Ethiopia's precious stones Featured

07 Sep 2017

 

Ministry of Mines, Petroleum and Natural Gas set to embark on integrative work with other relevant stakeholders in order to solve the bottlenecks involved in the precious stones/gemstones trade and maximize country's commercial potential and export good portfolio.

Precious stones or gemstones are naturally occurring materials that never go out of style due to their value in rarity and durability. Due to these and other factors, precious stones and gemstones are increasing in popularity as there is a rise in demand from consumers and investors.

In recent years, Ethiopia has gained considerable attention in the gemstone/ precious stone trade. Apart from Opal, a deposit of emerald and sapphire have been recently found in Seba Boru and Chella woredas in Oromia and Tigrai regions respectively.

Ministry Marketing Expert Getachew Addis, says that color stones have been found in various parts of the country. “Recently, Emerald and Sapphire (Ruby), which is also known as 'king of gem', have been found and certified by the relevant bodies. In addition to Opal, other precious stones like quartz, amazonite, granite, marble, tantalum are found in the country.”

According to Ethiopia Geological Survey's 2009 report, nine types of gemstones are found distributively in various localities across the country.

Ministry's Public Relations Expert Kiros Alemayehu for his part points out that due to its landscape and geophysical setting, Ethiopia is estimated to have huge deposit of gemstones. But, as researches are not conducted due to the fact that the project is new and the skilled manpower in that regard is limited, it is difficult to confirm that.

“However, currently, wide-ranging works and significant scientific studies are being done to identify potential areas, and assess the exact amount of precious stones deposit the country has.”

The economic benefits top quality gemstones bring to developing countries like Ethiopia - with its huge ambition of industrializing its economy and entering into middle income economy by 2025 - can be quite handy in terms of bringing in foreign revenue, creating jobs, and in general, in generating economic wealth for the country.

“We have seen countries with huge resources able to build a strong economy,” says Kiros before adding that precious stones bring huge economic benefit in terms of generating foreign currency and creating jobs. Precious stones like Opal, Emerald and Sapphire have brought in close to 8 million USD in the past few months.

Getachew for his part adds that they are valuable compared to precious metals like Gold. “One gram of top quality Sapphire and Emerald is sold up to one or two thousand USD, and some are even sold by Carats.”

In terms of job creation, Kiros indicates that small towns are immediately created in areas where these stones are founded, counting the people involved in the mining process and those businessmen that provide service to the mining communities there.

However, as any mineral, they are bound to price swing in relation to the international market and demand. The international market swings as per the discovery of new minerals, says Kiros. “We should be increasing the supply of precious stones in quantity, quality and variety in order to maintain and compensate the benefit we get from the minerals,” and the Ministry is taking that into account.

Although the economic benefit the minerals are bringing is satisfactory, it is possible to further expand them. There are a number of challenges and bottlenecks that needs to be attended in order to achieve that.

According to Kiros, one of the issues is the way the mining sector is structured or organized – more precisely, the loose nature in which the sector is decentralized to the lower level.

“When the sector devolve from Ministry to regional level, it is merged with other sectors like water and energy, and gets even loose as it reaches Woreda level, where they do not have bureaus and experts, and then at Kebele level, where we don't even have the structure to assess and prepare report like other sectors and ministries do.” This creates a problem in the Ministry's ability to provide support and facilitation, and help the sector thrive.

The supply chain of the gemstones is long, which runs from Kebele level to the National Bank, involves many actors. For Kiros, this creates complication and makes the sector vulnerable to abuse.

Another issue or bottleneck we face is not knowing the exact quantity and quality of resource deposit available. “Because it is a very capital-intensive sector, exploring for resources is even expensive to the point that large companies are aversed by the risk it involves, much less developing country,” says the expert. This opens up an opportunity for investment for local and foreign companies to enter into the sector solely or in joint venture.

Furthermore, in addition to lack of skilled manpower (geophysicists), there are also issues in relation to contraband and black market. According to Getachew, contraband is a major bottleneck that the country's precious stones trade faces. The fact that most of the mining sites are found close to border areas makes the issue of contraband a little more complicated.

Then there is the issue of black market, where these precious minerals are seen circulating widely. Kiros believe that would be almost impossible to fight it by assigning security forces in every border. “So, we should also be working on changing the mentality of the public that the right mining process is beneficial for the country.”

In addition to this, the Ministry has identified lack of market place for these precious stones as one reason for the circulation of these minerals in the black market. As a result, the Ministry has set a plan to build more than five market centers close to the mining sites in six States.

But, one thing Kiros sees as a major solution to the bottlenecks seen in the gemstone trade, and in the sector in general, is the work that will be done integratively with other relevant stakeholders.

“As the process is complicated, it will be hard for the Ministry alone to control and facilitate the mining sector, maintain the supply chain, identify potential sites for further detail study, while overseeing the sector by itself.” So, there needs to be integrative work along with other stakeholders like the security forces, the relevant bodies at federal, state and woreda level.

Most importantly, he opines that the major players and stakeholders have not only come to identify the problems, but have also reached to a common objective and common understanding to solve the bottlenecks. And this is greater move that will bring positive results in the coming years.

BY ROBEL YOHANNES

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