It is obvious that the mineral resource of Eritrea would play a significant role in the national economic rehabilitation activities. Regarding the potential resources, Menesey Magazine, interviewed the Minister of Energy and Mining, Mr. Tesfay Ghebreslasie for more detailed and updated information. Excerpts:   

 

 

What is the potential of mineral resources in Eritrea and what is the prospect?  

 

Although we have yet to conduct more detailed research to identify the quality, type and amount of mineral resources in Eritrea, based on the explorations carried out so far, the findings indicate that we can develop a strong mining industry. Different exploration activities that were conducted in various parts of the country during the last six or seven years confirm that Eritrea is one of the Volcanogenic Massive Sulfide (VMS) countries in the world. 

 

Where are the major areas of the country that have been or are being explored?

 

The major exploration target areas for the last six or seven years have been Dbarwa in the Southern Region; Adinfas, Embaderho, Mdrizien and Ketina in Maekel Region; Bisha and its environs in the Gash Barka Region; Awgaro and Hariena south of Bisha; and Zara, Wegrait, Melhoy, Kerkebet and Melobso in the Ansseba Region. But it should be clear that further researches needed to be conducted to enrich the findings.

 

There were also other areas which were explored for copper, zinc and gold deposits. The Southern and Northern Red Sea Regions have also been explored as major sources of raw materials for the cement industry in the country. Based on the researches conducted, we are establishing a cement factory around Gedem with a potential of producing 300,000 tones per year.  

 

A huge potential of raw materials in Tio and Gelalo sub zones for the cement industry could also enable us to establish factories producing millions of tones per year. This has been proven with the research carried out in the area.

 

Could you tell us which companies are taking part in mineral exploration activities?  

 

Many companies have been working here. Some of them are still working, but others have left. Those that found encouraging results and are continuing exploration include; Nevsun, working in Bisha and its environs; Sun Resources south of Bisha in Hambok, and its environs; Sun Ridge in Dbarwa and the environs of Asmara, and Sub Sahara Resources in Zara.

 

A Chinese company, CGM, along with the Eritrean National Mining Corporation (ENAMCO) formed Sino-Eritrea Mining Share Company also received a permit to explore minerals and has already started its work in the Awgaro area. Donia, a Chinese company, has also received a work permit to conduct exploration activities in Ketina, Southern Region, and in Weki and Defere in the Maekel Region. The Company is now making all the necessary preparations to start exploration.      

 

What is the tangible outcome these explorations explicate?

 

Based on explorations carried out so far, a large copper and zinc, along with gold and silver, deposits have been found in Bisha. The project is now ready for exploitation and while the mining activities are continuing, by conducting further research, it is expected that the potential would be larger.

 

Researches indicate that the Bisha mining site is expected to provide about 39 million ounces of minerals of which 1.06 million ounces of gold; 10 million ounces of silver; 747 million pound of copper and more than one billion pounds of zinc.   

 

For example, if we evaluate this at the current world market; today for instance, December 6, the cost of an ounce of gold is 803 dollar; for silver 14.25 dollar; for copper 6,847 and for zinc it is 2,500. So, although the value in the world market fluctuates, we could easily understand the value of the minerals we have.  What I am saying is just to help us have a general overview of the potential of mineral resources in our country.

 

Following the Bisha mining project, the focus would be on the copper potential in Dbarwa, Embaderho, Adinfas and Mdrizien. Although we need time to fully explore the potential of these areas, there is about five million ounce of high grade content of copper in Dbarwa. Similarly, the Adinfas potential is estimated to be three or four million ounces. That of Embaderho and Midrizien is also substantial and would play a significant role in the national economy.

 

Generally speaking, based on our findings, a total of 1.7 billion pound of zinc; 735 million pound of copper; 402,000 ounce of gold and 15 million ounce of silver is expected to be exploited from the above mentioned areas.

 

The Zara gold exploration activities are also becoming more encouraging. Researches indicate that the area has about 765 thousand ounces of high grade content of gold.

 

In a nutshell, the Bisha and the surroundings of Asmara’s mineral resource include copper, zinc, silver and gold. The potential and current situation of these areas is very encouraging. Thus, there is no doubt that we could establish a strong mineral extraction industry in our county.

 

Could you elaborate on the agreement signed between Eritrea and the Canadian Company, Nevsun Resources?

 

Regarding the Bisha project, we are about to start exploitation. The National Mining Corporation of Eritrea and the Bisha Mining Share Company signed an agreement on December 12 this year that would enable them to start exploitation. According to the agreement, the National Mining Corporation of Eritrea, on behalf of the State of Eritrea, will hold 40% of the shares. And the Eritrean mining proclamation states that every licensed body pays from 3.5 to 5 percent of the total cost of production to the government before hand. After a company pays all expenses, it also pays 38% tax on net income to the government. Then the government also gets a payment after all the expenses are covered based on the number of shares it holds.

 

The mining permit will be delivered soon after some questions are addressed. According to the research conducted in 2006, a capital of about 196 million dollars is required to start the Bisha mining works.      

 

 

Then, when can we expect to see the outcome of the mineral resource?   

 

According to our plan, we expected that production would start by late 2008. However, since some events deterred our progress in 2007, the production is expected for late 2009 or by the beginning of 2010. By early 2008, all the necessary preparations, building of the infrastructure are going to take place. So, all the major works will be conducted in 2008. The projects would employ about one thousand workers and would also provide an opportunity for different service rendering institutions.  

 

What significant role would the mining industry play in our country’s economy?

 

If it could not play a major role in the national economy, we would not have engaged in the mining activities. The advantage could be seen from different perspectives. First, the government gets an income of 5 percent of the total production. A tax is also paid to the government after all the production expenses are covered. In the mining sector, the government gets significant tax from the profit. Especially in the mining of gold and silver the government obtains about 38% of the profit. Moreover, our mining proclamation enables the government to have 10 percent shares outright and if deemed more benefiting, the government could buy 30 percent of the shares.      

 

With Nevsun, for example, we signed an agreement that enable us to have 40 percent share in the entire project. On the other hand, the mining industry opens a huge employment opportunity to citizens and plays significant role in encouraging foreign investors. At its final stage, if we develop the capacity of processing our raw materials here, the profit would be even greater.        

 

Specifically, what can the youth benefit from this?

 

Since the youth are the future of this country, their benefit is very clear. If we look at its immediate advantage, the youth will get ample opportunities of employment and they are the main beneficiaries of the socio-economic development of the country. The government is trying to establish a strong economic infrastructure and the youth are the main catalysts and at the same time the main beneficiaries. 

 

What is the current situation of oil and gas exploration activities in the country?

 

Since the 1960s, there were about 12 deep-digging and 11 surface digging activities conducted. Four of the deep-digging were carried out after independence. Between 1997 and 1999, an American company, Anadarko, dug three wells. However, what they found was not as expected.  A French company, Prienko also dug a well but it was not successful too. Now, we are establishing conducive ground for investors with a new strategy so as to restart the exploration works.

 

There is optimism that there is oil potential in our area, the exploration activities will continue. We cannot conclude with what we have done so far, that oil resource is not promising in Eritrea. What we are doing now is developing our promotion activities in order to attract investors. I cannot say that we have done much in our promotion activities. It is clear that the current situation with the Woyane also have negative implication. So, we have to establish an environment that interests investors despite the current no peace no war situation.

 

It was once believed that the Anadarko had found an encouraging result in their exploration and that they celebrated the occasion. What do you say about this?

 

The celebration marked the beginning of the work not the outcome. In the exploration works for oil, you succeed one out of ten. It is not disappointing that if you try two or three and fail. So, most part of the work is ahead.

 

There is a shortage in the gas supply and it is obvious that it affects the life of many people. What is the cause for that and when will it get solved?      

 

Most of our people had been using wood and animal dung as source of energy. The demand for gas rapidly rose in the cities, however. The biggest problem in the gas supply has been a shortage in transportation. The ship that we used for transporting gas is out of use now and our attempt to buy a new one was not successful. But we are working to solve it soon. Until we solve the transportation problem, we are importing gas from the Sudan using tankers. However, since there is a big difference between the supply and the demand, there is still a problem.

 

So, the lasting solution lies on buying a new ship. Trees should not be used as a source for domestic consumption of energy, however.

 

Although the price of oil rises at global level, the price here is higher. What is the reason? And do we expect a decline in the oil prices in the near future?        

 

The current price rising is due to the temporary control mechanism of oil consumption we introduced. The rise is only of gasoline and that means it creates a problem in the private vehicles. The price rise in gasoline is a result of a price reduction in kerosene and the control of unnecessary consumption.

 

But the private vehicles are facing a problem?

 

No. We also intend to save hard currency. We don’t expect the price to rise again. We are trying to make the price fixed. We are working to improve and strengthen public transportation rather than private vehicles. And this could be helpful not only for environmental reasons but also it could be economical.

 

There are some private vehicles that use diesel, which is not accessible. So, what do you think about allocating some for them? 

 

There are vehicles lacking diesel due to the new controlling mechanism we have introduced. But this is only temporary. The priority at this time is strengthening the public transportation.

 

But, still there is dissatisfaction with public transportation?   

 

The government is working diligently to develop the public transportation. However, with the rising number of passengers, we couldn’t say that there is no problem. When we compare the number of buses now and before, it is too different. The number of buses in cities and towns is now very high. We are also replacing old buses with new ones to reduce accidents.

 

The electricity price is also one of the main social problems. Some times the bill is higher than a family’s monthly salary. What is the problem?      

 

The Eritrean Electricity Authority fixes the price depending on the current oil price in the country. The government pays a lot of money to provide electricity to the villages. It pays 70-80 million Nakfa subsidy to that end. So, if the problem is to be eliminated, the national economy has to develop and national production has to increase. The Government, realizing the role of electricity in the production sector is attempting to make an affordable fixed price.

 

How are the rural electrification activities progressing?

 

We are working on three phases. The rural electrification work is in the third phase. In the near future about 62 villages would get electricity supply. In the coming three or four years another 83 villages would also get the same service. Since, electricity supply influences the installation of telecommunication services, most part of the country would get served soon.

 

Can the villagers who get electricity supply afford paying for what they consume?

 

We agree that due to the problems I mentioned above there is a rise in the price. But above all the user has to limit the consumption so as to reduce the expenses.

 

In some parts of our country the electricity supply is not daily. What is the reason and what has been done to solve it?

 

Cities like Asmara get 99 percent of supply. The location of the towns is also decisive for there are some areas where it is difficult to provide the supply. For example, if we take Afabet, although the work is now underway it is very expensive to install electricity. When you compare the expenses you make to install and the number of customers in the town it is different. So, the location of towns and cities is a big issue in the supply of electricity.

 

What are the main alternatives of energy so far identified?

 

Our situation forces us to look for options other than the oil we import. One of the main alternatives is wind energy. We have a pilot project of wind energy development in Assab and it is encouraging. In the southern region, Dekemhare and Gzgza areas, similar activities are also underway for wind projects. According to the study conducted, we can generate megawatts of energy from the wind.

 

And in areas that we believe it would take us long time to supply electricity; we encourage them to use solar energy and there are some villages using solar system. In this regard, the Ministry encourages those who take personal creativity, who upgrade traditional ovens, plant trees and so forth.  We encourage such families and also give them batteries that generate power.  

 

Furthermore, we are installing a solar water pump. This is expected to solve much of the demands in villages. Such instruments are tax free or are given priorities while imported.

 

It is really expensive to boil water using the power supply. So, it is important to use solar boiling system instead and it is a simple technology. Perhaps it could be a little bit difficult at first; up on its installation it works right. Those who can afford have already installed it and the Government encourages them.

 

Another option is developing domestic energy; preserving evaporations during hot weather so as to develop electricity. There are some areas in the Southern Red Sea Region identified for such purpose. All the necessary research has been made and we are only left with digging. It is expensive of course. In order to dig an area for an electricity supply it costs 9-10 million dollars. In Kenya the system is used as source of electricity.      

 

What do you say about the improved traditional oven that conserves heat?

 

It is not some thing new. Some improvements have been made, of course, but some people describe it as ‘smokeless’ which is wrong. It reduces the smoke but it is not smokeless. The oven keeps most of the heat inside and since the oven has a chimney, it keeps the room clean. Clearly speaking, the oven is designed to conserve the heat; so little wood is required. Generally speaking, it is economical, clean and safe compared with the old ones.    

 

So, does the government encourage families to use energy alternatives they get?

 

Definitely!

 

What final comments do you have, especially to the youth?

 

First, I would like to appreciate your Magazine for trying to cover this important and optimistic sector of mineral resources of our economy. Raising issues that concern the youth, enlightening them; informing them about the current national issue and future prospects is what the magazine should be praised for.

 

Generally I would like to reemphasize that the future of our country depends on this generation of youth. Our future is quite promising and there is nothing to worry about. In order to change this bright future into practice, we are expected to exert much effort to strengthen and keep our independence and national sovereignty.  Human beings have a mortal life. During this only chance one should not regret for not doing something. We should do something valuable. The youth are required to challenge the current situation and come out successful. If we do so, the future looks bright.

 

When I see it from this perspective, our youth are fortunate for they are in an independent country on one side and they are the ones chosen to build an independent nation on the other.