mined in Amhara, Oromia, and Somali regional states.

By MAHLET MESFIN
FORTUNE STAFF WRITER