13 February 2015 Economic News Round-Up


 Yara study confirms potash mining potential in Ethiopia


yaraOslo, 13 February 2015: A feasibility study, carried out on behalf of Yara International confirms significant potential to extract potash in the Danakil depression in northeastern Ethiopia.

The independent study identified an annual production of 600,000 metric tons sulfate of potash (SOP) over 23 years from reserves (Kainite, Carnallite and Sylvinite) at Yara’s Danakil concession. The company, which aims to begin mining activities in 3Q, 2018, is now seeking equity partners to develop the project.

The reserves will be mined using solution mining technology. The brine produced at the mining sites will be evaporated utilizing high solar radiation. The harvested salts will be processed and re-crystalized to SOP. Both standard and compacted SOP will be produced.

The product will be trucked 790km to Tadjoura, Djibouti, where the project includes a product storage and handling terminal at the new port currently under construction by the Djibouti Port Authority.

Capital expenditure of the project is estimated at USD 740 million, while operating expenditure is expected to amount to USD 167/metric ton FOB Djibouti.

The combination of a unique geological structure and an extreme climate in the Danakil depression required adjustments in the production process. Yara developed new technologies to fully utilize the local advantages.

Yara’s Danakil mining project has received the backing of the Ethiopian government, which has committed to providing electric power by building a 130km long power line. The government will also construct a new lowland transportation road to support mining operations. Sustainable water availability has been confirmed through a water exploration campaign, while an environmental and social impact assessment study confirms that the future activities comply with Ethiopian environmental legislation and international guidelines and standards.

For further information, please contact:

Anders Lerstad, Investor Relations
Telephone: (+47) 24 15 72 95
Cellular: (+47) 93 42 69 54
E-mail: anders.lerstad@yara.com

Esben Tuman, Media Relations
Cellular: (+47) 90 50 84 00
E-mail: esben.tuman@yara.com
Yara delivers solutions for sustainable agriculture and the environment. Our fertilizers and crop nutrition programs help produce the food required for the growing world population. Our industrial products and solutions reduce emissions, improve air quality and support safe and efficient operations. Founded in Norway in 1905, Yara has a worldwide presence with sales to 150 countries. Safety is always our top priority.
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.



Addis Ababa Airport to be extended, new hub planned


Addis Ababa Airport to be extended, new hub planned Addis Ababa: February 13, 2015 – Ethiopia will complete expansion work on the capital’s airport in 2018 to triple the number of passengers it handles from 7 million a year.

A site will soon be selected for a new hub to deal with 10 times the number in future, a senior official said.

Bole Airport, on the edge of Addis Ababa, is home to Ethiopian Airlines, the state-owned national carrier that is ranked the largest by revenue in Africa.

Less than a decade ago, the airport handled 1 million passengers a year but that rose to 7 million in 2014. Officials expect it to climb by 18 percent a year in the next few years.

Expansion work began in September at the airport, where passengers can face delays at peak travel and transit times. China Communication Construction Company is carrying out the work at a cost of USD$300 million, due for completion by 2018.

Ethiopia, with one of the fastest growing economies in Africa, is reported to be now looking at sites for a new international airport to serve up to 70 million a year.

By comparison, Dubai Airport handled 70.5 million passengers in 2014.

“We have whittled down potential sites from eight to three, all of which are within 60 to 70 km (37 to 44 miles) from Addis Ababa,” Hailu Gebremariam, Ethiopian Airports Enterprise project manager for Bole, told Reuters.

The site would be picked within six months although construction might take eight years after that.

“Once approved, the construction is only a question of four or five years,” he said.

An official said the cost of such an airport could be USD$2.5 billion to USD$3 billion.

Ethiopian Airlines has been expanding its fleet rapidly. It now has 77 aircraft, with 44 more on order. IATA ranks the airline Africa’s biggest by revenue and profit.

As well as capturing transit passengers, the airline aims to draw more visitors to see Ethiopia’s mountain scenery and ancient churches, castles and other monuments.



It’s Time Ethiopia And Its Neighbours Took The Bull By The Horns


map_horn_of_africaVENTURES AFRICA – Africa has had its fair share of crisis, but its current developmental strides are shifting focus from the continent’s troubles to the abundant potentials and opportunities. These positive changes have been reinforced by continuing regional integration in the Eastern, Southern and Western parts of the continent. However, the countries in the Horn of Africa are still held back by age old skirmishes, which are still barriers to socio-economic cooperation. This lack of transnational partnership continues to hamper the growth and development of these countries, which have among them states languishing at the bottom of international societal indexes.

In a recent High Level Joint Commission Meeting of neighbours Ethiopia and Djibouti held in early February, the leaders of the two countries underscored the significance of enhancing bilateral cooperation in the political, economic and social sectors. Djibouti’s Prime Minister Ismail Omar Guelleh and his Ethiopian counterpart HailemariamDessalegn reiterated their commitment and determination to consolidate the existing strategic relations between the two countries and peoples in all fields of cooperation.

Ethiopia building bridges to economic prosperity

Landlocked Ethiopia is a major economic partner of Djibouti and Sudan and is reliant on both countries’ ports for imports and exports. About 85 percent of the country’s yearly oil consumption comes from Sudan via the Port of Djibouti. A protocol concerning Ethiopian access to Port Sudan was signed between the two countries in 2000 in Khartoum. They are now in the process of linking their power grids. Ethiopia has also improved relations with Somalia, a country bordered by the Indian Ocean to the east. Although Somalia is just recovering from years of civil war and insurgency by Islamist extremists, Ethiopia and its ally, Djibouti have expressed commitment to helping Mogadishu cement the peace bulding process. In contrast, Ethiopia’s dealings with its northern neighbour Eritrea are extremely tense due to an ongoing border dispute between the two countries. After the end of a 30-year war in 1991, the two countries still have not found common ground. While Ethiopia has flourished and has become one of the fastest growing economies in Africa, Eritrea’s economic fortunes have not improved. Now, Ethiopia’s fears are not about another war, but the effect that chaos in Eritrea may have on its growing economy.

Eritrea’s change may be tied to a new leader

Eritrea’s stance on issues, and the way the international community views the poverty-stricken nation, may only change with a change in leadership. In a joint communiqué released by both Guelleh and Dessalegn after the  meetings held from February 2 through 9, they condemned they perceive as a policy of continuous and deliberate destabilization pushed by Eritrean Government led by IsaiasAfwerki. They pushed for the international community to strengthen sanctions against the Eritrean state instituted because of its support for Somalia based rebel groups. Djibouti and Ethiopia’s leaders say they seek sanctions to put further pressure Eretria’s leader who has shown no signs of readiness to make changes. However, a refugee crisis, high-level defections, and recently, mutiny in the army indicate that Afwerki’s regime faces serious threats and may fall sooner rather than later.

Just as the process of change began for Ethiopia after long-time strongman, MelesZenawi, died in 2012, Afwerki’s ouster may signal the beginning of change for Eritrea.  While everyone affected by the tension between Ethiopia and Eritrea craves peace, there are many thorny issues the two nations need to sort out. One important area of disupte is the contested border town of Bademe. The town was awarded to Eritrea by the Ethiopia-Eritrea Border Commission (EEBC) though Ethiopia has not relinquished control. Ethiopia may have to let go for the sake of peace. This will exert more pressure on Afwerki who uses the perceived Ethiopian threat to justify his system of one-man rule and compulsory military conscription.

Djibouti is Ethiopia, Ethiopia is Djibouti

Apart from having a common enemy in Eritrea, Djibouti and Ethiopia have always had good relations. There have been reports of genetic linkage between the two countries, which have led to a proposal for unification of the nations. Prime Minister Ghelle last May said there was no difference between them: “We believe that Ethiopia is Djibouti and Djibouti is Ethiopia, no difference at all.” According to the Ethiopian Reporter, Djibouti proposed a unification with Ethiopia, which the latter is likely to embrace. However, the people and the governments of the two countries should be the ones to decide what kind of integration they would like to forge. The Horn of Africa could form an important economic quartet if relations with Eritrea improve. The East African Community is arguably the most important economic bloc in Africa, and its integration has fostered the economic growth of member states. Such success can be replicated in the Horn of Africa, but this requires vision, commitment, will, and most importantly, that Ethiopia settles its scores with Eritrea. Ethiopia and Djibouti may not be enthusiastic about having a larger economic bloc in the Horn of Africa, but both countries have recommitted to the decision of the Inter-Governmental Authority on Development (IGAD) Assembly of Heads of State and Government to revitalize the eight-country trade bloc, to speed up the regional integration process. It remains to be seen whether countries in the EAC, who are comfortably building Africa’s largest economic bloc would be ready for an extra commitment with IGAD.



GlaxoSmithKline considers Ethiopia as a strategic country for investment in Africa

GlaxoSmithKline considers Ethiopia as a strategic country for investment in AfricaAddis Ababa: February 12, 2015  –  Dr Allan Pamba, GlaxoSmithKline’s Vice-President, Pharmaceuticals, East Africa and Government Affairs, Africa, said on Thursday that GlaxoSmithKline (GSK) considered Ethiopia as one of the strategic countries in Africa for its growth and investment plans.

He disclosed that GSK had completed its investment plans to set up a pharmaceuticals factory in Ethiopia and partner with Addis Ababa University in the areas of pharmaceuticals, manufacturing and healthcare delivery.

Meeting with State Minister for Foreign Affairs, Dr Yinager Dessie, Dr Pamba said that Ethiopia’s economic momentum had encouraged GSK to set up a pharmaceuticals factory in the country.

He emphasized that GSK was keen to position Ethiopia as a pharmaceutical supply hub for East Africa. Dr Yinager Dessie, who welcomed GSK’s commitment to set up a pharmaceuticals factory, noted that GSK’s interest in pharmaceutical production complemented Ethiopia’s priority interest in developing the manufacturing sector.

Dr Yinager said Ethiopia was keen to help GSK better the health and well-being of the people of the country. The two sides agreed to set up a joint technical team to discuss any problems and possible solutions in order to translate GSK’s investment plans into reality.



Ethiopia eyes investment in 300 Megawatt wind farm



Thursday, 12 February 2015

Ethiopia is in negotiations to finalize a deal with a Chinese firm Dongfang Electric Corporation to construct a 120 Mega Watts (MW) wind farm in place called Ayisha near the Djibouti Border.

Miskir Negash, External Communications Director at Ethiopian Electric Power (EEP), told newBusinessEthiopia.com that with the country embarking on a green economy strategy, wind power is one key component.

“while our main focus in on hydro electricity generation, we’re also seeing other options prominent among them being wind, and as such we’ve inaugurated so far 171 MW of wind energy” stated Negash adding that Ayisha project is estimated to have a current power generation capacity of 300MW.

Ethiopia has so far managed to commission two wind power projects built by French and Chinese firms respectively in the northern and central part of the country.

The first project to be commissioned the 51 MW Adama I wind power project, 95 kms south east of ethiopia’s capital Addis Ababa, constructed jointly by Hydro China and CGOC at a cost of $117 million and completed in 2012.

85 percent of the project’s funding was from the China Export Import Bank while the rest 15 percent was solicited from local sources.

The two companies have subsequently started construction on 153 MW Adama II wind power project, with according to Negash the project 82 percent complete and set to be finished this year.

The wind farm has a budget of USD 345 million and has reached 82 percent completion rate. 85 percent of the total cost is covered by the Chinese Exim Bank, while the Ethiopian government pays for the rest.

The second project to be commissioned the 120 MW Ashegoda wind farm located in Northern part of the country was inaugurated in October 2013.

The Project costing $ 289.7 million was built by French firm Vergnet SA with concessional loans from BNP Paribas and the French Development Agency (AFD). The Ethiopian government covered 9 percent of the cost.

Germans showing interest

Negash who refused to put an exact figure on the project said funding for the project is being looked in local and international financial sources, although the Ethiopian government estimates the total 300 MW project will need $ 536.6 million1.

He also stated that power generation ranging from 120-300 MW in total is under discussion with a German firm Laphto Technology Private Limited Company (PLC), potentially breaking the mold with projects that are increasingly being dominated by Chinese firms. The Ethiopian government has aims for the Aysha wind farm project to eventually be able to generate up to 1,000 MW of wind energy eventually.

“Ethiopia is embarking on a second phase of its five year Growth and Transformation Plan (GTP) starting from late 2015, and the Aysha project, will be part of the plan” Negash stated before surmising that there are other projects in the pipeline like the 100 MW Assela wind farm project.

The GTP a brainchild of the late Ethiopian Prime Minister Meles Zenawi launched in 2010 envisages Ethiopia achieving power generation capacity of 10,000 MW or more at utmost five years time from the current 2,200 MW.

The majority will come from Hydro energy, followed by wind power, Geothermal, with small contribution from waste energy and co-generation.

The Country also hopes for the renewable energy projects, to being a much needed hard currency by way of power exports to neighboring and regional countries.

Ethiopia so far has started limited power exports to Djibouti and Sudan of 60 and 100 MW each. It has also signed power export deal with Kenya to export electricity reaching 400 MW by 2016, as well as signed a Memorandum of Understanding with South Sudan.

The country which has invested heavily in renewable projects as part of its green economy strategy hopes to partially achieve its 2025 goal of net zero carbon emission, with investments in clean, renewable energy like wind, hydro and geothermal.



Farming may be key to Ethiopia’s industrial goals


ataADDIS ABABA, Ethiopia — Ethiopia’s ambition to become a manufacturing hub may hinge on Khalid Bomba’s ability to transform small-scale farming just as much as it relies on new railways and roads.

The 46-year-old one-time investment banker is chief executive officer of Ethiopia’s Agricultural Transformation Agency. His task is to increase production from a sector that employs 85 percent of the country’s workforce, most of them tilling plots of less than five acres.

“The cheap labour for industrial manufacturing is going to come from the rural areas,” he said.

“You are not going to have people coming off the farm if productivity levels don’t increase.”

Ethiopia boasts some of the highest economic growth in Africa, at eight percent or more a year. Much of it is fuelled by a huge state infrastructure program, which includes a new railway to Djibouti’s port, a city metro in the capital and vast hydro-electric dams, all aimed at attracting industrial investment.

However, agriculture still accounts for more than 42 percent of gross domestic product, high even in Africa.

The level is about 30 percent in next-door Kenya, yet Ethiopia still has to import basic foods to feed its population of 96 million.

The challenge for Bomba and his team at the agency, which was launched in 2011, has been to work out better planting, fertilizing and harvesting techniques while ensuring adoption by farmers, whose practices have sometimes barely changed since biblical times.

One of the first areas targeted by the agency was production of tef, a grain that is the main ingredient in Ethiopia’s national dish, injera, a kind of sour flat bread. Yields of 500 kilograms per acre were half or less of other grains in Ethiopia.

“The way that tef has been planted and grown has not changed for hundreds, if not thousands, of years,” Bomba said.

“The fact of the matter is that Ethiopia’s farmers had been planting too much seed.”

Farmers typically scatter 12 to 20 kg of seed per acre, but using just 1.5 to two kg, as well as planting in rows and using a particular seed variety, increased production by 50 to 70 percent, said Bomba, who was born in Ethiopia, studied in the United States and Britain, and spent 10 years with JPMorgan investment bank.

Only two farmers were initially willing to work with the agency, but adoption of the new practices has steadily increased. More than two million farmers adopted the techniques last year, although the rest of five million that were trained were still too wary to use them.

Rising production has driven down market prices of tef to the equivalent of $75 to $95 per 100 kg from $105 to $125. Higher yields also mean farmers can switch some of their land to other crops or even grow a second crop of pulses on the same tef land.

Bomba said tef exports, which are banned to avoid domestic shortages, could start on a small scale by the end of 2015 or 2016, although safeguards would be in place to protect local supplies.

Yields of wheat and corn have also improved. Wheat production has climbed almost eight percent a year since 2006 and reached 3.9 million tonnes in 2013-14, which met more than 85 percent of domestic needs.

The transformation agency is also studying the nation’s soil to improve fertilizer use.

Promoting better practices has relied on a government network of 60,000 “extension workers”, who help with training. This reflects the strong hand of state in other areas of the economy.

The agency is also spreading ideas by mobile phone.

Just as Ethiopia’s industrial drive has drawn heavily on Asia’s experience, the transformation agency was created after studying how nations such as Malaysia and South Korea grew.

Bomba led that study when he was working at the Bill & Melinda Gates Foundation, a philanthropic organization that still partly funds the agency.

He said roads and railways are the “shiny objects” that often capture the world’s attention, “but at the end of the day the backbone of this country remains the agricultural sector.”



UPDATE 1-Africa Oil says to place new shares, take impairment charges


Feb 12, 2015  – Africa Oil said on Thursday it planned to raise $100 million in a private placement and that it would take impairment charges related to assets in Somalia and Ethiopia.

It said the private placement would be of new common shares and that Dundee Securities Europe LLP and Pareto Securities would act as joint bookrunners.

The company said it would record a non-cash impairment charge related to its assets in Puntland, Somalia, in the fourth quarter of 2014 and would refrain from any operational activity until the political situation improved.

Africa Oil also said it had notified its partners it would withdraw from its 10 percent working interest in the Adigala Block in Ethiopia and that it would take a non-cash impairment charge related to costs there as well.

On Sept. 30, intangible exploration assets related to the Puntland properties amounted to $91 million and $6 million related to the Adigala Block.

The company said the net proceeds from the private placement would be used primarily to fund ongoing appraisal and pre-development activities in the South Lokichar Basin in Kenya.



Asian Paints completes deal to acquire Ethiopia’s Kadisco


Kadisco is engaged in the manufacturing and selling of decorative paints, industrial paints, automotive paints, other coatings and adhesives in Ethiopia


asianpaintsAsian Paints, India’s leading paint manufacturer, has completed its deal to acquire 51% stake in the Ethiopia-based Paint and Adhesive Industry Share Company (Kadisco) for $18.95 million (about Rs 117.6 crore). The deal, which was first announced in October last year, is expected to further consolidate Asian Paints’ presence in the African paint market. Indian firm had acquired the stake in Kadisco Paint through its indirect subsidiary Berger International Limited (BIL), Singapore.

“BIL has completed the aforesaid acquisition for a consideration of $ 18.95 million in cash. Certain regulatory approvals are pending from the governing authorities in Ethiopia in relation to the said acquisition,” said Asian Ltd in a BSE filing on February 10, 2015.

Kadisco, one of the leading paint companies in Ethiopia, is engaged in the manufacturing and selling of decorative paints, industrial paints, automotive paints, other and in Ethiopia.



US investment into Africa has only just begun, says CEO of Invest Africa


“There is a tsunami of money coming. America is just beginning to muscle up with capital and come to Africa. And if you think the money is coming in now, it’s just begun.”

Perceived risks of investing in the continent are falling below that of global players such as China and Russia, said Invest Africa's CEO, Robert Hersov, during a panel discussion at the 2015 Africa Mining Indaba in Cape Town.

This is according to Robert Hersov, founder and CEO of Invest Africa, a platform for business leaders and investors to gain better insight into the continent and its business opportunities. During a panel discussion at the Investing in Africa Mining Indaba today, he added perceived risks of investing in the continent are falling, below that of global players such as China and Russia.

“People know the rewards are immense in Africa. But they have always perceived huge risk. And I think what has happened over the last five years – and increasingly happening – is that the perception of risk is coming down. Because as people get into the markets, invest, back people, get decent local partners, they are realising that actually the risk is way higher in Russia or China than it is in most African countries. Yet the reward here is much greater. And people are working that out.”

Also on the panel was founder of the Mara Group, Ashish J. Thakkar, who fully agreed. “I have been active on the continent for the last 18 and a half years and I have never seen so much global excitement around Africa that we are seeing here today,” he highlighted.

“When Bob Diamond and I set about Atlas Mara, the majority of our capital came from the US, and the majority of that was capital which had never before come into Africa. So you can see that there is a new wave of investor appetite. But they need the right homes to come into.”

Higher returns, lower risk

Robin Saunders, founder and managing partner of private equity firm, Clearbrook Capital Partners, said her firm started looking at the continent roughly a year ago and compares it to the California gold rush in 1848.

“You see the very large global private equity funds pouring in… and sovereign wealth funds from the Middle East and elsewhere. And everybody wants to get in on this action.”

CEO of Nigeria-based Sahara Group, Tonye Cole, noted that “Africa still seems to be the only place where you can make returns above 20%, or thereabouts, on projects”.

China’s unintentional role

There has been a general improvement in the business and regulatory environments across the continent, said Hersov. This is, in part, a result of the realisation by African governments that they are competing with each other to attract investment.

“And in some ways we have to thank the Chinese for kicking it off. Because they set the ‘gold rush’ in motion and then everybody else woke up and started pouring in.”

In August the US emphasised its commitment to trade and investment in Africa with the first ever US-Africa Leaders Summit in Washington DC. The high-profile event saw US President Barack Obama host close to 50 African leaders to discuss opportunities for better business engagement between the two regions.



Tigray designates 12,000 hct industrial zone for investment


Addis Ababa, 12 February 2015  – The Tigray Regional State Urban Development, Construction and Industry Bureau said it has designated 12,000 hectares industrial zone for investment.

Bureau Investment Business Process Owner, Goitom Gebrekidan, told WIC today that the industrial zone aimed at attracting domestic and foreign investors was prepared in 12 major towns of the regional state.

According to Goitom, the bureau is ready to provide the land at lease rates of less than 0.75 birr per square meter in some towns.

Over 450 investment projects with a combined capital of 65 billion birr have been under implementation since 1984 E.C in Tigray regional state, according to him.

The investment projects have created jobs for over 900,000 citizens, it was learnt.



Ethiopia cancels diesel import tender for March-August


SINGAPORE  –  Ethiopia has cancelled an import tender for up to 120,000 tons of diesel fuel for delivery over March to August, and may have bought it through private negotiations instead, traders said on Thursday.

Ethiopian Petroleum Supply Enterprise (EPSE) was seeking 80,000 to 120,000 tons of 500 ppm sulphur gas oil for delivery into Djibouti.

PetroChina had placed the lowest out of three offers at a $5.75 a barrel premium above Middle East quotes for the diesel cargo with a credit period of 150 days.

EPSE has likely negotiated the mini-term contract with current term supplier Vitol at similar premiums to its existing contract, a Singapore based trader said. But this could not be confirmed with either EPSE or Vitol.

EPSE has an ongoing term contract with Vitol to buy 1 million tons of gasoil for 2015 at about $4 a barrel above Middle East quotes, traders said.


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