06 March 2014 News Update

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Allana Potash opening Ethiopian mine in the hottest place on Earth

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Keeping costs low is key amid potash price slump

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Mar 6, 2014 Stephanie Findlay

A highway under constuction in Ethiopia's Danakhil depression. (Allana Potash Corp.)

A highway under construction in Ethiopia’s Danakhil depression.

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Lately, things haven’t been looking good for potash producers. Last summer, Uralkali, one of the biggest producers of the potassium fertilizer, killed its partnership with competitor Belaruskali in favour of boosting output, fuelling oversupply fears among investors and driving down prices. The situation has hardly improved since then. On Jan. 30, fourth-quarter profits at Potash Corp. of Saskatchewan, another large producer, dropped 46%, a result, said the company, of the “challenging pricing environment.”

Allana Potash Corp., the Canadian developer of a $718-million potash mine in Ethiopia, believes it can buck the trend. While other mines are shelving development projects because of the lower prices, Allana is going “full speed ahead” with its Ethiopian project, says Richard Kelertas, vice-president of corporate development at Allana. The company’s secret? Kelertas says that the mine, set to begin producing in late 2015, will have easy access to the booming Chinese and Indian markets, and much lower production costs, making it profitable despite the price slump.

Allana’s mine is located in the remote Danakhil depression, a scorching-hot salt plain where temperatures often soar above 45°C, and where potash is close to the surface. Allana will do solution mining—cheaper than the open-pit or shaft mining done by its competitors. “When you’re talking about drilling down, you have to have a big mine, and big mines have to have big dollars,” says Spencer Churchill, a Toronto-based analyst at Paradigm Capital. Now, says Churchill, “a lot of the higher-cost producers are looking more aggressively where they can expand with lower costs.”

Lower potash prices will still hurt companies like Allana—just not as much as the big producers. Meanwhile, Kelertas can’t wait to start digging in the Danakhil depression. “It’s fairly tough conditions for humans,” he says, “but there’s always a slight breeze coming off the mountains.”

http://www.canadianbusiness.com/global-report/allana-potash-ethiopia/

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UK-Based Developer to Further Develop Ethiopian Gold Project

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Exploration and development company Kefi Minerals has started a $3-million program of trenching, reverse-circulation drilling and engineering at its newly acquired Tulu Kapi gold project, 28 km east of the town of Ayra-Gulliso, in Ethiopia’s Oromia state, as a precursor to the planned mine development, currently estimated to cost $140-million.

Having attended the Investing in African Mining Indaba to discuss its development plans with key industry players, Kefi Minerals explained at the indaba that the upcoming program was being conducted to refine a December 2012 definitive feasibility study (DFS) for a three-ton-a-year gold plant planned for development in 2015.

The earlier DFS estimated Joint Ore Reserves Committee-compliant resources of 25 t inferred and indicated resources at 2.34 g/t of gold and probable reserves of 17 t at 1.82 g/t of gold.

Work undertaken by the previous owner in 2012 to compile the earlier DFS involved more than 120 000 m of drilling and capital expenditure of more than $50-million.

Kefi Minerals chairperson Harry Anagnostaras-Adams told Mining Weekly on the sidelines of the conference in February that the company had bought its 75% stake in the Tulu Kapi gold project in December.

The company paid £1.5-million in cash to East African gold exploration and development company Nyota Minerals and issued 116.67-million ordinary shares in Kefi Minerals at an agreed price of 3p a share.

Kefi Minerals has conditionally raised £4.5-million through the placement of 225-million new ordinary shares, at a price of 2p a share, to fund the cash element of the consideration. The company also has pre-emptive rights over the remaining 25% interest owned by Nyota.

“The Ethiopian government will receive, without cost, a 5% participation interest when a mining license is issued,” highlighted Anagnostaras-Adams.

He added that the Ethiopian government was keen for Kefi Minerals to expedite the financing of the project and trigger the development of the mining operation, as the project was expected to be at the development stage by this month. However, there were delays, owing to Nyota Minerals’ inability to attract the required development finance for the project.

Ethiopian Prospects

Anagnostaras-Adams pointed out that Ethiopia fell within the minerals-rich Arabian-Nubian Shield (ANS), which has high prospective concentrates of gold and copper deposits. Gold is Ethiopia’s main mineral export, with exports having risen exponentially from $5-million in 2001 to $602-million in 2012.

There are 136 companies working on 246 mining licenses in the country.

“Ethiopia possesses diverse untapped mineral resources and is actively encouraging the exploration and development of these resources. Gold miner Midroc’s Lega Dembi mine, also in Ethiopia’s Oromia state, is the country’s largest mine, with a production rate of about 135 000 oz/y,” he said.

Further, Anagnostaras-Adams noted that the government of Ethiopia had, in the last five years, implemented policies and regulations that helped to attract mining investors.

“These include the 10% reduction in income tax, which dropped from 35% to 25% in July 2013 and a reduction in gold royalty rates,” he said.

[miningweekly]

http://www.ethiopiainvestor.com/index.php?option=com_content&task=view&id=4872&Itemid=88

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Yum Eyes Ethiopian Entry as KFC Restaurants Expand Across Africa

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By Chris Kay   March 06, 2014

Yum! Brands Inc. (YUM:US), the owner of the KFC fast-food chain, said it’s looking at entering Ethiopia, Africa’s second-most populous nation, as it expands across the continent.

“Ethiopia is the one that stands out because it has 85 to 90 million people, so that’s attractive,” Bruce Layzell, Yum’s general manager of new African markets, said in a phone interview today from Johannesburg. “We’re certainly nowhere near pushing the go button, it’s still at that explore stage, to find the right partner, to see if the business model will work.”

Ethiopia’s economy grew an average of 10.3 percent from 2008 to 2012, according to the International Monetary Fund. Expansion is projected to reach 7.5 percent this year from 7 percent in 2013, the Washington-based lender said in October.

Yum last month posted fourth-quarter profit that exceeded analysts’ estimates on sales gains at its international division. The Louisville, Kentucky-based company has been expanding in emerging markets as well as boosting sales in nations including Russia and France. Yum gets about a quarter of its revenue from its international division, where sales at restaurants open at least a year rose 2 percent in the quarter. Yum has more than 40,000 restaurants worldwide.

“We don’t want to go to a country where we can only build four or five restaurants, that’s going to deliver no one success,” Layzell said. “We want to go in and build 50, 100, our business is the scale game.”

Yum operates in 13 sub-Saharan African countries, including South Africa and Nigeria, which are its largest markets in the region, he said. The company is also exploring the possibility of opening Pizza Hut stores in the region, Layzell said.

http://www.businessweek.com/news/2014-03-06/yum-eyes-ethiopian-entry-as-kfc-restaurants-expand-across-africa

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Ethiopia the 7th  biggest economy in Africa

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The CIA World Fact-book has updated Ethiopia’s GDP PPP (Purchasing Power Parity) to 118.2 billion USD for 2013 which is over 9 billion USD growth from the previous year’s.

“This is a remarkable annual growth particularly for an economy without oil, gas, or significant minerals,” the report said.

According to the report, Ethiopia’s economy leapfrogs many notable countries including Syria, Tunisia, Uzbekistan, Bulgaria, Burma, and Dominican Republic. Ethiopia is now officially the 7th biggest economy in Africa and the 69th biggest economy in the world.

Ethiopia’s GDP (Official Exchange Rate) also grew from 41.9 billion USD in 2012 to 47.3 billion USD in 2013. Lead by manufacturing and electric power grids, Ethiopia’s economy is expected to continue leapfrogging many countries in the next few years, the report added.

The report said: “Once again, the right policies outlined by the government and the ruling party are proven to be working. The credit for such sustainable high growth rate goes to all hard working public servants, specifically, to the late Premier Meles Zenawi, who was the architect of the economic reforms.”

http://www.ethpress.gov.et/herald/index.php/herald/news/6187-ethiopia-the-7th-biggest-economy-in-africa

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Dr. Tedros holds talks with Israel’s agriculture, rural dev’t Minister

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Foreign Affairs Minister, Dr. Tedros, held discussions with Israel’s Agriculture and Rural Development Minister, Yair Shamir, on Wednesday, March 5.

Dr. Tedros noted that Ethiopia and Israel had a long and strong relationship and pointed out that Ethiopia has taken lessons from the Israeli experience in the areas of micro-irrigation and water management for arid regions.

Shamir explained that his visit was in line with the new policy that his country was following, focusing on Africa. He said Israel was keen to deepen its relations with African nations.

Dr. Tedros underlined Ethiopia’s great potential and the opportunities for investment. He called upon Israeli businesses to invest in Ethiopia, drawing attention in particular to the priority areas of horticulture, floriculture, textile and garment production and agro-processing.

He also expressed the government’s commitment to provide all necessary support to encourage Israelis investors. The Israeli Minister said the Israeli government would also pave the way for Israeli businesses to invest in Ethiopia and said Israel was very willing to use its agricultural knowledge to work closely with European countries in order to find ways to invest jointly in Ethiopia.

Shamir is heading a delegation of representatives of leading Israeli companies involved in agriculture, irrigation, poultry, fisheries, agro-chemicals and large scale agriculture project integrators.

http://www.waltainfo.com/index.php/explore/12548-dr-tedros-holds-talks-with-israels-agriculture-rural-devt-minister

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Israeli agri-tech companies show investment interest

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The business-to-business meeting of investors would enable to get Israeli companies in different lines of investment

The Ministry of Agriculture discussed with its Israeli counterpart agricultural investment opportunity potentials which are open to more modern Israeli companies to make a great business out of it thereby transferring technology to the local people.

Opening the meeting here yesterday, Minister Tefera Derbew said that as the government is set to eradicate poverty and improve the lives of those engaged in agriculture, the business-to-business meeting of investors would enable to get Israeli companies in different lines of investment.

He said the agriculture and rural development policies are adopted to enable farmers to use modern technology and new agricultural practices efficiently and effectively thereby boosting production and productivity.

According to him, the policy provides a framework to boost the share of local and foreign investors in the agriculture and rural development.

“Ethiopia is a land of unique opportunity for agricultural investment. We have identified two kinds of investment opportunities, i.e., highland and surrounding areas of Addis Ababa and big states and the lowland areas of the country where there is vast arable land with sparsely populated or not inhabited by settlers,” Tefera said.

He also noted that given the high number of livestock population opportunities for the production and export of good quality meat and poultry, it is commendable for Israeli companies to boldly venture in this sector.

Israeli Agriculture and Rural Development Minster Yair Shamir on his part said that the State of Israel is a tiny country while half of it is arid and semi arid and situated in a geo-politically turbulent region. “This makes trade and cooperation with neighbours limited or non-existent. Consequently, Israel’s trading partners are remote and faraway.”

According to him, the visit made to Ethiopia is an opportunity to publicize technologies that were developed and commercialized in Israel by the agri-tech sector for the benefit of Israeli and Ethiopian farmers.

He further noted that business cooperation helps Israeli companies to better understand the characteristics and diverse needs of Ethiopian agriculture and explore ways of using this cooperation.

Israeli Ambassador Belaynesh Zevadia also said that Israeli agri-tech companies have keen interest to forge closer investment and business cooperation in Ethiopia.

She said that Israel is characterized by intensive research and innovative development system to overcome local scarcities of water and arable land or its vigilance to provide effective and measured responses to evolving domestic and foreign threats.

As to her, Ethiopia would learn a lot from the successful experiences of Israel in the agriculture sector and this could be realized via transfer of skills and capacity building training.

http://www.ethpress.gov.et/herald/index.php/herald/news/6205-israeli-agri-tech-companies-show-investement-interest

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GTP goals most likely to be met: Ministry

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The Growth and Transformation Plan(GTP) is most likely to be met within its time period said, Minister of Communications and Information Technology, and Economy and Finance Cluster Coordinator with the rank of Deputy Prime Minister, Dr. Debretsion Gebre-Michael. Efforts are under way to overcome the frequent power disruptions occurring in the different parts of the country.

In exclusive interview with Ethiopian Press Agency, the Minister said that viable achievements have been witnessed in three years implementation of GTP. Some sectors have even performing beyond what is expected, he added. He further stated that despite impediments faced in the export industry sectors, goals set in the agriculture and services are among the favourite due to be met.

Recalling that the former electric power corporation has been restructured and split into two independent entities, newly introduced reforms are under way so as to tackle power disruption and customer complaints with regard to service provision.

Indicating that taking measures against employees solely cannot be a mere remedial solution to deliver improved power supply and services, Dr. Debretsion underlined that organizational transformation is meant to ensure better service delivery. Hence, technical failures and disruption would be registered at their respective call centres and there will be no favour for service provision, added the Minister.

http://www.ethpress.gov.et/herald/index.php/herald/news/6203-gtp-goals-most-likely-to-be-met-ministry

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Nation importing raw materials for industries to alleviate shortage

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The Ministry of Industry said that Ethiopia is importing raw materials to alleviate shortage of raw material for industries.

Minister Ahmed Abtew told a press conference Tuesday that industries in the country are affected by shortage of raw material due to the increase in number and capacity of industries, he said.

Textile and leather industries are the main areas affected by shortage of raw materials.

According to Ahmed, power interruption is also affecting the development of industries. The nation is striving to solve problems related with power interruption, he added.

Though production of industrial outputs is increasing, the development does not correspond with the target set in the Growth and Transformation Plan., he added. The performance of industries and the revenue secured from the sale of industrial products does not meet the plan.

During the first half of the budget year, the country has exported only 40 per cent of the total output from the textile and leather industries because of increased local demand, the Minister said.

Ahmed also indicated that 15 new companies will start operation soon.

http://www.ethpress.gov.et/herald/index.php/herald/national-news/6211-nation-importing-raw-materials-for-industries-to-alleviate-shortage

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Ethiopia Earned US$ 80M from Leather Export during the First Half of FY 2013/14

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Ethiopia obtained US $80 million revenue from leather and leather products export during the first half of the current budget year, the Leather Industry Development Institute (LIDI) said.

Communication Director with the Institute Birhanu Sarjabo told Ethiopian News Agency that the plan was to earn as much as US $173.5 million.

The revenue obtained during the reported period has increased by US $10 million compared to the amount earned a year earlier.

The Institute is working in close collaboration with stakeholder in the industry to achieve the US $347 million earning target set for financial year.

The Institute is currently working with the Addis Ababa Technology Faculty and other foreign institutes to build capacities of Ethiopian companies. In collaboration with the Ministry of Agriculture, the Institute is also undertaking activities to raise the public’s awareness to prevent damage on hides and skin.

Around 32 companies are engaged in producing leather and leather products in Ethiopia, employing more than 15,000 citizens.

http://www.2merkato.com/news/alerts/2865-ethiopia-earned-us-80m-from-leather-export-during-the-first-half-of-fy-2013/14

<a href=”http://2merkato.disqus.com/?url=ref”>View the discussion thread.</a>
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Construction of roads linking Addis – Adama highway launched

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The construction of two road projects covering 28.1-kms that link the Addis Ababa-Adama highway with Addis Ababa in two directions has been launched, the Ethiopian Roads Authority announced.

The Authority said in a press release that the Akaki-IT Park/Goro/ and Akaki-Lebu roads are being undertaken at a cost of over 4.6 billion birr.

The 14.5-kms Akaki-IT Park (Goro) project links the Addis Ababa-Adama highway with the Eastern and North Eastern part of Addis Ababa, while the 13.6-kms Akaki- Lebu road will interconnect the road with Western and North Western Addis Ababa.

The construction of the roads ,which will have six lanes, includes the construction of six big bridges, four interchanges and a railway crossing, among others.

Some 75 per cent of the total cost for construction of the roads will be covered by the China EXIM Bank and the balance by the government .

http://www.ethpress.gov.et/herald/index.php/herald/national-news/6212-construction-of-roads-linking-addis-adama-highway-launched 

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Clearing out all  hurdles for industries to flourish

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It is a widely agreed fact that in any country’s socio-economic development, private enterprises are engines of development. From small scale enterprises to large scale industries, private enterprises have instrumental role in supporting socio-economic development.

As one can witness from history, due to the involvement of private investors, throughout the world, enormous achievements have been gained in development. In this regard, private enterprises proved to be highly influential agent for economic growth and sustenance of today’s prosperous countries.

Particularly, in an emerging economy, the role that the private sector plays is significant. It creates jobs, facilitates the creation and exchange of goods, services and innovative techniques, which in turn upgrades economic performance, fosters local, regional and global competitiveness, stimulates growth, and eventually brings about development

In Ethiopia, over the past few years, the number of private enterprises has been on the upswing. As a consequence, the country has been able to register considerable economic growth for the past consecutive years.

However, as some investors who are engaged in various investment areas claim, though the government has put in place investment friendly policies and offers various incentives, a number of bottlenecks, including some bureaucratic red tapes still remain unaddressed.

In this regard, recently a consultative meeting, which discussed the challenges that investors engaged in metal and engineering sector encountered, was organized by Metals Industry Development Institute (MIDI).

During the meeting the challenges that investors faced each day and which negatively affected their investment activities were discussed thoroughly.

According to the investors, insufficient electric power supply, repetitive interruption of power, delay in imported capital goods, unnecessary bureaucratic procedures of logistics from the Ethiopian Shipping and Logistics Service Enterprise, shortage of working capital and attitudinal problems are negatively affecting industries’ activities and their financial performance.

The participants were particularly frustrated by problems which are related with Revenues and Customs Authority, delay in imported capital goods and frequent power interruption, apart from are responsible for reduction of industries’ productivity. Besides lack of skilled manpower is challenging the sector, according to the investors.

Ethiopian Association of Basic Metals and Engineering Chairperson Aseged Mamo for his part said problems associated with excise tax, logistics, and power interruptions were deep rooted. He however, said that working together with the Association can reduce problems.

Representative of the Ethiopian Electric Power and Corporation Girma Lemma while admitting that the mentioned problems were prevalent particularly in the Dukem town, said the Corporation is putting all out efforts to solve the problems. Accordingly the Corporation has installed electric line that supplies power to Dukem and Gelan to Bishoftu towns.

The Corporation is also striving hard to meet customers’ satisfaction, Girma said, “we all work our level best to solve the problems.”

Demissie Shibiru also a participant, applauded MIDI’s relentless support to the sector adding that the consultative forum would help all parties including the Institute, investors and stakeholders to have a joint and reciprocal partnership framework.

Director General of the Institute, Workneh Delelegne said since the challenges the investment sector is facing are broad, they cannot be difficult to think of addressing them in an overnight. However, if the main actors in the sector including developmental investors, and Ethiopian Basic Metals and Engineering Association, collaborate work for a common goal the problems can be easier to identify and address, he said.

“Joining together strengthens and enhances audibility. Thus, the Metals and Engineering investors should work collaboratively and much closer than ever,’’ he underscored.

The Institute has been rendering its support to developmental investors persistently. It further strengthens its support and assists the sector in every possible ways, the Director General remarked.

http://www.ethpress.gov.et/herald/index.php/herald/development/6199-clearing-out-all-hurdles-for-industries-to-flourish

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Ethiopian, Somali institutes sign agreement

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The Ethiopian International Institute for Peace and Development (EIIPD) has established a working relationship with the Mogadishu-based Heritage Institute for Policy Studies. Both sides agreed to work on changing opinions in Somalia that are hostage to the negative memories of past history.
According to EIIPD press release The Ethiopian Herald received yesterday, the director of the Somali think tank Abdi Aynte visiting EIIPD to sign a Memorandum of Understanding (MoU) discussed with Institute staff the identification of projects the two sides would jointly engage in.
Despite the progress underway with respect to the positive relations between the two countries, Aynte said that there are elements that hold the view in Somalia.
Policy informing think-tanks should organize public policy discussion forums to popularize the positive developments in relations between the two neighborly countries with emphasis on changes that have made all the negative attributes irrelevant due to the policies by the incumbent Ethiopian government, he said.
Aynte also expressed his strong view about the value of the present constructive relationships between the two countries and proposed that the EIIPD and the Heritage Institute should jointly work to renew people discourses among the peoples on both sides that had not had the chance to publicly express their views.
“We the policy research institutes should facilitate and create an opportunity for them by organizing forums”, he added.
Speaking about the situation regarding the Al-Shabaab group, he stressed that it was alien to the Somali peoples’ interest and was engaged with international Jihadist project. Due to this reason, it has no support from the people of Somalia.
Al-Shabaab lost support after moderate groups left the group. The weak group may be moving nearer to Yemen for lack of support in Somalia coupled with the pressure from the African Union force, AMISOM, he said.
EIIPD Deputy Director on his part said that Ethiopia strives to see peaceful and stable Somalia and the government has been exerting its maximum effort to make Somalia peaceful.
Ethiopia is at the forefront of countries in mobilizing regional and international actors to engage in bringing peace and stability in Somalia since 1992, he added. (EH)

http://www.waltainfo.com/index.php/explore/12560-ethiopian-somali-institutes-sign-agreement

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Boosting green transition will improve food security, UN says

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2014 is the Year of Agriculture and Food Security in Africa

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Ensuring food security is one of the most pressing challenges in Africa, which is increasingly losing ground as a result of challenges from climate change to land degradation, the top United Nations environment official Monday said, urging a stronger emphasis on the continent’s transition to a ‘green economy.’

“From plugging into solar power in Algeria and Tunisia to investing in green funds in South Africa, diverse pathways to greener and more-inclusive economies are being pursued across the continent,” the Executive Director of the UN Environment Programme (UNEP), UN News quoted Achim Steiner, as saying in his message for Africa Environment Day. “This transition must be accelerated.”

Africa Environment Day, marked annually on 3 March, focuses this year on ‘Combating Desertification in Africa: Enhancing Agriculture and Food Security.’

The continent has lost 65 per cent of its agricultural land since 1950 due to land degradation, according to figures cited by UNEP. Up to 12 per cent of its agricultural gross domestic product (GDP) is lost due to deteriorating conditions and 135 million people are at risk of having to move from their land by 2020 due to desertification.

This year’s commemoration coincides with Wangari Maathai Day, which is dedicated to the celebration of the work and vision of Africa’s first female Nobel laureate, champion of grassroots environmental activism, and fervent defender of biodiversity.

Inspired by the Ms. Maathai and her Green Belt Movement, UNEP created the Billion Tree Campaign in 2006. The campaign surpassed its initial goal of planting one billion trees in just a few months.

“Professor Maathai showed the kind of visionary leadership that will be required to win this crucial race,” Steiner said.

He added hope that “other leaders will be inspired to pick up the baton and ensure that Africa’s rich natural resources can be conserved, and thus serve as the foundation for a sustainable future and food security for all on the continent.”

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