Eritrea welcomes foreign investment

The government of Eritrea is hoping a new mining policy and investment law will help open up this Horn of Africa country to foreign investment.

A delegation of Eritreans attended the recent convention of the Prospectors and Developers Association of Canada in Toronto under the sponsorship of Rift Resources (VSE) as a way of promoting mining opportunities back home. Alem Kibreab, head of the country’s department of mines, said his government was in the process of proclaiming its Mining Act and regulations. Although the history of mining in the country can be traced back to Egyptian times, there is currently no commercial mineral production in Eritrea. Rift, based in Toronto, is awaiting the completion of a joint-venture agreement for the Asmara concession; the junior has incorporated two Eritrean subsidiaries in anticipation of the agreement.

An independent nation since 1993, Eritrea is bounded by Djibouti, Ethiopia, Sudan and the Red Sea. It has an area of about 125,000 sq. km and a population of 3.5 million.

Occupied by the Italians from 1890 to 1941, Eritrea became a British protectorate before being federated with Ethiopia. The latter country, in defiance of a 1950 United Nations resolution, dissolved the Eritrean parliament and annexed the country, which led to armed fighting. Eritrea finally liberated itself from Ethiopia in 1991 after 30 years of war. In 1993, Eritreans voted in favor of independence in an internationally monitored referendum.

Nine national languages are spoken in the mainly Christian and Muslim country; Arabic, English and Italian are widely spoken. The capital city, Asmara, is situated inland.

As would be expected after years of fighting, the country’s infrastructure (for example, roads, ports and the railway) was devastated and a major reconstruction program has been drawn up.

Farming forms the backbone of the Eritrean economy; the government estimates that some 26% of the country’s land mass is suitable for agricultural use. In addition to mining, the government is hoping to give new life to the marine resource, energy and manufacturing sectors, and to tourism.

The chief geologist of the Geological Survey of Eritrea, Tesfamichael Kaleta, said the country’s geologic framework is recognized as being made up of Precambrian basement rocks unconformably overlain mainly by

tertiary-to-quaternary volcanic and sedimentary rocks. Current thinking has the basement rocks divided into four tectonic blocks or segments separated by tectonic boundaries.

Major mineral resources include gold, silver, copper, zinc, lead, iron, nickel and chromium. The list also includes the industrial minerals of potash, sulphur, gypsum, silica sand, feldspar, kaolin, mica and asbestos, and the building materials of granite, marble, slate and limestone. The Mining Law recognizes three types of licences: prospecting, valid for one year; exploration, valid for three years and renewable twice for 1-year periods; and mining, valid for up to 20 years or the life of the deposit (whichever is shorter) and renewable for 10-year periods. Incentives for mining companies include “low” taxes and royalties and the right to dispose of extracted minerals locally or abroad without obtaining other licences.