Eritrea expects to have four mines in operation by 2018 producing gold, copper, zinc and potash as the African nation looks to build an industry that can kick-start its economy. Eritrea’s artisanal miners have long scratched for gold nuggets on deposits that stretch along the Red Sea, a geological formation known as the Arabian Nubian Shield, but the country currently has just one working commercial mine.
The industry is growing, however. A new gold mine, a joint venture with a Chinese firm, will start commercial production by the end of March, said Alem Kibreab, the director-general of the Department of Mines. It will be followed by a mine that will in stages produce gold, copper and zinc, which is expected to start operations by the end of 2017, then a potash mine. “In 2018, we will have four mining companies,” he said, giving one of the most detailed outlines yet for the development of the industry.
Alem said the government was looking to the nascent industry to boost economic growth in the small Horn of Africa country, which officials say has a population of 3.6 million and that has long relied heavily on remittances from Eritreans abroad for foreign exchange. The government says the threat from Ethiopia, from which it won independence in 1991 and fought a border war in 1998-2000, makes investors wary.
The African Development Bank estimates growth in 2015 was 2.1%, up from 2% a year before, but Eritrea itself does not issue figures. In mining ventures, the government gets an automatic 10% stake free and then usually takes up its right to buy 30% more.
Bisha mine in the north of Eritrea, a joint venture between Canada’s Nevsun Resources and the state mining firm ENAMCO, is the only mine now in full production. It began by producing gold in 2011, though output of that metal has since been phased out. As excavations have moved deeper, it has been producing copper and will soon mine zinc.
Based on current reserves, production will continue until around 2025, but further exploration could extend its life. Nevsun says the mine contributed $800 million to Eritrea’s coffers in its first five years of operation through taxes, royalties and return on investment.