The National Bank of Ethiopia (NBE) and the Ministry of Mines (MoM) are in works to revise the premium price for artisanal gold purchase, which would see the current 35 percent premium double upon implementation.
Regional officials confirmed that Chinese citizens are involved in the artisanal mining in Benishangul Gumuz region, which was once a major source of hard currency from traditionally mined gold; which unfortunately is on a steep decline in the current budget year.
In a bid to combat the issue the regional administration has expressed its commitment to tackle the involvement of foreigners and the gold contraband.
In his latest interview with Capital, Takele Uma, Minister of Mines, said that the two government bodies have revised the new adjustment which will be ratified in the near future for application.
“We have revised the rate and generally agreed on the new premium price but the issue has a connection with the macroeconomic condition of the country. Due to that, the macroeconomic committee will conduct necessary evaluations to make it effective as soon as possible,” he said.
As part of motivating the gold suppliers, the two bodies proposed to make the premium to be more than 85 percent higher against the international market price, which is now 35 percent.
Contraband and the involvement of foreign citizens has become a critical challenge for the precious metal market that is direly needed at the central bank in the current budget year.
The Minister said that adjusting the premium is enough in addition to responsible government bodies properly regulating the problem on the ground.
To tackle the challenge a delegation led by Takele has extensively looked into the matter with the Benishangul Gumuz region leaders, as the region has now become a notorious gold contraband stronghold.
At the discussion, Kamil Hamed, Head of Mining Recourse Development Bureau of Benishangul Gumuz region, confirmed that there are Chinese that are working with local artisanal.
The Bureau Head, who was recently appointed to the position, said that the artisanal claim that they hire the foreigners to support their mining operation.
However, he confirmed that there is confusion with regards to the involvement of foreigners at the traditional mining areas, “they are even using very hazardous chemicals, which we are not familiar with, to mine the gold.”
Experts who closely follow the case said that the Chinese citizens who illegally invaded the area are involved on the contraband businesses with routes up to Somaliland in order to smuggle the precious metal out of the country.
Recently, the Ministry of Mines disclosed that in collaboration with security apparatus it has taken measures on foreigners that were involved on the illegal gold trade.
During the latest meeting chaired by Ashadli Hassan, President of Benishangul Gumuz region, comprising also of federal government and regional officials, discussions on how the illegal gold trade in the region should be alleviated was looked into in addition to how best artisans can supply the gold to the central bank as per the country law.
Gold supply to NBE has suddenly dropped in the current budget year which affects the hard currency earnings from the sector. In the past two years, gold was one of the top three commodities as sources of export earnings for the country.
At the discussion, Million Mathewos, State Minister of Mines, underlined that if the current illegal behavior continues it would damage the country’s economy, “we have to halt the contraband in a coordinated manner and as soon as possible.”
“Foreigners that are present at the mining areas are involved on the illegal chain, so without further discussion we have to get in to action and take them out from the mining area and the illegal chain as well,” Million further stressed.
At the meeting it has been stated that artisanal gold coming from Gambella and South West Ethiopia regions to NBE is returning back on its former course, while the supply from Benishangul Gumuz has plummeted to almost nil.
The State Minister said that besides taking measures on illegally presented foreigners, the regional administration has also move forward to control the artisanal associations.
“The regional administration should revoke the license of the associations which do not supply their product to the central bank,” he added.
“As we give a production obligation for large scale miners, artisanal miners need to have commitment to supply a given amount of gold for the central government in a given period,” Takele said adding that some of the errors in the mining sector will be answered by the newly proposed proclamation that has already been sent to the Councils of Ministers.
He remained that in Benishangul Gumuz region there are 476 artisanal associations licensed by the region. Meanwhile the regional administration does not give responsibility to the artisanal to come up with a given amount of the product.
“It must be corrected,” he underlined.
Ashadli said that high premium price that is given for artisanal gold miners against the international rate is sufficient to encourage the supply of the product to the central bank but more needs to be done. He added that the current gold suppliers, who buy the product from miners but in the end do not sale to the NBE, must be excluded from business since they are the major ones responsible for the smuggling.
“We have to form new associations that involve artisanal miners on the supply of the precious metal for the central bank,” he underscored.
At the meeting it was also stated that the Commercial Bank of Ethiopia (CBE) branch at the area, which represents NBE was also involved in the illegal activity.
Kamil said that the CBE branch officers were part of the sabotage.
“They systematically discourage suppliers who want to follow the legal procedure and sale their product for the government,” he said.
“The branch tells suppliers that it does not have sufficient cash to pay for the gold, due to that a legal supplier is forced to go to contrabandists. However the same branch provides huge sum for contrabandists for their illegal trading,” he explained.
According to regional officials, Sudanese nationals that cross the border are also working with local artisanal.
“The Sudanese are those who introduced small scale machines like crashers to mine the product, taking their share or payment in gold, which is one of the reasons for the reduction of gold supply,” he further elaborated.
The regional President said that a task force led by him has been formed to tackle the illegal trade. He expressed his regional administration’s commitment to solving the problem. He proposed that as part of tackling the contraband, the central bank shall facilitate a condition to buy the product at the site from artisanal miners directly rather than taking the precious product from suppliers.
“Expanding trading branches at mining sites or the surrounding shall help the traditional miners to sale their gold immediately and get their payment; due to that nearby branches would be part of the solution,” he said.