Saudi Billionaire’s Gold Find May Double Ethiopian Production
By William Davison
National Mining Corp., a closely held company owned by Saudi billionaire Mohammed al-Amoudi, said it found gold deposits in southern Ethiopia that may produce at least 10 metric tons a year, almost doubling national output.
Exploration conducted over 15 years shows the Okote site in Ethiopia’s Oromia region has more than 550 tons of gold, of which 73 tons may be ready for extraction within 24 months, Chief Executive Officer Melaku Beza in an interview on March 12 in Addis Ababa, the capital. The company plans to invest $150 million in the initial phase of production, he said.
“This area has huge potential,” he said. “The revenue will be about $4 billion in 20 years’ time” from the 73 tons and the government will receive $1 billion from tax and royalty payments over that period.
Ethiopia, the world’s third-biggest coffee grower, is diversifying its economy to reduce its reliance on agriculture, which accounts for 43 percent of the gross domestic product, according to African Development Bank data. Gold exports surged 75 percent to 11 tons in the fiscal year through July 7, 2011, generating $485.3 million. Earnings totalled $258.8 million in the first half of the current fiscal year from $179.2 million a year earlier, according to Trade Ministry data.
“I think mining development in Ethiopia will be the future hope of the country for foreign-currency income,” Melaku said. Last year, coffee shipments earned the country about one-third of its total foreign-exchange revenue of $2.8 billion.
Surveys conducted by South Africa’s Venmyn Rand Ltd. have shown deposits of 113 tons of gold in the southern part of Okote, which is about 600 kilometers (373 miles) south of Addis Ababa, Melaku said. The area may contain more than 425 tons, Melaku said.
Ethiopia’s only commercial producer of the precious metal is Midroc Gold, another company owned by al-Amoudi that was formed out of NMC to develop the Legedembi deposit. That mine, which is about 100 kilometers north of Okote, produces about 4 tons of gold a year, said Melaku.
At peak production, Okote may employ 5,000 workers and earn the company more than $500 million a year from 10 tons of the metal, he said.
NMC, which is based in the capital, was formed in 1993 when al-Amoudi bought the state-owned Ethio-Libyan Joint Mining Co. The sale was the first of a state-owned company to private investors by Prime Minister Meles Zenawi’s two-decade old government, according to Melaku.
The state owns 5 percent of all gold operations, levies an income tax of 35 percent and collects royalties of 8 percent, according to Melaku. Australia’s Nyota Minerals Ltd. (NYO) and Vancouver-based Tigray Resources Inc. (TIG) both have discovered gold deposits in the Horn of Africa nation. NMC also has found 18 tons of gold in the northern Tigray region, said Melaku.
Ethiopian-born Al-Amoudi is the world’s 61st richest man and is worth $12.5 billion, according to Forbes magazine. His Ethiopian investments include cement, hotel, soft drink and agriculture companies.