Engineering & Mining Journal

SEP 2018

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HORN OF AFRICA 54 E&MJ • SEPTEMBER 2018 www.e-mj.com clipped when Lega Dembi had its license suspended following violent protests by locals living around the operation. Al Amoudi was close to the ruling faction that ran Ethiopia for the past three de- cades. However, the new prime minister appears to be building his own relation- ships, especially with on-the-ground communities. It is possible that Lega Dembi's license will be reviewed and calls for applicants issued. Al Amoudi, incidentally, was one of the hundreds of wealthy Saudi citizens arrested in a government roundup last year in the country, ostensibly for corrup- tion and tax evasion. Among the more promising projects are East African Metals' two gold proj- ects located in the far north Tigray of the country. Both are near the Eritrean bor- der, not far from the Bisha mine across the frontier. According to East African Metals' prospectus, it expects to achieve an av- erage metal production of approximately 17,800 ounces per year (oz/y) of gold and 57,250 oz/y of silver. Open-pit mining will be the method of extraction, using drill blast, shovels and trucks. Around 715 metric tons per day (mt/d) will be extracted, using two-stage crushing, heap leaching, and Merrill Crowe technology. Although the company has yet to say so, it is likely that its export route will be north across the newly opened Eritrean border, rather than the longer route south toward Djibouti. License Revoked Less certain is the fate of the Danakil Potash project (not to be confused with the Danakali project across the border in Eritrea), concessions that cover approxi- mately 312 km 2 . The project was initially developed by Canadian junior Allana Pot- ash, in the northeastern Danakil Depres- sion. As the name suggests, it is contig- uous with the Danakali project in Eritrea. Allana sold its concessions to Tel Aviv- based Israel Chemicals in 2015. ICL was intending to complete the development at a cost of around $650 million, but by 2016, ICL had run into a dispute with the government over what ICL calls an "ille- gal tax assessment, and a failure to pro- vide infrastructure." ICL has since filed a $200 million lawsuit in The Hague International Ar- bitration Court, the Netherlands. The Ethiopian government, meanwhile, has taken over development, although it is unclear how or if the deposit is close to full production. It is possible the new leadership in Addis Ababa will want to bring the dis- pute to a quick resolution. A key to un- derstanding Ethiopia is its military, which is the largest force in Africa at more than 100,000. The military has itself buried deep in the country's financial infrastruc- ture, including the managing of multiple businesses, through the blandly named Metals & Engineering (Metec) company. Metec was doubtless behind the engineered dispute with ICL, since it also owns potash and chemical produc- tion plants that would benefit from the Danakil project. But Ahmed has also moved to shake up Metec's board of re- tired generals and appoint civilian over- seers. At the same time, he has begun yanking other projects such as a sugar farm from Metec. "Ahmed has been able to announce these reforms because of the changing dynamics within the ruling coalition," said Barnaby Fletcher, senior analyst, Southern Africa, at specialist global risk consultancy Control Risks. "Many of the seemingly dramatic reforms an- nounced by Ahmed are little more than obvious solutions to the challenges Ethiopia is facing." Somalia Saga Somalia remains the outlier in the re- gion. The country remains governed by a fragile federal government, with limited influence outside the capital Mogadishu. Currently resource activities focus on off- shore oil and gas, mostly. An exception is Somaliland, a break- away region in the north that declared independence from the greater Somalia. Somaliland is relatively stable and for the region, prosperous. It has failed to achieve international recognition, but this could change as it continues to set itself apart from the instability of Mogadishu. Somaliland has aggressively courted investment, especially in oil, gas and mining. It has a Ministry of Mines and Minister Hussein Abdi Dualeh, who is a regular visitor to international events such as the Mining in Africa Indaba. Recent- ly, he hosted a mining event in Dubai to drum up support for an independent on- shore resource industry for Somaliland. Somaliland's growing ties with the United Arab Emirates are a strong en- dorsement of eventual independence. Re- cently, Dubai-based DP World, the largest port operator on the globe, signed a deal to develop a full industrial harbor on the Somaliland coast. Should it become independent, So- maliland would be a solid exploration destination with deposits of gold, iron, tantalum and others. A new rail link between Ethiopia and Eritrea cuts travel time from three days to eight hours. (Photo: Turtlewong) Eritrea and Ethiopia have ended generations of conflict, says WS Insight analyst Christopher Hockey. (Photo: WS Insight)

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