From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Mon Feb 01 2010 - 08:09:00 EST
Experts see Eritrea leading regional mining surge
Mon Feb 1, 2010 8:55am GMT
By Jeremy Clarke
ASMARA (Reuters) - An impending mining boom in Eritrea will challenge
oil-rich neighbours to make it easier for foreign companies to prospect
across a massive geological structure in the region rich in base metals and
gold, analysts say.
Eritrea set the government's stake in any mining project at 10 percent stake
in 2008 with an option to buy a further 30 percent, a small claim compared
to other countries in the area like Egypt which mandates a 50 percent stake
or Sudan at 60 percent, according to industry experts.
The relatively liberal mining terms have led more than a dozen foreign
companies to get licenses to explore in Eritrea which analysts expect to
accelerate dramatically in the next five years and provide a lifeline for
the impoverished economy.
Advanced projects are at Bisha, run by Canada's Nevsun Resources Ltd, with
gold production expected by the end of the year, and at Zara, run by
Australia's Chalice Gold Mines and expected to start producing a year later.
"In the next ten years other nations in the region will look at Eritrea's
mining boom and they will want in. They will relax their laws and it will
become a regional boom," Timothy Strong, Eritrea manager for British company
London Africa, told Reuters.
"If you look at the geography, Eritrea is a relatively small nation compared
to African giants Sudan and Egypt, but it has many more foreign mining
companies than the others combined. Geologically speaking, they are just as
prospective as Eritrea."
The companies are attracted to Eritrea because it sits on a patch of the
Arabian Nubian Shield, a geologic feature that stretches from Saudi Arabia
and Yemen in the east to Sudan and Egypt in the west.
PRESSURE ON THE NEIGHBOURS
Tucker Barrie, an economic geologist and an expert on the Arabian Nubian
Shield, says neighbouring countries have already taken note that foreign
companies are now prospecting nearby.
"It is not going to wash with any foreign company if Khartoum keeps asking
for 60 percent of gold mining projects. That's why even though it's 50 times
the size of Eritrea, there is only one foreign company mining there," he
said.
"However Khartoum is well aware it needs to revise its mining law. In fact,
they asked me to show them a copy of Eritrea's mining law. The bottom line
is, these are poor countries and they should take as much as they can of
their own resource, but it's a balancing act, they still need to invite
foreign companies into their country."
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