GEOLOGY OF ETHIOPIA

Since 1991, the Government of Ethiopia has instituted policies designed to improve the political, social and economic sectors of the country. One of the most important parts of the new economic policy is that it permits the full participation of the private investment in the mining sector. The government has enacted a very competitive legal and fiscal regime that attracted international mining companies to participate in the development of Ethiopia's mineral resources. Also, the government has been making progressive amendments to the Mining Laws in order to make it more competitive.

The oldest rocks are composed of deformed Archean rocks while the youngest rocks are mainly Quaternary sediments and lava flows. The outcrops covering most of the country are Tertiary volcanic and marine and non-marine sedimentary rocks. Archean and Proterozoic rocks are exposed in the southern, western and northern parts of the country. Such divers geological set up makes the land mass wealthy in mineral resources of various types. The low to medium grade Proterozoic metamorphic rocks are composed of six major green stone belts that host a number of gold and other precious metal targets.

Notable gold, platinum, and rare metals deposits, which are currently, transferred to the private sector including the Lega Dembi Gold Deposit, the Yubdo Platinum Deposit, the Akobo Basin placer Gold Deposit, and the Kenticha Tantalum Operation are located in these greenstone belts.

In the last five years, various dimension stone operations were also developed and transferred to the private sector. Concurrently, a number of international and local mining companies were granted exploration, and mining licenses. Exploration activities were focused on gold and base metals followed by industrial minerals and dimension stones. Aggressive activities were also observed with the emergence of the gemstone industry. Significant numbers of licenses were granted for exploring and mining of opal within the rhyolite belt in the volcanic terrain of the central highlands. A number of other applications are being processed to explore and mine opal in the same region where the opal field seems open towards north.

Apart from this, three companies were granted licenses to explore and mine mineral water in different parts of the country. The Mineral Operations Department of the Ministry of Mines is the focal point to receive, facilitate and process exploration and mining applications presented by foreign companies joint venture with local companies and small to large scale mining activities to be carried out by local companies.

Currently the department is attempting to update its promotional documents and to invite international mining companies to participate in the exploration and mining development ventures of the country. All interested investors can contact the department in order to get further information on the mineral potential and prospective candidate projects for development.

Further more investors can obtain diverse geo-information from the Geological Survey of Ethiopia (GSE) which is accountable to the Ministry of Mines. Since its inception in the late 1960s, the GSE has been engaged in exploring the country for various minerals. In addition to reconnaissance and detail surveys for minerals, the GSE has also been studying the geological, hydro-geological and engineering geological conditions of the country. The Ministry of Mines welcomes all interested investors to come to Ethiopia and be partners in the development of our prospective mineral resources.

PART 1: GENERAL GEOLOGY AND MINERAL POTENTIAL

GENERAL GEOLOGY

The Geology of Ethiopia is grouped into three major units namely Precambrian, Late Paleozoic - Mesozoic and Cenozoic rock units.

• Precambrian rocks consist of a wide variety of meta sediments, volcanic and intrusive rock units which have been subjected to varying degrees of metamorphism and deformation. These are well exposed on the northern, western, southern, southwestern and eastern parts of Ethiopia;
• Late Paleozoic-Mesozoic sediments are widespread in Ethiopia as a result of the transgression regression of the sea and cover the northern, central, eastern and southeastern part of the country. They are represented by limited tillite (northern and eastern), sandstone, limestone, shales, marl, dolomite and Gypsum.
• The Cenozoic volcanic rocks (Tertiary to Recent) are associated with the formation of the Main Ethiopia Rift, Afar depression and the highland volcanic. The unit consists of basalts, trachytes and associated dyke swarms, andesites, rhyolites, ignimbrites and pumice as ash. Sediments of Tertiary age, which are represented by sandstones, limestone, gypsum, anhydrites etc., are known to occur in eastern Ogaden, in the Dankill Depression and in the Omo River Valley. Quaternary sediments are also widely distributed and genetically belong to lacustrine and marine origin. There are also alkaline and acidic intrusive which range in age from Mesozoic to Late Tertiary.

Exploration

Systematic mineral exploration started in Ethiopia during the late 1960's. Surveys were carried out mostly in the Precambrian low-grade metamorphic terrain of the country by the Geological Survey of Ethiopia. Thirty percent and thirty five percent of the country is covered by geological and hydro-geological maps respectively. Geochemical technique using stream sediments, rock and soil sampling is the main tool of exploration to delineate target areas. Gravity, seismic, magnetic data are also available that are collected in the course of mineral exploration by the Ethiopian Geological Survey and foreign companies. Several mining companies, both local and foreign, are currently carrying out exploration mainly for gold and base metals, platinum and tantaleum (tantalite-culumbrite) in different regions of the country. Other minerals, being explored include gemstones particularly opal, rare metals, industrial minerals, dimension stones, energy minerals, and mineral water.

Mineral Potential

The geologic diversity of the Ethiopian land mass makes it host for various minerals including precious metals, gemstones of a wide variety, base metals, rare metals, colorful dimension stones, healthful mineral waters, and huge deposits of Silica sand, ceramic and cement raw materials, energy minerals including coal, oil shale, and geothermal fields. The following are major targets for advanced exploration and/or development.

Precious Metals:- This includes gold, platinum and silver and associated with the low-grade metavolcano-sedimentery rocks. Lega-Dembi, Megado Serdo, Sakaro, Dul, Oda, Kurmuk gold, Yabdo platinum are located along thin belts and occur as primary and placer deposits.

Gemstones:- Gemstones such as opal, topaz, olivine, corundum (ruby and sapphire), quartz, garnet and others are widely known to occur in Ethiopia. Currently, opal is being mined and explored in the central highlands of the country.

Base Metals:- This includes Cu, Zn, Pb, Sn, etc. and have highly promising potential. These are found mostly associated with gold in the greenstone belts.

Rare Metals:- Apart from the current operation of tantalum (tantalite-columbite), a number of anomalies are found in the southern greenstone belt.

Chromite and Nickel:- These bodies are associated with serpentinite belts and are occurred in southern Ethiopia.

Iron:- Various occurrences of iron are found in different part of Ethiopia.

Industrial Minerals:- Ethiopia is well endured with various types of industrial minerals and the following raw materials are defined and outlined systematically.

• Silica sand, Feldspar, Dolomite
• Quartz, Feldspar, Kaoline
• Limestone, Clay, Gypsum
• Phosphate, Potash, Soda Ash
• Marble, Limestone, basalt, Brick clay, ignimbrite etc.
• Bentonite, Dolomite, Graphite, Soda Ash, etc,

MINIG OPERATION

comparatively mining contributes only small percentage to the GDP of Ethiopia. The largest gold mine in the country produces about 4 tons per year form a primary deposit, and several alluvial gold production centers are also producing many tones of gold. Ethiopia also produces other minerals such as gemstones (mainly opal), soda ash, tantalum, kaolin, construction minerals particularly colorful dimension stones, a variety of industrial mineral raw materials, and healthful mineral water.

INVESTMENT OPPORTUNITIES AND MINING LEGISLATION

The country is endowed with a variety of mineral resources (see the above details in Part I and the Metallogenic Map of Ethiopia). All interested persons and groups are invited to invest in the mining industry of Ethiopia. The Government of Ethiopia issued a new Mining Proclamation and Mining Tax Proclamation in June 1993. These laws are the outcome of much research in the field of mining investment. The Tax Proclamation fully recognizes the high -risk nature of mining investment and provides a liberal reward for those who venture into the sector. The calculations for determination of taxable income are devised so that the investor will get a fair reward for his effort and investment in finding and producing the minerals.

The main objective of the new mining law was to improve the legal framework for mining investment in the country. Realization of the shortcomings of earlier laws and policies was very important in taking the subsequent corrective measures. The future of the mining sector is now firmly allied to private investment. The preamble to the new mining law states that the law recognizes the significant role of private investment in capital formation, technology acquisition and marketing of minerals. This is a very positive step forward from the earlier government policy of complete monopoly of the mining sector.

In June 1993 new Mining and Mining Income Tax Proclamations were issued having considered knowledge-based experiences in competitive countries and given the following;

• Invite private investment in all kinds of mineral operations;
• Provides a prospecting license for one year;
• Provides an exploration license for an initial period of three years and renewed twice for one year each;
• Provides a mining license for 20 years and renewed for 10 years unlimitedly;
• Guarantee the licensee’s right to sell all the minerals locally or abroad giving marketing freedom;
• Provides for exemptions from custom duties and taxes on equipment, machinery, vehicles and spare parts;
• Gives securities of tenure;
• Gives clear provisions on fiscal and other issues;
• Considering taxation on repatriation of profits and capitals, a licensee shall pay a 2-5% royalty on Ad Val Orem at production site, and a 35% income tax on taxable income. Taxable income is computed by subtracting from gross income for any accounting year all allowable revenue expenditure, a four years straight line depreciation, reinvestment deduction and permitted loses;
• The mining proclamation guarantees the opening and operation of a foreign currency account in banks in Ethiopia, retention of portion of foreign currency earning and remittances of profits, dividends, principal and interest on a foreign loan etc. out of Ethiopia.

Of course this fiscal package is still subject to frequent reviews for we want to maintain a balance between the objective of the government and investors as is evident by a series of amendments of the 1993.