30 March 2015 Business News Briefs

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Ethiopia Plans to Introduce Secondary Bond Markets Next Tax Year

bloomberg(Bloomberg) — Ethiopia will develop a secondary market in government and corporate bonds next fiscal year to expand the country’s fundraising options, a central bank official said.

The National Bank of Ethiopia will create the market in the year ending July 7, 2016, Yohannes Ayalew, vice governor of monetary stability, said in an interview Sunday in Addis Ababa, the capital. Ethiopia, which has capital controls and no stock exchange, sold $1 billion of Eurobonds for the first time in December.

“Rather than resorting to central bank borrowing the government can use this instrument to finance most of its” requirements, he said in an interview Sunday. “The equally important reason is corporations and new investments can get alternative means of issuing bonds and financing their needs.”

Ethiopia doesn’t plan other significant monetary policy changes, Yohannes said.

http://www.bloomberg.com/news/articles/2015-03-29/ethiopia-plans-to-introduce-secondary-bond-markets-next-tax-year

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Dr. Tedros meets a delegation led by Ambassador Gil Hajkel

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Dr. Tedros meets a delegation led by Ambassador Gil HajkelAddis Ababa: March 28, 2015 –
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Foreign Minister Dr. Tedros met a delegation led by Ambassador Gil Hajkel, Head of Israeli Agency for International Development Cooperation, at his office.

Dr. Tedros welcomed the delegation and underlined the excellent relation this remained a priority for the next Growth and Transformation Plan (GTP2) to be launched later this year. He praised the training given by Israel to Ethiopians who are engaged in the agriculture sector.

He said besides empowering them with important skills, it also provided a change in the mind set of the trainees encouraging them to transform challenging conditions into opportunities. Ambassador Hajkel also emphasized the long standing cooperation between the two countries and praised the increasing development cooperation between them.

He highlighted the benefits that MASHAV development cooperation training offered to trainees in Ethiopia, adding value and productivity for cash crops they produce. Dr. Tedros and Ambassador Hajkel also discussed further strengthening of development cooperation between Ethiopia and Israel.

http://www.fanabc.com/english/index.php/news/item/2575-dr-tedros-meets-a-delegation-led-by-ambassador-gil-hajkel

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 Ethiopia eyes gas production, exports by 2017 – PM

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Ethiopia expects to start producing and exporting natural gas from under-developed reserves in its southeast by 2017, Prime Minister Hailemariam Desalegn said on Friday.

Several firms have already acquired licenses to explore more than 40 blocks throughout Ethiopia in the past four years, the vast majority of them in the southeastern Somali Region.

“Studies show the existence of natural gas reserves in several places, and they will all be gradually developed,” Hailemariam told a press conference in the Ethiopian capital.

Officials from the mines ministry say the Calub and Hilala fields in the Ogaden Basin have deposits of 4.7 trillion cubic feet of gas and 13.6 million barrels of associated liquids, both discovered in the 1970s but not yet exploited.

“For the time being, a Chinese firm is carrying out activities on the Calub and Hilala reserves,” Hailemariam said. “In the next two years, we plan to start exporting and using the natural gas from these areas.”

Hailemariam did not give further details, but China’s GCL-Poly Petroleum Investments signed a production sharing deal with Ethiopia’s mines ministry in late 2013 to develop both fields.

The prime minister was speaking a month after the Horn of Africa country signed an agreement with neighbouring Djibouti to construct a pipeline stretching from the same region to the Red Sea state’s port.

“GCL-Poly Petroleum Investments will fund the pipeline that will transport the Ethiopia gas to Djibouti for a total cost of more than $4 billion, of which $3 billion will be invested in the Djibouti section,” said Mohamed Nour, a communications adviser at Djibouti’s energy ministry.

A number of firms have filed requests to explore oil and gas in the country’s Abay, Mekelle, Metemma, Gambela and the Southern Rift sedimentary basins in addition to the Ogaden, including Tullow Oil and SouthWest Energy.

Ethiopia’s Somali Region used to be plagued by security concerns, with the Ogaden National Liberation Front (ONLF) waging a low-key struggle for independence.

Analysts say the rebels have been severely weakened over the years by government forces, but warn they can still hamper development with hit-and-run attacks.

http://nazret.com/blog/index.php/2015/03/28/ethiopia-eyes-gas-production-exports

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Ethiopian to lease eight Dreamliners from Boeing

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dreamlinerExecutives of Ethiopian Airlines are in talks with bigwigs of Boeing to lease six to eight Boeing 787-8 early build Dreamliner aircraft. 

These aircraft were manufactured by the American airframer, Boeing, in the early days of production of Dreamliner aircraft. The early build aircraft are heavier than those that are being assembled now and have shorter range because of their weight.

The aircraft are currently parked at Boeing’s manufacturing plant in Everett, near Seattle, Washington state.  The original customers were said to have balked because the aircraft were too heavy, limiting their range.

Ethiopian Airlines Group CEO Tewolde Gebremarim, told The Reporter that his airline is discussing with Boeing to lease about 6-8 early build B787 Dreamliners. “We want to lease them but we will not purchase them. The issue is still under discussion,” Tewolde said.

Ethiopia’s national flag carrier is the third airline in the world to own and operate Dreamliner next to All Nippon Airways and Japan Airlines in August 2012. Currently, Ethiopian operates 11 Dreamliner aircraft making it the largest Dreamliner fleet operator in Africa.

Tewolde said that B787 was a very good airplane. “It is fuel efficient and it is very comfortable,” Tewolde told The Reporter. He adds, “It is our core fleet and very popular among our customer. We have more load factor on the routes we operate Dreamliners.”

Though Ethiopian needs to order for more Dreamliners it was unable find slot at Boeing as the US aircraft manufacturer is fully booked. Subsequently, the airline leased three B787 from ILFC. The first one was delivered to the airline last month and the other two will arrive in Addis Ababa in the coming weeks.

Boeing has been trying to sell the overweight aircraft around half the cost of the catalogue price of 218 million dollars in order to free them from the drag on Boeing’s balance sheet. Another African carrier, Air Austral, is also said to be in discussion with Boeing to buy two early build 787-8 Dreamliners.

Ethiopian fleet is dominated by Boeing aircraft. Currently, the national flag carrier operates B787, B777, B767, B7575, B737, MD11 and Bombardier Q400 aircraft. For the first time in its long history Ethiopian placed orders for Airbus aircraft in 2009. Ethiopian ordered 14 A350-900, Airbus’ new jetliner. Delivery of these aircraft would begin next year.

Currently, Ethiopian is evaluating the B777x and Airbus A350-1000. The airline operates 81 aircraft and plans to boost the number to 140 by 2025.

Ethiopian is scaling up its operation by opening up more destinations and this has prompted the airline to acquire more jetliners. At the moment the airline has 43 aircraft on its order book.

http://www.thereporterethiopia.com/index.php/news-headlines/item/3335-ethiopian-to-lease-eight-dreamliners-from-boeing

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Ethiopia: Allana Potash Sold to Israel Chemicals

By Cecilia Jamasmie,

colluli-allana1

CANADIAN junior miner Allana Potash Corp. (TSX:AAA) has agreed to be acquired by fertilizer giant Israel Chemicals Ltd. (ICL) after it failed to raise the capital it needed to remain as a standalone company.

The market reacted positively to the news as the stock was trading almost 44% higher at 47.5 Canadian cents in Toronto at 11:18 am

The $109.50 million takeover(or Cdn$137M), aims to speed up development of Allana’s promising Danakil project in northeast Ethiopia. 

“Considering the generally challenging financial environment for junior mining companies, we would expect the short and long-term financing needs of Allana to include potentially significant dilution to Allana’s current shareholders,” Allana chief executive, Farhad Abasov, said in the statement.

ICL already owns 16.4% of Allana’s shares and the deal is expected to close by August 17.

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President and CEO of Allana Resources, Farhad Abasov once said:

Obviously it would make commercial sense [for Allana] to transport the material from Ethiopia across the border to Eritrea. It would be ideal if this could overcome any political tensions between the two countries [than exporting it through Djibouti, a thousand kilometer away] …

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The Short Pain For Allana Potash Shareholders

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Summary

> Israel Chemicals makes an offer to acquire all shares of Allana Potash at a 40% premium.
> As it didn’t look like Allana was able to secure construction financing anytime soon, this might be the best way out for Allana shareholders.
> I will either sell on the open market or tender my shares to Israel Chemicals and reinvest the cash elsewhere.

How it got into trouble

Allana Potash (OTCPK:ALLRF) has announced it has reached an agreement with major shareholder Israel Chemicals (NYSE:ICL), whereby the latter will acquire all outstanding shares of Allana Potash for C$0.50 per share in cash (with the exception of Liberty Metals and Mining which elected to receive the equivalent of that amount in shares of Israel Chemicals).

Securing financing for Danakhil took too long

In my previous PRO-article on Allana Potash last May, I was quite bullish on the company as the economics of its potash project looked extremely appealing. However, as the company clearly seemed to have been struggling to secure funding for the project (keep in mind the feasibility study was filed in March of 2013), I had to become more careful as something clearly wasn’t working out the way I expected it to be. In my most recent update on Allana, I was already getting impatient as a financing deal should have been reached shortly after the feasibility study. The golden rule in the mining sector is the longer it takes to secure funding, the more shareholders should be worried.

Is the offer fair?

In hindsight, this seems to be completely true. The offer of C$0.50 (US$0.40) per share might be a 50% premium to the last closing price, but the total value of US$130M is quite low compared to the official NPV of the project. The total value of the SOP operation in the most recent economic study was $1.6B and the MOP production had a net present value of $1.3B for a combined NPV of $2.9B.

This means the company gets sold for less than 5% of the Net Present Value of Danakhil. Granted, if Allana would have developed the projects by itself the dilution would have been sky high, but paying 4.5 cents on the dollar is quite low and it does look like Israel Chemicals is getting a very nice deal here.

I’m a little bit surprised the management is supporting a deal at this level and it might indicate it wasn’t even close to signing a financing deal to develop the project by itself. If that’s indeed the case, selling the company to Israel Chemicals might have been the best decision.

Investment thesis

It has been more than two years since the feasibility study on the Danakhil potash project has been filed and no substantial progress has been made. I consider the takeover offer (at a premium of approximately 40% compared to the share price when I wrote my first article) from Israel Chemicals to be a good way to get out of Allana and I will either tender my shares to Israel Chemicals or I will sell them on the open market and deploy the cash elsewhere.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: The Short Pain For Allana Potash Shareholders

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Eritrean Rebels Warn Australian Firm Exploring Potash

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AN ERITREAN rebel group on Saturday warned an Australian mines firm against potash, gas and other natural resource exploration in the Red Sea’s nation.

The Red Sea Afar Democratic Organisation (RSADO) rebel group accused the Australian South Boulder Mines Ltd of partnering with the Eritrean government to illegally exploit resources of the Afar’s region of Danakil, stressing it caused environmental damage on their traditional homeland.

The project “is forcibly removing the indigenous Afar community in Eritrea from their homeland and caused a devastating impact because their economic, social and cultural survival is deeply linked to their traditional land,” said a statement issued by a special committee delegated by RSADO to investigate the alleged humanitarian situation caused by South Boulder Mines.

“For the Red Sea Afar People, land is central to their cultural and social well-being,” the statement added.

The rebel group warned the company to stop its economic partnerships with the Eritrean government and leave the Afar Region (Dankalia) immediately.

Otherwise, the group threatened to launch retaliation attacks against the foreign company.

“Failure to refuse or ignore our call will result in detrimental action against your Project,”
the rebels said in a statement also copied to Paul Donaldson, Chief Executive Officer and Managing Director of the Australian company in Eritrea.

The rebels said some foreign multinational corporations violate sanctions by the United Nations and the African Union on the Eritrean regime and sign mining exploration agreements with Asmara government which they accused of “systematically killing its people unlawfully and arbitrarily”.

They further accused the South Boulder Mines Company of disrespect for human rights laws and disgraces to the UNSC, AU, EU resolutions and the UN Universal Declaration of Human Rights, International Covenant on Economic, Social and Cultural Rights as well as the UN Declaration on the Rights of Indigenous Peoples.

In the past, RSADO has routinely alleged victories against government army in an on and off cross-border attacks it launches from Ethiopian borders where it operates.

But, Asmara repeatedly dismissed those allegations further accusing its long-time arch-foe Ethiopia of harbouring and supporting the exiled rebels.

http://www.tesfanews.net/ethiopia-allana-potash-sold-to-israel-chemicals/

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Business tycoon welcomes planned Ethio-Egypt industrial zone

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A major Egyptian electric industries tycoon has welcomed the plans by Egypt and Ethiopia to discuss a common industrial zone, stressing that the Ethiopian market is “very promising” for Egyptian products.

Ahmed al-Sewedy, CEO at El Sewedy Electric, whose company runs two giant plants in Addis Ababa, said that an Ethio-Egypt industrial zone will be on the agenda during future meetings by the joint cooperation committee announced during President Abdel Fattah al-Sisi’s visit to Ethiopia on Tuesday.

He praised Egyptian President Abdel Fattah al-Sisi and Ethiopian Prime Minister Hailemariam Desalegn for the “enthusiasm they both exhibited concerning the idea.”
When opened, the industrial zone will be beneficial to the Egyptian economy, since it would “rely on Egyptian production in most of its components,” according to Sewedy.

He said that such a project would provide an opportunity for the Egyptian workforce, noting that 30 percent of the staff at his two factories in Addis Ababa are Egyptian.
According to Sewedy, the absence of a seaport in Ethiopia raises the price of imports, as the closest port to the country lies in Djibouti, 1,000 kilometers away from the Ethiopian capital.

http://www.waltainfo.com/index.php?option=com_content&view=article&id=18368:business-tycoon-welcomes-planned-ethio-egypt-industrial-zone&catid=52:national-news&Itemid=291

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Bangladesh, Ethiopia seek ‘higher-level’ relations

State minister for foreign affairs of this African country Berhane Gebre-Christos told his counterpart Md Shahriar Alam that his country put “great emphasis” to its relations with Bangladesh.

They met on the sidelines of the Women in Parliaments (WIP) Global Forum summit in the Ethiopian capital Addis Ababa, the foreign ministry said on Thursday.

Though there is no significant movement in the “warm” relations at present, Addis Ababa helps Bangladesh to step up its engagement with African countries, as it hosts the African Union headquarters.

Bangladesh has already initiated a process to open its mission in Addis Ababa.

Alam told his counterpart that the opening of an embassy would give “greater importance to increase its engagement with Africa”.

Ethiopia depends heavily on agriculture and is known as one of Africa’s fastest growing non-oil economies.  The country is seen as a key US ally.

The two junior ministers expressed “satisfaction” at the existing “warm” relationship and said this tie “must be complemented by more trade and investment between the countries”.

They felt enormous potentials remained untapped.

Both sides are working on reaching an agreement to hold regular foreign office consultations where a whole range of bilateral issues will be discussed.

They also agreed on the need of high-level visits between the two countries.

State minister Alam said both countries could work together to “maximise” benefits in different sectors such as hydropower, electricity, textiles, air connectivity, leather, and meat processing.

He suggested the signing of a ‘Trade and Investment Promotion and Protection Agreement’ to enhance bilateral trade and investment.

Ethiopian State Minister for Trade had in an earlier meeting showed interest in sending a high-level trade delegation in Dhaka soon to explore business potentials.

http://bdnews24.com/bangladesh/2015/03/27/bangladesh-ethiopia-seek-higher-level-relations

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Executive Committee discuss inputs, grounds and goals for the second GTP

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Addis Ababa, 29 March 2015 –

The Executive Committee of Ethiopian People’s Revolutionary Democratic Front (EPRDF) has discussed on the major grounds, inputs and goals of the country’s second Growth and Transformation Plan.

According to a press release the Office of EPRDF Council sent to WIC,  the Executive committee has evaluated the past four years’ performance of the country’s  GTP that is taken as grounds/inputs  for designing the second GTP.

The Executive Committee has ascertained that the performance was effective in realizing the benefits of the majority of the Ethiopian people in economy, infrastructure, social development, good governance and capacity building.

It also indicated that there was a remarkable public mobilization and participation that could serve as input for the Country’s second Growth and Transformation Plan and in realizing the efforts exerted to ensure good governance in the country.

Despite the plan to realize 11.2 per cent every year, Ethiopia has registered an average growth of 10.1 in the past four years, the press release indicated, adding that the growth is so significant compared to the 5 percent economic growth in Sub Saharan countries.

The Executive Committee has also passed the observed successes, strengths, weakness and shortcomings in the past four years’ of the first Growth and Transformation Plan to be taken as inputs for the second GTP.

http://www.waltainfo.com/index.php?option=com_content&view=article&id=18395:executive-committee-discuss-inputs-grounds-and-goals-for-the-second-gtp&catid=71:editors-pick&Itemid=396

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