News Federal foreign mining concessions stir controversy, pushback in Tigray
July 13, 2024
Foreign individuals detained for attempts to access gold illegally: sources
The Tigray Interim Administration (TIA) is caught between a rock and a hard place as the federal government pushes for the return of concessions in Tigray to foreign mining firms while the sites being doled out by the Ministry of Mines are under the control of local miners who have no intention of leaving. The situation has led to increased friction in the region and the detention of foreign individuals whom regional security forces accused of attempting to access mining sites informally without licenses.
There were a reported 27 large-scale mining operators, most of them backed by foreign investment, operating in Tigray before the outbreak of war in November 2020. These firms abandoned their concessions during the fighting, and the sites have since been taken over by local mining outfits.
Over the last several months, however, the foreign investors have begun exerting efforts to regain their mining sites with the support of the Ministry of Mines and the federal government.
Sun Peak, Sekota Mining, Axum Metals, Ayiga Trade and Industry, Harvest, National Mining Corp, Tigray Resources, Newmount, Losbase and Vedas are among the dozens of large-scale mining firms that used to hold concessions in Tigray.
The TIA has suspended the issuing and renewal of all foreign mining investment licenses and concessions until lingering disputes with the federal government have been laid to rest. Last year, the Tigray Mining Bureau placed an official request with the Mines Ministry to revoke 27 licenses, citing the firms that held the concessions had failed to make any progress on their projects even before the war.
“These companies did not start operations as per their agreements. Because the Ministry did not take measures on these companies, they have become a bottleneck to the region’s and the country’s efforts to utilize its resources for development,” reads the letter.
However, some of these companies are attempting to regain access to their sites despite the uncertainty lingering over the licenses, according to regional officials.
Earlier this week, the managers of East Africa Metals (EAM) tweeted the company would be resuming operations at the Mato Bula and Das Tambuk sites in Tigray. A few months ago, Sun Peak issued a statement heralding its reentry into Tigray.
Nonetheless, Fisseha Miresa, head of the Tigray Bureau of Land and Mining, says the TIA did not approve the resumption of operations for any of the firms.
“We do not know East Africa. All 27 licenses were granted by the federal government, so it is the Ministry who knows,” he said. “They are the mandate of the federal government. We cannot give or deny them licenses but we want to sit down and talk with the federal government before those large-scale miners regain their licensing or not.”
A number of foreign individuals representing some of the 27 companies recently traveled to Tigray without permits from the TIA. Regional officials say the individuals were apprehended and detained by security forces before departing. They allege the foreigners were there to work with organized local mining groups who are operating in the sites that were previously earmarked for the large-scale firms.
Most of these sites have been occupied by local settlers and organized mining groups following the conflict, making it difficult for the TIA to free them up and re-allocate them to foreign investors.
“Since the war, new people have settled in the mining areas previously allocated to the investors. These communities have even established new towns in the areas. Now, the mining investors are requesting TIA to relocate those settlers. But that is difficult. So many households have settled there,” said a regional official who spoke to The Reporter on condition of anonymity.
The official disclosed that locals are also against the return of large-scale mining firms backed by foreign investors and provided more detail on the run-in with foreign individuals.
“They were detained for one night last week. They were two Chinese nationals. They were released the following day after officials got involved. Other Chinese citizens have also been detained. They were working with local artisanal miners, which is not allowed. Foreigners are permitted to invest, but these individuals hold no investment license,” said the official.
He alleges that Ezana Mining Development Plc, a subsidiary of the Endowment Fund for the Rehabilitation of Tigray (EFFORT), is cooperating with foreign individuals who are looking to gain access to gold illegally.
“Ezana holds several sites but it never works. It has transferred all its projects to foreign companies, maintaining some stake in them. The region does not allow foreign miners, and the local community has no interest in allowing them either, including Ezana,” said the official.
He disclosed that only former TDF combatants and local artisanal miners are granted two-year mining licenses. Locals have previously threatened to destroy machinery and equipment if large-scale miners or federally-licensed firms enter Tigray, according to the official.
Fisseha, however, denied that any foreign individuals were ever detained in Tigray.
“Nobody has been detained. We only check whether foreigners coming to Tigray have the permits to be here,” said the Bureau chief.
Sources told The Reporter that TIA officials also side with locals in their opposition to the presence of large-scale mining firms.
“The TIA has no resources to rely on since the federal government stopped disbursing the budget for Tigray,” said one source.
Officials at the Ministry of Mines and representatives of the foreign mining companies did not respond to The Reporter’s requests for comments.
According to Fisseha, the region is negotiating with federal authorities including the central bank before resuming the supply of Tigray’s gold to the coffers of the National Bank of Ethiopia (NBE). He says the central bank’s relatively low purchasing price is discouraging local mining operators and fueling a thriving contraband trade.
“Currently, more than 20 quintals of gold are produced annually from Tigray. All of it is going to contraband,” said Fisseha.
He concedes that almost all of the region’s gold mines are under the control of various interest groups.
“The illegal mining is being run largely by people from Tigray, and refugees and IDPs,” said Fisseha.
Another critical factor that has complicated the situation for foreign mining investors with ambitions in Tigray is the ambiguous and complicated ownership structures that have made it difficult to regulate them.
For instance, EAM is not directly licensed in Ethiopia but indirectly owns projects in Tigray.
A report released by EAM in December 2023 indicates its mineral property interests consist of the Harvest Property in Ethiopia, which includes the Terakimti Gold Heap Leach Project, and another project in Tanzania. The firm also has a 30 percent equity interest in Tigray Resources Incorporated Plc (TRI), which runs the Adyabo Property – Mato Bula Gold Copper Project, and the Da Tambuk Gold Project. Harvest and TRI are incorporated in Barbados, with one Ethiopian citizen holding 1 percent in each. EAM, which holds significant stakes in Harvest and TRI, is also incorporated in Barbados but listed in Canada stock exchange. Companies often register in Barbados to avoid taxes, according to sources.
The same report, however, states that the Ministry of Mines has yet to consent to EAM’s applications for mining projects in Mato Bula and Da Tambuk.
“EAM expects a decision from the government regarding the application prior to the end of the first quarter of calendar 2024,” reads the report.
It is unclear whether officials at the Ministry of Mines have given the green light. EAM’s liabilities sat at USD 5.8 million as of December 2023, according to the report.
Meanwhile, Ezana also holds stakes in Harvest and Tigray Resources Incorporated, as well as a 96 percent stake in Axum Metals. The remaining four percent is held by other EFFORT subsidiaries such as Trans and Guna.
In 2020, EAM entered agreement with Hong Kong-based Sino Union Energy Group Limited to acquire a majority ownership stake in the Harvest Project. At the time, Harvest Project was held by EAM’s wholly owned subsidiary, Tigray Ethiopia Holdings Inc (TEHI). Hence, TEHI holds a 70 percent interest in Harvest Mining PLC with Ezana Mining Development PLC.
In December 2020, the ministry wrote final notification letter to Tigray Resources Incorporated Plc. “your company failed to meet obligation to complete development work and start production for the license it took in 2017 to produce gold, copper and silver in Tigray. Failure report in five working days will result in immediate termination of the mining license,” reads the letter.
Similar letter was issued by the ministry to Harvest Mining Plc in December 2020. Harvest also failed to start production of gold and silver in Tigray, under the license it was consented in 2016. The ministry gave five days deadline.
In its January 2024 report, the Canadian Sun Peak stated ambitions to acquire a 51 percent stake in Axum Metals Share Company, which would enable it to take over the Terer and Meli gold sites. Sun Peak is also eyeing sites like Hamlo, Meda, Inda, and Angoda North.
Sources say most foreign mining licenses in Tigray are granted as joint ventures with Ezana, but because the company structures and relationships are so complicated, regional and federal officials are unable to trace the true ownership of gold project sites.
“Most of the mining areas formerly under Ezana are currently held by foreign investors. Ezana is not running any project directly. It did not benefit the community. The capital it registered when taking the projects has not been realized. Ezana transferred its projects to other companies as joint ventures and has no direct involvement in the projects. The local people are unhappy with both Ezana and the foreign investors,” said one of the sources.