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Report highlights ‘$5bn dollar potential’ of Ethiopia’s mining and geothermal sector

Out-Law News | 13 Oct 2014 | 10:43 am | 1 min. read

Ethiopia has the potential to earn $5 billion a year from the mining sector and by tapping into geothermal energy sources, according to a new report.

The report, ‘Strategic assessment of the Ethiopian mineral sector’, compiled with the assistance of the World Bank, said initial studies by the Geological Survey of Ethiopia and private companies showed the country “had a wide range” of possibilities for the exploitation of mineral deposits, Ethiopia’s Welkessa news agency reported.

Ethiopia’s mines minister Tolosa Shagi told a ceremony to launch the report on 8 October that the country had already secured “more than $2.3 billion from exports of gold, tantalum, opal, marble and other minerals” over the past four years.

Shagi said exploratory activities conducted to date in “limited” parts of the country indicated that “Ethiopia is endowed with a favourable geological environment that hosts a wide range of mineral and geo-energy potential”.

More than 130 companies are working in solid minerals operations and oil and gas activities in Ethiopia, Shagi said. However, he said there was still a need to develop adequate transport and accountability systems to ensure that the development and management of resources is conducted “effectively”.

Earlier this year a grant contract was signed to support the drilling of two wells in the first phase of a major geothermal power project in Ethiopia. The contract, worth up to $8 million, was signed by the African Union and the Icelandic-US private developer Reykjavik Geothermal Limited for drilling the wells at the Corbetti geothermal power project.

In 2013, Norway agreed to provide Ethiopia with $13m, through the World Bank’s BioCarbon Fund, to help the country’s carbon neutrality programme.

International Monetary Fund (IMF) managing director Christine Lagarde said that the “scaling up” of energy infrastructure investments in Ethiopia and other African nations were “critical for growth to be sustained”.

The IMF’s Regional Economic Outlook for Sub Saharan Africa (116-page / 2.53 MB PDF), published last spring, said economic activity in the region continued to be underpinned by large investments in infrastructure, mining and maturing investments. The report said weaker commodity prices and slower growth in emerging markets may reduce net inflows of foreign direct investment, but overall growth across sub-Saharan Africa “should remain in the top 30% in the world”.