About Ethiopia

The Federal Democratic Republic of Ethiopia is located in northeast Africa, in the region termed the Horn of Africa.

Ethiopia has steadily improved in economic development since 2002. New mining regulations were issued in 1993 with the purpose of promoting the exploration and development of Ethiopia's natural resources. Ethiopia is viewed as a country with underdeveloped hydrocarbon and mineral wealth, and opportunity for future economic development is envisaged as a possible significant economic driver for the country. In early 2011, the Economist magazine predicted Ethiopia will have the third highest growth rate in the world over the next five years, after China and India.

The country is landlocked and is topographically comprised predominantly of high plateau. The population is diverse in terms of languages spoken and religious following, with a Christian majority coexisting with a one-third Muslim population.

Mining in Ethiopia

Gold is Ethiopia's main mineral export and has been mined since ancient times, primarily as alluvial or free gold. At present, Ethiopia has a single large-scale gold mine, Lega Dembi, in the southern area of the country, owned by Midroc (98%) and the Ethiopian government (2%). Another advanced project exists at Tulu Kapi, in the west central area of the country, owned by Nyota Minerals Limited. The IFC, a member of the Work Bank Group, has made a £3.4M investment in Nyota to help finance development of the property.

In addition to gold, Ethiopia has reserves of platinum, copper, potash, natural gas and hydropower. However, the mineral industry is not a significant sector of the economy, contributing less that 1 % to GDP. On a global scale, Ethiopia is a significant producer of tantalum, producing 7% of the world's supply in 2007. Other key minerals produced in Ethiopia include niobium, platinum, tantalite, cement, salt and gypsum, clay and shale, and soda ash.

During the 1990s the Ethiopian government revamped mining law and regulations and began upgrading infrastructure to support mining. In 1993 the Mining Proclamation and the Mining Tax Proclamation was put in place to provide for a legal regulatory framework to promote investment in mineral exploration and production in the country. These Proclamations were followed by additional amendment proclamations until 1996, marking a major shift from the government monopolized mining sector that existed prior to 1993. The proclamations allow for business incentives that include security of tenure, the right to sell minerals, preferential duty and tax provisions on equipment and machinery, a 5-8 % production royalty (revised in Proclamation 678/2010), a 35 % income tax on taxable income, and a structuring to allow for repatriation of profits.