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Derba East Coal Mining Plc, a joint venture of Debra
MIDROC and East Africa Holdings, has finally
acquired legal status and registered at the Public
Notary Office in December 2008. The newfound company
intends to produce over one million tonnes of coal a
year by engaging in surface and underground mining.
"The coal that is to be extracted by the mining
company is initially planned to be supplied to
Derba-MIDROC and Dire Dawa (which has been renamed
National) cement factories," Haile Asegide, CEO of
Derba MIDROC, told Fortune. "But the company will
eventually expand its supply to cement as well as
glass and bottle-manufacturing factories."
A subsidiary company of MIDROC Ethiopia, Derba
MIDROC, is constructing a cement factory with an
investment capital of 2.4 billion Br. Ninety-two per
cent of the company is owned by the MIDROC Group
while the remaining shares are owned by Sheik
Mohammed Hussein Ali Al-Amoudi, the Saudi business
tycoon who was recently ranked as the number one
richest black man in the world by Forbes Magazine.
Meanwhile, East Africa Holdings has purchased 51% of
the former Dire Dawa Cement Factory from the
Privatisation and Public Enterprises Supervisory
Agency (PPESA) close to two years ago. Following the
procurement, the company began expansion works
planting additional machines next to the existing
ones to increase the production capacity of the
factory.
Including National Cement, Factories that are
currently active include the state-owned Mugher
Cement Enterprise and Messebo Cement Factory under
the ownership of the Endowment Fund for the
Rehabilitation of Tigray (EFFORT). All these
factories use furnaces for burning in their
production processes.
Cement is made from a mixture of calcium carbonate,
silica, iron oxide and alumina. According to the
World Coal Institute, a high temperature kiln,
fuelled by coal, heats the raw materials to melt
partially at 1,450 degrees centigrade transforming
them chemically and physically into a substance
known as clinker.
So far the cement factories in Ethiopia have been
using light fuel oil in order to generate the heat
that they need to produce clinker. On top of this,
some factories that need coal in their production
processes use electricity. But Haile has stated that
"the cost of electricity for these factories is
unbearable."
Close to three years ago, the Oromia Bureau of Mines
and Energy granted an exploration plot to East
Africa in the Moye Woreda of the Jimma Zone, 416Km
outside of Addis Abeba. In Moye alone, there are
over 20 million tonnes of coal, according to a study
conducted by the Ethiopian Geological Survey
Institute.
According to Haile, further intensified studies are
currently being undertaken by the Geological Survey,
the Geological Department of the Addis Abeba
University and a Chinese Firm, Shenyang Design. The
projected cost is estimated to be close to six
million dollars. Of the total 200 million dollar
investment intended for the entire project, the cost
of dozers, graders, dump trucks as well as other
machineries, is estimated to be at 30 to 40 million
dollars.
The memorandum of understanding between the two
companies was signed in March of last year at the
Sheraton Hotel in Addis by Mohammed and Buzuayehu
Tadele, chairmen of MIDROC and East Africa Holdings,
respectively.
According to Buzuayehu the study that is being
conducted by the Chinese firm has shown promising
results. "According to the findings of the study, we
will in the near future be able to commence surface
mining," he told Fortune.
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