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Gold exploring slowed by price and border dispute
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1. There has been a slowdown in gold exploration in Ethiopia over the last year because of the decline in the international market price. Gold sells for $257 an ounce today, compared to nearly $400 several years ago. In addition, several foreign companies have temporarily abandoned their exploration activities and declared "force majeure" because of Ethiopia's border dispute with Eritrea. Under force majeure, the Ethiopian government negotiates with each company individually to extend the concession period and reduce exploration payments.
2. Even so, the prospects for gold production in Ethiopia over the long term are favorable. Geologic studies indicate that Ethiopia has very favorable conditions for gold deposits. Most of Ethiopia's gold production at present comes from discoveries in the southern regions from the "Adola" gold fields. The Lega Dembi mine, purchased by the National Mining Corporation, is the foremost site of gold production in the country, although many individuals pursue gold panning as a potentially lucrative occupation. (note: the U.S. company Canyon Resources, which has gold exploration concessions in the Adola field near Lega Dembi and several other claims in the north, has temporarily pulled out of Ethiopia under force majeure. End note.)
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Getting in their salt licks
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3. Besides gold, there are opportunities in Ethiopia for expanding salt and potash production. Before the border conflict, Ethiopia imported all its salt from Eritrea, neglecting its own substantial salt deposits. With the Eritrean border closed to salt imports, Ethiopia is looking for ways to hasten the development of its salt resources. In the meantime, Ethiopia is importing salt from Yemen and Tanzania through Djibouti. The largest salt deposits in Ethiopia are found in the Danakil depression, the arid lowland desert between Ethiopia's borders with Eritrea and Djibouti, and in the Ogaden in southeastern Ethiopia.
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Calub gas tender revisited
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4. The Ethiopian government is revising its tender for the development of the Calub gas field. No bidders on the tender last year even approached the price Ethiopia was asking. As a result, the Calub Gas Share Company and gas field will be privatized in one phase instead of two, with a major emphasis on the production of fertilizer. It is too early to determine whether the recent offer by Santa Fe Gas (now Santa Fe Snyder) to the Ethiopian Privatization Agency will attract enough interest to begin negotiations. Although the Privatization Agency has the lead on plans and negotiations over the Calub Gas Share Company, any final decision is made difficult because several different entities, including the Ministry of Mines and the Electric Power Corporation, have an interest in the case.
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Working the tantalum mine
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The privatization of Ethiopia's Kenticha tantalum mine, which drew significant interest from Cabot corporation of the United States among others last year, has been shelved for the time being. Again, all of the offers were too low and unacceptable. Ethiopia operates the mine on a small scale at present and exports the tantalum acquired from near the surface. The mine's machinery is incapable of extracting tantalum deposits deeper underground, however, so continued production will require significant investment and sophisticated technology. For this reason, the government is approaching individually those companies that expressed interest in the tantalum operation.
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Potash and platinum
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Overall, there are 11 foreign companies and 19 Ethiopian firms with mineral exploration rights operating in Ethiopia. Ethiopia has a great potential for additional production of potash and sulfur. Ethiopia has granted several potash concessions near the border with Eritrea, including one that was discovered and worked by the Parsons Company from the United States before underground water proved too difficult to divert. Ethiopia was once a major producer of platinum but "technological advances in the field" have made investment in Ethiopia's platinum production unattractive.