Ethiopia will finalize reforms for its mining and oil industries within the next two months, mines and petroleum minister announces. The reforms are intended to encourage more foreign investment in the areas, the minister added.

While Ethiopia has cut mining taxes for companies that seek to venture into the industry, the government is now eager to attract more foreign investment and ease the shortage of foreign currency.

Samuel Urkato, minister of mines and petroleum, said, “We are reforming all the laws, the national mining policy and the strategy that goes with that policy. These reforms include all fiscal regimes too in order to compete for global mining investments.” He insists that promoting the mining sector has become a priority.

A number of gold companies are now prospecting to invest in Ethiopia, of which Newmont Mining, a Colorado (US) based mining company with roots extending over a century, is one. The Norwegian fertilizer producer Yara International also plans to build a potash mine and a fertilizer factor in the country.

Ethiopia’s mining industry brought $3.5bn in foreign direct investment in the past five years, but the government is now determined to see a dramatic rise in this. One way to ensure this is sustaining its enormous investment in infrastructure, which is one of the factors that made Ethiopia the fastest growing economy in Africa. “Take a company working at a remote site. They shouldn’t construct roads. The government should do that. They shouldn’t work on railways. The government will provide that,” Samuel said. He also said the government plans even more incentives to motivate the industry.

The Ethiopian government has reduced the corporate tax rate for miners from 35 to 25 percent two years ago, and has recently lowered the precious metals royalty rate from 7 to 8 percent. The current law, which states that the government has a 5 percent minimum equity stake in mining projects is lower than many other Africa countries. According to Samuel, however, the government is prepared still to do more so far as incentives go. “We will see later how to improve these royalty and fiscal regimes. We will gradually improve the size of royalties,” he said.

Source: Reuters