Mine Ministry developing ‘Special small-scale law’ for gold artisans


The Ministry of Mines (MoM) is to develop a new ‘special small-scale law’ to provide incentives for traditional gold artisans in various parts of the country in an effort to increase exports.
Sinkinesh Ejigu, Minister of MoM, told Capital that the new law is in the developmental stages and will be submitted to Parliament after the second quarter of the current budget year.
The Minister said that the law will facilitate loans and duty-free schemes for sector actors to increase their exports from the current levels. “We have already put in place inducements such as duty-free schemes for mining companies, but small-scale developers should also receive similar motivation,” Sinkinesh said.
Currently, artisans are conducting mining operations using manual techniques and manpower. According to the plan, the new scheme will allow traditional gold artisans import machineries the Ministry says are needed to develop gold mining and will also facilitate loans to support the sector. Previously, especially before the 2004/05 fiscal year, the government viewed artisan gold miners as illegal producers. “After the conclusion of our study, we came to realize that they could be better employed in developing and increasing gold output and that we have to grant them recognition and provide support instead of considering them as illegal miners. Since 2005, we have been testing the sector and decided to legalize their operations in order to scientifically develop the sector,” she said.
The Ministry has been working with regional states to organize and register traditional gold miners under several associations that will then supply gold to National Bank of Ethiopia (NBE), which was previously being sold illegally across the border because there wasn’t any legal framework to sell the product in the country.   
After it conferred recognition and legality to traditional gold miners with a supporting directive that stated that the miners could sell their gold directly to the NBE at international price levels, the revenue secured in terms of hard currency from the gold sector has dramatically increased. Currently, the majority of gold secured for export come from traditional exporters. In the current fiscal year, MoM plans to generate about USD 700 million from gold collected by artisans, about 70 percent of the USD 1 billion target it has set to earn from gold and tantalum. The biggest gold exporter, MIDROC, is expected to generate USD 231 million from exports.
The particular focus on traditional artisans is based on the performance they have shown, which has led to the development of a new special small-scales law. “Without any support, the artisans have registered good performance and we believe additional support and incentives will have a positive upward development of the sector,” Sinkinesh said.
A week ago, Prime Minister Hailemariam Desalegn stated at a press conference that traditional gold miners have unexpectedly become a major source of export revenue for the country. “Due to that fact, proper attention and support must be given to the sector,” he added.
According to the Minister, the original target set in the Growth and Transformation Plan (GTP) was upwardly revised due to the high performance registered, compared with the baseline on which the original target was set.  
In the 2009/10 fiscal year, hard-currency earnings from traditional gold production exports were USD 214 million, which initially became the baseline for the five-year GTP plan.
But revenue secured from the sector was very high indeed compared with the target in the GTP.
According to Sinkinesh, in the 2010/11 fiscal year gold exports from traditional miners reached to over USD half a billion, which was the target set for the end of the GTP period, and the revenue in 2011/12 was over USD 600 million. In the past year, however, revenue declined slightly compared to the previous year as international market prices declined.
Revenue from the mining sector, mainly gold exports, has become one of the major hard-currency earners for the country, outperforming other sectors that were expected to generate more export revenue in the five-year plan.
Several gold mining companies who utilize scientific techniques have taken possession of concessions in different areas of the country and some of them have already announced that they have discovered huge deposits. Sinkinesh stated that gold exports will become one of the major exports of Ethiopia in the near future. She said Humera, Metekel, Welega in the West and Northern Ethiopia are areas where enormous gold deposits were discovered by these companies. “We have a lot of hope for the sector,” she concluded.