Foreign mining companies quitting exploration in Ethiopia

Aug 7, 2012 (TefaNews) – The number of foreign mining and explorationcompanies that cut and pack their investment in Ethiopia are growing in recent months citing different reasons.

Companies like Maxus and ZPEG, that were working on oil and gas explorations in the Ogden region have pulled entirely out of the country following the killing of dozens of its workers during a raid by the rebel group operating in the area. 

Last year the Malaysian Company Petronas quits its oil exploration activity in Ethiopia after spending over $350m.

BHP, one of the leading potash producer companies in the world, recently abandons its potash project in the Afar region after investing over $80m on exploration works.  Sources closer to the company cited higher exploration costs, security threats, unfavorable honey-coated investmentpolicies together with the unmatched competition they would met from the well advanced, world-class Colluli Potash deposit in neighboring Eritrea as the main reasons for the quit.

On top of such uneasiness, the Ethiopian ministry of Mines last week announced revoking of 11 petroleum and mineral exploration licenses besides halting the issuance of any mineral exploration licenses altogether.

One of the major companies that have been affected by the decision and kicked out of the country was the Hong Kong based oil and gas giant, PetroTrans Company Ltd that has beeninvesting heavily in the last few years on the dangerous and greatly risky region of the Ogaden basin.

Donia Beijing Resource, a gold explorer company operating in Tigray region is not spared by the sweeping, blind fold decision.

Dismayed by the sudden change of heart by the ministry, PetroTrans urges the ministry to revisit its decisions or face the matter at the International Tribunal Courts. It also warns that no other company will have the right to operate at Calub and Ilalla fields, which PetroTrans investedmillion of dollars for exploration and other related works. Sources in Ethiopia reveals that the company pays close to $11m for a non-refundable signature bonus alone.

Such unwarranted turn of events in the country’s mining industry and the developing political uncertainty further tarnish the country’s image and scares away existing and/or new potential investment in the sector.

Presently, the country only survives with a handful of artisanal miners and MIDROC Gold, the only modern large scale gold mining company.

–Tesfa News