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In what turned out to be a disappointment to
authorities at the federal government, traditional
artisans have failed to mine as much gold over the
past two quarters as expected of them, unlike last
year when their bounty took them by surprise.
Around 1,759 artisans mining gold in Oromia,
Benishangul, and Tigray regional states had exceeded
authorities’ expectations in 2010/11, after selling
to the central bank 6,615kg of gold, surpassing the
government’s projection under the five-year
transformation plan by 26pc.
Gold mined by artisans represents a major portion of
the precious metal Ethiopia exports. For instance,
artisans sold 2,064kg of gold worth 109.5 million
dollars to the central bank, while companies engaged
in gold production exported 588.3kg, worth 35.4
million dollars, during the first quarter of this
year.
They have supplied 3,809kg of gold during the past
two quarters. Nevertheless, this volume of gold for
export from artisans was 44pc less than that
targeted by authorities at the Ministry of Mines (MoM).
“It is due to the frequent price drops in the
international market in the past months that
discouraged miners,” Tamrat Mojo, head of the
Traditional Mines, Manufacturing, & Transactions
department at the MoM, told Fortune.
Experts in the industry agree with the drop in
prices. A gram of gold sold at 59.3 dollars in
September 2011, was sold at 53.1 dollars in January
2012, showing a 10.5pc loss in value, according to
SStandard Chartered Plc. a multinational financial
services firm headquartered in London, United
Kingdom.
But, they challenge the assertion that the drop in
prices is the only reason behind the fall in
revenues. Although the international market has its
own impact on the performance of artisans, it should
rather as a warning to the Ministry that production
of gold in these areas is at risk of depletion, an
expert working for a private mining firm, argues.
“The ministry has never conducted surveys in order
to determine production potentials of the areas
being mined by the artisans,” the expert told
Fortune. “The areas could be deteriorated.”
His is an assertion hard to dismiss by authorities
at the Ministry, for sources at the MoM disclosed to
Fortune that there, indeed, has never been a
detailed study conducted on the major gold-producing
regions in which the artisans are highly active in
mining.
Indeed, this was not good news for the Ministry
which only achieved 29pc of the annual target in
seeing 13,200kg of gold mined. This is also a bad
sign for the country’s overall export ambitions,
which included 841.7 million dollars from exporting
gold in 2010/11, according to data from the Ministry
of Trade (MoT).
“We are expected to work hard in order to meet our
target,” Tamrat admitted.
The international gold market may soon turn in
favour of the Ministry. There will be a 10-dollar
increase per kilogramme from the previous year,
price projections for 2012 indicated, according to
Standard Chartered Plc.
In a bid to encourage artisans, the central bank has
been offering a five per cent price margin on top of
the international price. Officials at the Ministry
attributed the production increases over the past
years to this. However, this incentive seems not to
be helping the artisans that much anymore, after the
Ministry decentralised the market six months ago.
Aiming to reduce the costs of producers, including
transportation, a tripartite agreement was signed
between the Ministry, the central bank, and the
Commercial Bank of Ethiopia (CBE) in which the
latter was delegated by the central bank to conduct
purchases, opening branches in the major gold
producing regions. In each transaction, the branches
of the bank effect 9opc of the payment within 24
hours, while the remainder is to be paid within a
month, upon the artisan’s request, at which time
they will be paid at the international price. If
prices lower by the time of the artisan’s request,
they will get paid at the original price.
Nonetheless, some of the producers are not happy
about the decentralisation, as they are charged a
two per cent service charge. The service charges are
added to pay for the central bank’s air transport
expenses when collected from the regions, to which
the bank pays up to 90 million dollars, according to
sources.
Gold is hardly the only mineral where authorities
have discovered a decline. Miners have only exported
7,338kg of gemstones worth 3.3 million dollars, 22pc
lower than the Ministry’s target of exporting
9,400kg.
The artisans have only found luck in producing 122tn
of tantalum worth 5.3 million dollars in the first
half of the year, while only 56tn was targeted for
the whole year. |
