Mining Gears Up for a Take Off

Dubbed as “a frontier for exploration in Africa” by Richard Chase, CEO of Nyota Minerals Ltd, the British minerals giant, Ethiopia is getting preeminence in the mining sector and has become a destination for big multinational mining companies. 252 companies had so far taken mining license, according to the Ministry. The sector was also able to earn 1.5 billion dollar during the first half of the growth and transformation plan. Most of these earnings came from gold, ornamental stones and tantalum.

Even though modern mining in Ethiopia is a recent phenomenon, gold has traditionally been mined from alluvial and, to a lesser extent, primary free gold since ancient times. Modern gold mining methods have only been used since the 1930’s in the Bedakesa Valley of the Adola area in Southern Ethiopia. Later exploration has resulted in the discovery of the Lega Dembi deposit and other minerals, historical records show.

The Ethiopian mining proclamation 52/1993 and mining income tax proclamation 53/1993 and other proclamations of the sector, state that the government requests 5pct free equity shares with every licensed mining company operating in the country, as well as 35pct income tax and 8pct royalties.

According to the 1962 Income Tax Act of South Africa, mining companies earning taxable income derived from mining for diamonds and other minerals and base metals are taxed on a flat rate basis, of 29%, but such companies are also liable to the secondary tax on companies at the above rate of 12.5%