Limestone Resource Potential in Ethiopia

INVESTMENT OPPORTUNITIES IN LIMESTONE RESOURCES DEVELOPMENT OF ETHIOPIA

INTRODUCTION Limestone rocks are sedimentary rocks that are made from the mineral calcite (calcium carbonate, CaCO3) which is formed from the beds of evaporated seas and lakes and from sea animal shells. Limestone is a very common sedimentary rock of biochemical origin. Sometimes it is composed of almost pure calcite, but most limestones contain lots of other minerals and sand and they are called dirty limestones. The various minerals that make up a limestone rock affect its colors and shadings. Limestones are available in colors such as blue, shades of pink, yellow, brown, gray and red (Fig 1).

Fig 2 Massive, light yellow limestone deposit (Upper Muger valley, Central Shewa.

Travertine is a banded, compact variety of limestone formed along streams, particularly where there are waterfalls and around hot or cold springs. Calcium carbonate is deposited where evaporation of the water leaves a solution that is supersaturated with chemical constituents of calcite. Tufa, a porous or cellular variety of travertine, is formed near waterfalls. Coquina is a poorly consolidated limestone composed of pieces of coral or shells. Limestone was most popular in the late 19th and early 20th centuries. It was also a very popular building block in the Middle ages since it is hard, durable, and commonly occurs in easily accessible surface exposures. Many medieval churches and castles in Europe are made of limestone. It has also become common in Ethiopia to see buildings made from limestone(Fig 3).

Fig 1 Different colored beds of Hakim Gara Limestone, Harar (National Mining Quarry).

Because of impurities, such as clay, sand, organic remains, iron oxide and other materials, many limestones exhibit different colors, especially on weathered surfaces. Limestone may be crystalline, clastic, granular or massive (Fig 2), depending on the process of formation. Crystals of calcite, quartz, dolomite or barite may line small cavities in the rock.

Fig 3 Residential building built b y limestone, Addis Ababa.

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The deposition of limestone strata is often a by-product and indicator of biological activity in the geologic record. Limestone is usually the type of rock that gives us caves which could be used as geo-parks. Most caves are the result of dissolution of calcite by the action of acidic waters. Ground water can dissolve portions of massive limestone formations and yields extremely large caverns. Large caves and numerous sinkholes are often found in areas that have significant limestone formations and in this context, Sof Omar Cave in Ethiopia is a good example of natural heritage (Fig 4).

Fig 5 Cut and polished limestone slab, Hakimgara, Harar.

Other uses of limestone include:•

Pulverized

product

for

soil

conditioner to neutralize acidic soil conditions; •

Crushed for use as aggregate the solid base for many roads;

Fig 4 Lime ston e pi la lrs re flec ted in th e wa ter in the entrance hall to the Sof Omar Cave. Source: http://www.pbase.com/

Calcium (along with nitrogen, phosphorus, and potassium) is a key mineral to plant nutrition: soils overlying limestone bedrock tend to be pre-fertilized with calcium. Limestone is an important stone for masonry and architecture, vying with only granite and sandstone to be the most commonly used architectural stone. The surface of limestone can take a plethora of finishes such as polished, honed, smooth, sawn etc as in Fig 5.

•

Reagent in desulfurizations;

•

Ingredient for glass making in some circumstances;

•

Added to paper, plastics, paint, tiles, and other materials as both white pigment and cheap filler;

•

Ingredient for making toothpaste

•

Suppression of methane explosions in underground coal mines;

•

Added to bread and cereals as a source of calcium;

Limestone is a key ingredient of quicklime, mortar, cement, and concrete. Limestone can be crushed and used as road ballast. Limestone blocks, limestone slab, tiles and countertops are all available and used for different purposes.

•

For fireplace, pavement, and countertops; and

•

For whitening of sugar in sugar industry. 2


Geology The thick succession of Mesozoic and Cenozoic sediments in Ethiopia comprises potential resources of limestone. Limestone makes up about 10% of the total volume of all sedimentary rocks in the country (Fig 6 & 7). The limestones are mainly exposed in the Blue Nile Basin, the Mekele outlier, Hararghe, Denakil, and the Ogaden Basin.. The limestones deposits in the Mesozoic succession are referred to as Antalo, Abay, Urandab, and Hamanlei Formations (Tefera et al, 1996). The Antalo Formation in eastern Ethiopia is a 750 meters thick sequence which consists predominantly of fossiliferous yellow limestone suitable for industrial use. The Formation contains thin beds of marl and calcareous shale, and occasionally arenaceous bands near the top.

Fig 7 Geological and known limestone deposits of Ethiopia

In northern Ethiopia, in the Mekele area, the limestones are yellow and blocky (Fig 8). They are used as cement raw material and dimension stone. The Formation conformably overlies the

Fig 6 Thick succession of Mesozoic sediments, Muger valley, Shewa, Central Ethiopia. Source: Haileyesus Walle

Adigrat sandstone and grades upward into Agula shale. The marginal parts of the Mekele outlier consist of sandy oolitic facies suggesting a near shore environment.

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The Abay Formation of middle Jurassic age occurs in the Abay River lying between the Adigrat and the Antalo Formations (Fig 10). The Formation consists of 196 meters thick sandy limestone and calcareous sandstone; a 257 meters thick unit of gypsum, as well as a 138 meters thick upper unit- sequence of alternating shale and limestone bringing the total thickness of the formation to 580 meters.

Fig 8 Blocks of yellow limestone, Mosobo (Mekele, Northern Ethiopia). Source: Haileyesus Walle

In the west-central part, the Formation developed limestone varying from near-shore oolithic limestones, through fossiliferous pale limestone and marl to black limestones deposited in deeper water (Fig 9).

Fig 10 Antalo limestone deposit, Jema valley, central Ethiopia. Source: Haileyesus Walle

A succession consisting of black shale and marly and gypsiferous limestone, the Urandab Formation, comparable in age to the Antalo Formation, occurs in the eastern and southern parts of the country resting on the washed out surface of the upper part of Hamanilei Formation. In Hararghe region, 95 meters thick of brown limestone with alternating clay and limestone is included with the Urandab Formation. This unit is also encountered in some boreholes in eastern Ogaden (Tefera, et al, 1996).

Fig 9 Different limestone beds intercalated with marl. Source: Haileyesus Walle

The Hamanilei Formation is used for the fossiliferous limestone of Jurassic age in southeastern Ethiopia and the Ogaden region. The Hamanilei Formation which consists of predominantly of limestone and dolomite is exposed in wide areas of Hararghe, Sidamo and Bale areas. The rocks of this formation have gradational contacts with the underlying Adigrat Formation and overlying Urandab Formation. The Hamanilei Formation 4


reaches a thickness of up to 1350 meters in eastern Ogaden (Kazmin, 1972).

A thickness of 410 meters at Gabredarre and 629 meters in the Gumburo well have been recorded (Merla, 1979). The

Cenozoic or Early Tertiary sedimentary rocks occur in eastern-most part of the Ogaden sedimentary basin. These include the Auradu and Karkar Formations. The Auradu consists of similar massive limestone but alternating with thinly bedded chalky or gypsiferous limestone, and in some instances with greenish brown calcareous shale (Mohr 1962a) as in Fig 13.

Fig 11 Limestone resources of Hakimgara quarried for Dimension stone (National Mining Company). Source:Haileyesus Walle.

The other limestone which represents the upper most part of the Jurassic sedimentary succession in the western and eastern Ogaden is the Gabredarre Formation. It is exposed in the Wabi Shebele and Fafen River and consists mainly of light colored oolitic limestone and marl.

Fig 13 Thinly bedded limestone intercalated with marl. Source: Haileyesus Walle

Limestone Resources In Ethiopia, the Antalo limestone deposits are mainly utilized for cement and dimension stone.

Fig 12 Dipping gray limestone deposit in Dire Dawa, eastern Ethiopia. Source: Ministry of Mines, 2002.

The cement and lime industries are the main consumers of limestone in Ethiopia. So far, the limestones of Mossobo and Mugher have been well explored for utilization in the cement production.

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Delga Chebsi limestone located 23 km northeast of Dire Dawa (Wichael, 1983), Mesobo limestone near Mekele, and the Jemma-Wonchit and Muger valley limestone of Northern Shewa are suitable as dimension stone and cement raw material with resource in the order of tens of millions of tons. The Hakim Gara limestone has beds varying from some tens of centimeters to several meters in thickness.

Fig 14 Location Mesozoic sediments and limestone resources of Ethiopia.

Calcite limestone of dimension stone quality is predominantly found within the Jurassic Antalo limestone and the Hamanlei Formation. The best exposures and most interesting deposits of the Antalo limestone are found in the central part of the Abay valley, and within the tributaries of Abay River including the Jemma, Wonchit and Mugher river vallies. Fig 16 Thick limestone deposit suitable for dimension stone and cement raw material. Source: Haileyesus Walle

The Kella limestone from Butajira area has an estimated resource of 2.6 million tons and is unsuitable for the production of caustic soda (Karstadet , 1988). However, highquality limestone can be obtained by selective mining, which is economically unjustifiable. High-quality limestone is exposed in other parts of the country, but these occurrences require further assessment of their utilization potential in various industries and for the production of fillers. Fig 15 Thick succession of Antalo limestone, Dejen valley. Source: Haileyesus Walle

Only the most accessible occurrences have been assessed to evaluate their suitability as dimension stone. Among these, the Hakim Gara limestone (Fig 11) occurring near Harrar,

Dolomitic limestone and dolomite of Mesozoic age are also mined as raw material for the bottle and glass industry.

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Present Situation Derba Midroc, sister company of Midroc Ethiopia; Ethio Cement; Jema Plc; and East Africa have received land in Oromia region, for the construction of cement factories (International Finance Corporation, IFC, Google). Presently, Ethiopia's annual production of cement stands at 1.82 million tons. However, the

yearly demand-supply shortfall is estimated to be more than two million tons. Up to April 8, 2008, a total of 29 companies had permits to invest in the cement production sector out of which 15 have licensed for limestone exploration and the rest secure the license for limestone production (Walta Information Center, 04 Feb, 2009). However, they are far from filling the gap between demand and supply (August26, 2008, Addis Fortune, Wudineh Zenebe, Google).

Table 1 Proven Reserve, Production Capacity and Status of Cement Factories in Ethiopia

Factory Mugher Cement SC DireDawa Cement (National Cement SC)

Proven Reserve (metric tons)

67.17

Mossobo Cement SC

Production Capacity (metric tons /year) 0.870

status

0.150

Under production

0.630

Under production

2.46

Under construction

0.160

Pilot production (August 26,2008,Google) Under production

Under production

69.53 Derba Midroc Cement SC Avoringa(Israeli Company)Cement Others

imports Clinker from Pakistan

0.170

Source: International Finance Corporation, IFC, Google; August 26, 27, 2008 Addis Fortune, Wudineh Zenebe, Google

resources and are good opportunities for future development.

Opportunities The development of limestone resources of the country shall contribute to:•

•

•

Save foreign currency, create employment opportunity, the development of industry, construction and agricultural sectors and economic development of the country. In this regard tremendous mount of limestone resource exist in the following areas. Antalo limestone resources of Abay river valley and its tributaries including Jemma, Mugher and Wonchit rivers have potential

•

Limestone resource of Hamanle Formation of Western Harreghe region, particularly, at Debesso River, Hirna, Kobo, Karamile and Chelenko areas, within 60-75Kms radius from DireDawa, is very viable for the development of limestone for cement and dimension stone applications. Antalo limestone resources of central Tigray region, particularly, at Agula River, Giva River, Maimeken area, Wukro and Hagereselam area (3540Kms west and northwest of 7


Mekele) are also attractive for cement, filler dimension stone and other applications. Market and Trade

Ethiopia imported nearly up to 1.0 Million tons of cement in 2008 (Ethiopian Customs and Revenue Authority). The current annual production capacity of the existing cement factories reaches up to 1.82 Million tons. The demand for cement is still not satisfied as the country’s construction activity

increasing exponentially. Therefore the need for exploration of additional raw materials, mainly limestone is vital. The dominant importers of Calcium Carbonate are Saudi Arabia and South Africa with a significant import from Kenya, France and the UK.

Table 2 Imports of Calcium Carbonate 2000 -2005

Calcium Carbonate Year 2000 Tons Us$ US per ton Chalk Tons 35 Us$ 7528 US per ton 213 Origin Auk France

2001 2002 879 1,011 176,685 193,197 201 191

2003 1,605 350,254 218

2004

2005

<1 31 4477

22 7370 330 Netherland s

26 6876 264 France Pakistan

17 1132 65 China

39 9360 240 Netherlands Taiwan

Source: BGS, Demand/Supply Survey of the Ethiopia Industrial minerals sub-sector, Keyworth, Nottingham, 2007 Table 3 Imports of Cement, 2005-2008

year

2005

2007

2008

Tons 1327 60,722.5 ETB(In thousands) 2,914.43 68,588.6

896,228.4 1,220,240.3

932,618.4 1,536,438.4

ETB per Ton

1362

1650

2195

2006

1129

Source: Ethiopian Customs and Revenue Authority

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MINING LEGISLATION In June 1993 new Mining and Mining Income Tax Proclamations were issued having considered knowledge-based experiences in some competitive countries and given the following provisions:•

Invites private investment in all kinds of mineral operations;

•

Provides a prospecting license for one year;

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Provides an exploration license for an initial period of three years and renewed twice for one year each;

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Provides a mining license for 20 years and renewed for 10 years unlimitedly;

•

Guarantee the licensee’s right to sell all the minerals locally or abroad giving marketing freedom;

•

Provides for exemptions from custom duties and taxes on equipment, machinery, vehicles and spare parts;

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Gives securities of tenure;

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Gives clear provisions on fiscal and other issues;

•

Considering taxation on repatriation of profits and capitals, a licensee shall pay a 25% royalty on ad Val Orem at production site, and a 35% income tax on taxable income. Taxable income is computed by subtracting from gross income for any accounting year all allowable revenue expenditure, a four years straight line depreciation, reinvestment deduction and permitted loses;

•

The mining proclamation guarantees the opening and operation of a foreign currency account in banks in Ethiopia, retention of portion of foreign currency earning and remittances of profits, dividends, principal and interest on a foreign loan etc. out of Ethiopia.

Of course this fiscal package is still subject to frequent reviews for we want to maintain a balance between the objective of the government and investors as is made evident by a series of amendments of the 1993.

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INVESTMENT CLIMATE OF ETHIOPIA The Federal Democratic republic of Ethiopia has created a conducive investment environment to ensure, (promote) private investment play a leading role in the development of the national economy. This favorable climate for foreign investment has been created as consequence of the solid foundation of political and economic reform, particularly the stably secured macroeconomic reforms which are achieved by carefully managed sequential reforms coupled with faire fiscal and monetary policies. By virtues of Ethiopia’s unique and untapped natural resources, its proximity to Middle Eastern and European markets, its 60 million populations, and huge labor force both disciplined and easily trainable are some of the comparative advantages worthy of consideration while investing in Ethiopia. This is further enhanced by specific incentives and efficient administrative procedures.

Mineral Investment

Between 1974 and 1991 private investments were not allowed in the mineral sector. The government was fully responsible for the exploration and development of the sector, before the advent of the new economic policy of Ethiopia. In compliance with the new market oriented economic policy of Ethiopia the parliament declares that it is continuing policy of the Federal Government in the national interest to foster and encourage private enterprises in developing economically sound and stable mineral mining. For a successful implementation of the policy a number of steps have been taken aiming to boost the confidence of the private sector following the governments strong believe that rapid mineral development can only be realized when the private sector is given a full right of operating managing and owning mineral enterprises. This is the underlined reason for the government’s active response to the concern of the 10


International mining Companies. Accordingly it has restricted its role to basic mineral resources exploration, regulation and promotion only ; •

to avoid the fear of controlling a large tract of prospective land by state owned companies,

•

to avoid the fear of seeable high risk due to unexpected unfair competition with state owned enterprises.

In this connection a measure stick for such truck record of the government’s commitment is manifested by the privatized Lege Dembi Gold Mine, the only one government owned large scale gold mining , and the small scale Kenticha Tantalum Mine which is already in the pipeline for privatization. This includes the reform of the mining law which is taking place since 1993 and many changes that have happened justify the sincerity of the government. Furthermore the commitment is much affirmed following the establishment of a fair and clear cut mining legislation giving investors assurances of the fruits of their success. It constitutes a fair setup of efficient and effective licensing and mineral right administration system, a fair set of environmental laws, rules to monitor and mitigate and reclamation effects by mining operation, fair laws to regulate the safety and health of the work fore and securing of tenure. It also gives to license holders with a number of incentives including low royalty, exemption from custom duties and taxes on the equipment, machineries vehicles, and spare parts necessary for mineral operations with a 10 years provision to allow investors to carry forward losses.

Geological Survey of Ethiopia (GSE) P. O. Box 2302, Addis Ababa, Ethiopia Tel: (251-1) 463325 Fax: (251-1) 463326, 712033 E-mail: [email protected]

Source of information: Geological Survey of Ethiopia (GSE) Prepared by Wondafrash Mammo; Sentayehu Zewdie; Geremew Negassa Address: [email protected]; [email protected]; [email protected]

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Reference: Bekele Woldemichael. 1983. Preliminary geological Report of Delga Chebsi & Hakim Garra limestone (marble) & Hamaresa granite Deposit (ELMICO). British Geological Survey. 2007. Demand/Supply Survey of the Ethiopia Industrial minerals sub-sector. Keyworth, Nottingham. Karstaedet, H., Abinet, Y., and Ilfeyos, T. 1988. Report on limestone of Kella Horst. Eth. Inst. Geol. Survey unpublished Rep. Note No 277, 54pp. Kazmine, V. 1972. Geology of Ethiopia Unpublished report EIGS, Addis Ababa: Ethiopia. Mengesha T., Workineh H., Tadiwos C. 1967. Explanation of the geological map of Ethiopia. 1:2,000,000 scale. Geological Survey of Ethiopia. Addis Ababa. Merla, G.n.d. Explanation to the geological map of Ethiopia and Somalia. 1:2,000,000 scale. Department of Geology and paleontology, University of Florence, Italy. Mohr, P. 1962. The Ethiopian Rift System. Mohr, P.A. The Geology of Ethiopia. University College of Addis Ababa Press (reprinted in 1971 at the Haileselasie I university press), Asmara: Ethiopia. pp268. Sisay Abera. 1994. Review of Industrial Minerals of Ethiopia. AGID Report series Geosciences International Development, No.18, 173-180 PP. Tibebu M. and Halemichael F.2003. Industrial Minerals and Rocks Resources Potential of Ethiopia, 66pp. Tom, H. and Haileyesus W. 2002. Building - stones of Ethiopia. ETHIONOR. Grytting A/S, Norway.

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Limestone Resource Potential in Ethiopia

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