Ethiopian Review

The Ministry of Mines and Energy (MME) on Thursday gave a briefing on a new draft law that governs trade in precious minerals to businesspeople engaged in the sector.

The bill was drafted by the MME, the Ministry of Trade and Industry (MoTI), the Revenue and Customs Authority, and the National Bank of Ethiopia. The Council of Ministers endorsed the bill two weeks ago and it is expected to be presented to Parliament next month. Andarge Bekele, legal department head with the MME, said that the new law promotes legal trade in gold, platinum, silver and gemstones such as ruby, emerald, safire and opal. “The law enables us to formalize the precious mineral trade and encourages businesspeople to engage in the sector,” Andarge said.

Andarge told The Reporter that the ministry tried to asses other countries’ mineral trade law. The country earns more than 350,000 dollars from the export of gemstones and more than 85 million dollars from gold.

According to the new law, individuals can obtain three types of licenses- precious mineral trading license, crafting license, and purifying license. Goldsmiths will be forced to buy raw gold only from the NBE. The bank would buy raw gold from gold producers cooperatives and individuals and distribute to goldsmiths. It also exports gold bars. Goldsmiths will be obliged to report the amount of gold they plan to buy from the bank and the amount of ornament they would produce in each fiscal year to the MME. They have to also report the amount and the type of product they sell at the end of the year.

So far the MoTI has been issuing the mineral trading license and it was unable to supervise the mineral transaction. Now the mandate to issue the license as well supervise the trade has been transferred to the MME.

The goldsmith shops should also stamp the cart a content of the gold, and their logo on the gold. “This would help us to trace back the manufacturer if the gold found to be an inferior product,” Andarge told The Reporter. However, some of the goldsmiths said the cost to put the logo on the gold was cumbersome. Officials of the MME said they would look into possibilities in helping them import the technology.

A senior official with the MME told The Reporter that the big gold scandal exposed last year at the NBE prompted the ministry to draft the new law. Recently, the NBE Commissioned goldsmiths to make golden rings which the bank would award to its employees. The bank placed an order for an 18-carat gold and entered into agreement with goldsmiths. The gold is reportedly worth 100,000 birr. Accordingly, the goldsmiths supplied the gold to the bank. Officials of the bank who had a bad experience with hundreds of million birr gold fraud took the gold to the geochemical laboratory of the Ethiopian Geological Survey Laboratory found in Mekanissa for inspection. And, to their dismay, the golden rings were found to be only 16 carats each. The NBE is now in row with the goldsmiths. “The new law is believed to avoid this kind of fraud,” an official with, MME told The Reporter.

Alemayehu Tegenu, Minister of the MME, told the businesspeople that the government wants businesses to prosper. “We want you to be richer but doing legal business. Individuals involved in fraud will not be tolerated. And those who are not involved in such kind of a scam can do the usual business without any fear,” Alemayehu said.

The new law levies stringent fines on those who sell inferior quality of gold and those who are engaged in illicit trade. The fine is up to 500,000 birr and a fifteen-year imprisonment. Some goldsmiths shop owners and gemstone traders complained that the fine was to high. However, officials of the MME advised the traders that the safest way was not to engage in fraud.

In a related news, the MME was revising the national mining law. Gebre-Igzabher Mekonnen, miming operations head, told The Reporter that the ministry was undertaking a study which would enable it to improve the country’s mining law. Gebra-Igzahbher said the amendments would encourage investors to engage in mineral development.

By Kaleyesus Bekele | (Reporter)