Issue No. 244

On 28 July, the Office of Ethiopian Prime Minister Abiy Ahmed issued a press release announcing macro-economic measures intended to reassure global financial institutions and Addis' creditors, particularly the International Monetary Fund (IMF), the World Bank, China and the Paris Club. The stakes are high-- a USD 10.5bn support programme and an exceptional loan from the World Bank, also numbering in the billions on the cards. The latest reforms follow months of measures by the National Bank of Ethiopia seeking to curb persistent inflation and strengthen the Ethiopian Birr (ETB). Simultaneously, Tigray has been grappling with an internal political crisis increasingly bubbling above the surface. Seemingly unrelated, the national financial and regional political crises are linked by none other than gold.
 
Northern and western Ethiopia lie on the African side of the Arabian-Nubian shield, a geological region particularly rich in volcanogenic massive sulphide ore deposits, including gold, copper, zinc and other strategic metals. Unlike Sudan and Eritrea, Ethiopia's subsoil remains under-exploited at the industrial level, but appetites are growing, and many foreign companies appear interested in Ethiopia's resources. Much of this is just hype, though, with most licenses granted explanatory only-- most international companies will never drill or mine in Ethiopia.
 
Similar to Eritrea, these companies are listed on Western stock exchanges, including those in Toronto, New York, and London. They profit by announcing spectacular discoveries, veins or investments, with their shares subsequently rocketing. That's what the mining industry is all about. Sun Peak Metals Corp, for example, made a lot of noise about reopening the Shire sites after the Tigray war, but no actual progress has been made. One Tigrayan miner said that the "Canadian geologists come to the concessions to take a few pictures for the shareholders, then leave again." In the same vein of media hype, the press and social networks were abuzz in May with the news that Emirati companies were preparing to exploit the Tigray mines. In fact, it was only a question of acquiring shares in a Canadian exploration company, not an operating company. Once again, it was another publicity stunt intended to raise share prices.
 
Ethiopian gold is still predominantly carried out by artisanal or small-scale miners. Large-scale projects that go on to the exploitation stage can be counted on the fingers of one hand and are generally carried out as a joint venture with an Ethiopian company. Among these, Ezana Mining Development PLC has the lion's share.
 
Ezana is a subsidiary of the Endowment Fund for the Rehabilitation of Tigray (EFFORT), the conglomerate that has accompanied Ethiopia's development since 1995, and has been historically tied to the former ruling Tigray People's Liberation Front (TPLF). Its director, Fisseha Meresa is also in charge of the Tigray Mining Bureau, which oversees the official licensing process-- raising serious questions about potential conflicts of interest. Perhaps unsurprisingly, Ezana has established a mining monopoly, not only in Tigray but in other regions as well, draining gold to the National Bank of Ethiopia, including from small-scale operations. Over the years, some employees, and particularly managers, have regarded nugget picking as a prebend and reaped enormous personal profits. To say there has been an evaporation of the gold would be an understatement.
 
With the change of federal government in 2018, Ezana might have fallen from grace, but with most of the employees of the Ethiopian Ministry of Mines having been trained with the company, little has changed. Following the war in Tigray that ended in November 2022 and international pressure, however, the tide is turning against Ezana Mining. In the process of restoring compliance, the National Bank of Ethiopia demanded greater transparency and bullion delivery in November 2023. Fisseha Meresa temporarily disappeared soon after, and as if by magic, several tons of gold suddenly reappeared. One inside source joked that either they were keeping the gold for personal use or they'd done an excellent job in a month!
 
To offset these misappropriations, bypass Ezana and replenish its gold stocks, the National Bank of Ethiopia announced that it would raise the price at which it buys gold from small producers. This is part of the tranche of measures being implemented to reassure the IMF. Until now, the Bank has charged a flat rate of 35% above the international market price for gold. From 6 May 2024, prices have been set according to the quantity of gold supplied, with tiers at 150g (still 35% above the market price), 1kg (52%) and 5kg (60%). This measure is intended to stimulate production and encourage groups of small producers to reach the crucial 5kg threshold and thus compete with Ezana. The Gambella authorities have already announced record production, which will be sent directly to the National Bank.
 
The Tigray Interim Administration (TIA) is more than aware of the problem, which is why it has suspended all licenses and shut down all formal mining sites in Tigray. With the region's mining still one of the most coveted in the Horn of Africa, the TIA chaired by Getachew Reda is seeking to pass mining legislation before the fait accompli sets in. If Tigray is the new frontier of mining, it is critical that it does not become the Wild West.
 
But the industrial problem is interwoven with both personal quarrels and factional wars. The TIA is a somewhat fractious coalition of both TPLF and non-TPLF figures, who are increasingly finding themselves at odds, placing Getachew in a precarious position. When moderate reformers seek to reform the highly vested mining sector, they attack the personal interests of influential TPLF members, which has political consequences. After a particularly contentious recent meeting of the TPLF's Central Committee, it has become clear that broader internal party conflicts can no longer be concealed.
 
The mining itself is also proving controversial, with artisanal miners having died in recent months, notably in the Hitsats mine near Shire, and demobilised Tigray Defence Force (TDF) soldiers implicated in illicit extraction. These former TDF soldiers oppose the old military guard that controls the regional gold trade and have tried to block the TIA. These young former TDF soldiers, who are still without support, are demanding their due, both materially and morally, from the region's mines. It is long overdue to regularise their situation and make space within Tigray's mining industry for all.
 
Diamonds may be eternal and gold incorruptible, but people must know how to renew themselves in a changing world.

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Dr. Charlotte Touati, affiliate researcher with the IRSB, Christian apocryphal literature and early Christianity, Faculty of Theology and Religious Studies, University of Lausanne, Switzerland