
My Opinion | 127991 Views | Aug 14,2021
Apr 13 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )
Takeaways:
Ethiopia's ambitious efforts to ramp up domestic coal production are falling short, with output reaching only 41pc of the targeted 1.64 million tonnes in the past eight months, creating a deficit of over 600,000tns.
The underperformance revealed the persistent structural and operational challenges in extractive industries, challenges that continue to undermine import substitution goals and economic diversification efforts. The update, disclosed two weeks ago by Mines Minister Habtamu Tegegne during a parliamentary session, casts a light on the fragility of the country's mining infrastructure.
While coal is a critical energy input, especially for cement factories, inadequate production has left plants dependent on expensive imports. The federal government's push to substitute imported coal with domestic supply has made some headway, about 64pc of the coal consumed by cement producers in the last nine months was sourced locally. But, technical constraints, poor energy content in unwashed coal, and regional instability have slowed progress.
Lemi Cement Factory’s recent opening has helped the industry, and a new plant is expected in Dire Dawa next year, potentially easing long-standing supply pressures.
According to the Minister, Ethiopia might eventually export cement, given it has about 25pc of the raw materials needed for production. Coal exploration is at an early stage, but the Geological Survey of Ethiopia has found major deposits in the Geba, Deleb-Moye, and Mush Valley basins. Around seven percent of estimated coal reserves are believed to lie in the Geba Basin, in Amhara Regional State. Officials say more detailed mapping could reveal even larger deposits and bolster future supply.
Demand for washed coal, which carries higher energy content, is surging. ET Minerals Plc built a coal-washing facility in the Dawero Zone with an investment exceeding 5.2 billion Br, employing more than 500 workers and capable of washing 150tns an hour in tests. The Ministry also granted a coal mining license last year to Sequoia Mining & Processing Plc, backed by 617 million Br in investment. According to Ministry data, 64pc of coal used by cement producers in the past nine months came from domestic sources, during which cement output reached 5.4 million tonnes.
Muger Cement is among the companies switching to washed local coal. Its CEO, Gezahegn Dechassa, disclosed that the state-owned company signed a contract with ET Minerals to source 40pc to 50pc of its coal domestically.
“It's cost-efficient,” he said.
Domestic coal has become more affordable after forex changes drove up import costs. Muger demands 140,000 tns of coal annually to make one million tonnes of cement annually and has a daily capacity of 3,000tns.
Yet local miners remain under strain. In Jimma, Oromia Region State, a miner, Ashenafi Megersa, has operation runs at less than full capacity because of scarce capital, high fuel costs, and weak demand. Cement companies often reject miners’ lab findings, citing discrepancies in energy values of up to 2,500 kilocalories.
“The selling price of white stone is 9,000 Br a vehicle. This is 11,000,” Ashenafi said. “It’s not always profitable.”
He urged the government to clear overburden stones, supply equipment, and establish washing facilities in Goro and Wolkite to help operators in the Southwestern Regional State.
The Ministry plans to ban unwashed coal in cement plants. National Cement, for instance, needs up to 1.8 million tonnes of coal a year. According to the Minister, recurring obstacles include coal quality issues, supply bottlenecks, spare-part shortages, and regional instability. He told MPs that consistent domestic production could help Ethiopia save hundreds of millions of dollars annually by cutting imports.
Mineral Industry Development Institute Director Bisrat Kebede (PhD) expects four or five more coal-washing plants to open soon.
According to Yemanebrhan Kiros, manager at Yomener Energy Auditing & Engineering Plc, cement factories use around 100tns of coal daily. Unwashed coal ranges from 1,500 to 4,000 kilocalories, while washed or imported coal can reach 6,000. Some high-grade local coal attains 5,500. He said 3,000tns of cement can be produced from 400tns of top-quality coal, stating the need to eliminate sulphates and other residues.
However, cement production has stagnated at seven million tonnes, far below the 36 million tonnes the construction sector requires. Some officials argue factories should operate at 880pc capacity to reach 20 million tonnes a year. Lemi National Cement, inaugurated by Prime Minister Abiy Ahmed (PhD), may help narrow the gap. With a daily capacity of 15,000tns, it is seen as a major addition. East African Holding, a major shareholder, has begun distribution, stabilising prices in some areas and offering relief to contractors.
Parliamentarians pressed the Ministry on poor oversight of regional mineral exploration, noting that other countries rely heavily on state enterprises. Habtamu said covering a country of 1.1 million square kilometers is difficult. He proposed a national mineral mapping initiative to attract investors and reduce wasted effort, urging lawmakers to approve funds for the project in the next budget cycle.
MPs also questioned sluggish lithium mining, which the Minister attributed to low demand in China, Ethiopia’s main buyer.
“It's very early," he told federal legislators. "The minerals haven’t been properly utilised, and the public hasn’t benefited yet.”
Ethiopia’s hopes for economic growth partly depend on boosting mining and industry. Officials believe coal washing can trim import bills, while strong gold exports bring in foreign exchange. If new coal-washing plants reach full capacity, the Ministry projects up to 300 million dollars in savings next year. Yet local miners say infrastructure, financing, and technology remain stumbling blocks. Muger Cement’s partial shift to local coal demonstrated a broader trend, but consistent supply and improved quality will be vital for full adoption.
Despite these limitations, gold exports have surged, providing a contrast to the challenges in coal mining. The Ministry disclosed 1.88 billion dollars in gold revenues from 22tns exported over eight months. The gold sector grew by 841pc compared to last year. Habtamu told MPs that if current trends continue, gold production could hit 33tns annually, citing National Bank of Ethiopia's (NBE) incentives that secured 4.3tns in one month. Three new small-scale gold miners are set to begin operations soon.
The Minister warned, however, that heavy reliance on gold leaves Ethiopia exposed to global price swings and adds little local value. Large-scale gold operators have yet to meet expectations. Midroc Gold is producing under 60pc capacity due to flooding, and Tulu Kapi in Tigray Regional State may start production in the coming months.
However, legislators questioned why 95pc of gold mining remains artisanal, and why major ventures have not delivered stronger results. They want to see more production, better oversight, and tangible gains for local communities. The ministry says many regions remain underexplored and sees national mineral mapping as a path toward unlocking resources.
Much of the country's gold is found in Proterozoic basement rock covering 18pc of the country. Tulu-Kapi and Ankore have notable reserves, and the northern greenstone belts around Terakimiti show grades as high as 16Gms a tonne. Lega Dembi and Sakaro mines remain active in the south. The East African Rift Valley hosts geothermal fields and a lower-grade deposit in Tendaho, Afar, Regional State, with drilling indicating about one gram a tonne.
Minister Habtamu disclosed that new licenses are being issued and that a new Midroc concession might start exploration in three years, potentially introducing modern methods and more efficient practices.
PUBLISHED ON
Apr 13,2025 [ VOL
26 , NO
1302]
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