By Keffyalew Gebremedhin – The Ethiopia Observatory
Opal and Ethiopia
The legend of Ethiopia’s Queen Sheba aside, adorning herself, among others, with opal during her visit to King Solomon in Jerusalem, the fist known evidence of mankind’s involvement with the gemstone is a little over 6000 years old. This discovery was made in Kenya in 1939 by archaeologist Dr. Louis Leakey. He was the first person to find opal artifacts in a cave in that country from as far back as 4000 BC, according to Allan Eckert’s book The World of Opals.
Dr. Leaky then applied himself to the task of establishing where that opal came from by a process of identification and elimination. On account of material differences, he ruled out the three then known opal occurrences in Tanzania, Zimbabwe and Morocco. Eventually, clear resemblances between what he had discovered in Kenya and the opal used for some rudimentary appliances on the Ethiopian side of the Rift Valley led the archeologist to conclude that the opal was from occurrences in Ethiopia.
Nevertheless, in spite of this long Ethiopian association with opal, its exploration and production in the country has barely been older than a little over two decades. However, geologists have amassed evidences that Ethiopia is one of the three countries that are generously endowed with the high quality gemstone, which has been used for various types of jewelries.
In fact, the first indication of opal’s presence in Ethiopia came to the attention of the international market in 1993. Dr. N. Barot wrote mentioned it in an article appearing in the International Colored Gemstones Association Gazette (ICA Gazette) indicating that opals from Ethiopia had been sighted at a Nairobi gem market, according to Gems & Gemmology magazine, Summer 1996, quoted in Crystal Vine. However, reliable information is no where in reach how it was produced and where that originated from.
Regarding the development of institutions dealing in Ethiopia with policies on minerals and mining in Ethiopia, the ministry of mines is only a 1977 creation and the Ethiopian Geological Survey (GSE) established in 1968. It means that all along whatever mining the country had been engaged in including gold had largely been artisanal.
Therefore, this also means that the very discovery of opal is not related to these institutions. Its modern beginnings are rather accidental, in the main associated with an Ethiopian American chemist Tilahun Yohannes of Colorado, who came to Ethiopia from the United States for a visit in 1995, after 41 years absence.
Tilahun met an Ethiopian geologist in Addis Abeba. The geologist invited him to his office to benefit from his expertise, where in the meantime he saw a cracked open opal nodule in the office and was mesmerized by it.
Generous enough, the host gave it to him as gift. It became the trap for the Ethiopian-American, which eventually drew him into taking personal interest in its quality and stability, as chemist and possibly with half-hearted business interest too. After some studies and consultations in the United States, he returned to Ethiopia and subsequently conducted reconnaissance and geological exploration north east of Addis Abeba, in Menz Gishe, near Mezezeo village.It is that area since the late 1990s that has proved the first reliable source for the quality Shoa opal to foreign markets. The Colorado paper implied that Tilahun Yohannes did not seem to have pursued it personally after 1997 any further.
As to the opals, material published in 2009 by the Geological Survey of Ethiopia (GSE) referred to their colors, the broad areas of internal fire ranges of green, yellow and red with gray matrix of the polished Menz Gishe opals as unique, which shows, even when it is in the form of rock-piece. Writing especially of the chocolate variety of rough opal with its colorful snakeskin pattern, the paper lavished its praises on the most striking and distinctive behavior, which it said deserved to be called the queen of gemstones.
In the circumstances, it is fitting to state that, notwithstanding their late arrival to the international gem world, it is not without reason that Ethiopian opals – especially the Shoa and Wollo opals (the established sources for now) – should manage to become brand names in the gemstone world.
Ethiopian opals take “the gem world by storm”
For a while now, numerous jewelry auctioneers and dealers’ webpages have been displaying the most beautiful opals from Ethiopia to the international market. Some even considered them threats to Australia’s huge and equally beautiful opals.
In fact, lately on news of “the amount of Ethiopian Opal offered for sale [increasing] dramatically in the opal market,” an Australian in opal business in 2010 wrote, “At the possible wrath of some Aussie opal lovers I dare to make this statement. If this field is as extensive as it may well be, perhaps in the future, Australia could lose its dominance in the light opal market.”This speaks to the quality and stability of the Ethiopian semi-precious stone. One could get a sense of their attractions by just searching online terms such as “Ethiopian opal”, or “Ethiopian black opal”, “Ethiopian chocolate opal”, “Wollo opal”, “Shoa opal”, “Gondar opal”, etc. The beautiful images that would fill the screen would surprise anyone beyond belief. Equally striking is how much some of the distant little known localities such as Menz, Wegel Tena, Delanta, Mezezo, Bonga, Daya Dawa, Mehal Meda, Fincha Wuha, Harshitmi, Tsehay Mewcha, Kuta Ber, Moyale, Mega, etc., have quietly become – household names in the gem industry – surely a few more than others.
Put briefly, the recent offering price of $600,000 for 370ct was monumental testament to the Ethiopian quality as well as the very popular international brand names they have become.
An international dealer in opals from Jewelry Television, in February 2011 jtv jewelrytelevision – published beautiful picture of the jewelry made of the Wollo opal, what it called the Ethiopian Hydrophane Opal. Its amazing look in the picture (not published here because of copy right issues) was accompanied by a tiny highlight of its origin and its care requirements. Its extraordinary magnificence is striking and the commentator wrote that the Wollo opals has taken “the gem world by storm.”
More importantly, given the diverse geology of Ethiopia, this could only be the curtain-raiser for what is to come, provided that the country uses its resources properly and for the benefit of all its citizens.
In other words, there could still be more areas burying these semi-precious stones of amazing varieties Ethiopia has yet to uncover and make use of them to the benefit of its citizens. By now, the world already has a taste of the Ethiopian opals. And the little that has so far been known of them, especially their brilliant qualities and abundant “play of color[s]”, have proved irresistible attractions.
The major problems and obstacles to deny the country benefitting from these resources natural resources are only a combination of inadequacies of the society in the technological sense on one hand and on the other corruption and political greed. Emphasis on and the need to reiterate these problems in this article is not with adequate reasons, as would be discussed in a moment.
Diagnosis of the technological and policy inadequacies
The most dramatic exposition of how rudimentary the country’s understanding of its natural wealth still is seen in the 2009 publication by the GSE, listing in its Table 5 the “Geographic coordinates of [most] gemstone occurrences shown on the location map” [below] as “unknown”.
Companies come; they do what they like and stay so long as their benefits are enhanced. Neither foreign aid nor World Bank loans have hardly shown any adequacy in this area. This is not to level the on donors or the GSE, but to urge them to do better. In fact, the GSE has played key role in surveying the country’s resource areas (reportedly about 80 percent) and promoting Ethiopian gemstones.
The problem is that its attention is dictated by policy direction that is hooked on petroleum exploration, gold and geothermal energy to the neglect of gemstones.
Therefore, by this measure, there are aplenty evidences that the country is being disadvantaged by its inadequacies of vision and the consequent problems of prioritization. This shows also on how and why the country is loosing value. For instance, the Indian gemstone business has become the largest beneficiary from Ethiopian opals. It has become sort of a vacuum cleaner for Ethiopia’s semi-precious stones, the instance of which is its attraction to 80 percent of the uncut and unpolished opal exports. This has made India one of the largest processed opal re-exporters in the world. Added to the list of importers at cheap prices from Ethiopia and re-exporters of gemstones at higher prices to the international market are China, Hong Kong, Singapore and Malaysia.
Nonetheless, on its part the GSE has been acknowledging that the value and competitiveness of Ethiopian gems depends on four elements: their beauty, play of internal colors they possess, their rarity, hardness and toughness, and the skill with which they have been cut and polished.
The latter part is the perennial problem for Ethiopia. This far, the country has been given to taking the unprocessed product to the market and lose their added value. In addition, the government has done little to help and improve the hazardous situation in which artisanal miners have been forced to operate to produce the gemstone.
If the manner in which things have been managed in these past two decades is any indicator, the country has scarcely managed to benefit from these very valuable riches. Backwardness and inadequacies of all gradations – political, social, technological and corruption – have been the main obstacles confronting our country.
The law and mining practices: What is being done to close backdoor of corruption?
Ethiopia opened its mining sector to investors in 1991. While the responsible government institutions are required by the revised 2010 law to ensure that environmental impact assessments are carried out and health and safety matters are regulated, in cooperation with licensed operators, the country has barely managed to give full effect to its laws.
At the same time, this law is very important providing the country modern legislation. It has, among others, broadened the range of mining licences available, the purpose of which is to attract investors. The license categories in the mining sector now are:
◙ the non-renewable non-exclusive reconnaissance licence (valid for 18 months)
◙ the exploration licence (valid for three years and renewable twice for a period of a year);
◙ the Retention licence (valid for three years and renewable up to three years);
◙ Small and large scale mining licences for mining operations (valid for up to ten years and renewable for up to five years, while large scale mining is valid for 20 years and renewable for ten years).
Moreover, to put the beef on the table, the 2010 law has also lowered royalty payment levels to companies; it has provided exemptions from customs duty and taxes on mining equipment; it guarantees the right to sell minerals locally or abroad and the availability of dispute resolution procedures, such as arbitration.
The anomaly here is that, relaxing stringent regulations is one thing to attract foreign companies. But lacking clarity is whose interests it is serving best. This has given rise to allegations of involvement in some scam of senior politicians of the ruling party, both at the federal and state levels, as accusations since 2011 have persistently suggested.
What the implementation of the new law has done is to open to anyone both the mines and the country, with loopholes suiting local and international collusions. This in other words means that corrupt practices, involving both locals and foreigners operating as agents have been depriving the country of the benefits of its natural resources.
Proclamation No. 678/2010 in its Part III, under licenses, paragraph 30, states:
Rights and Obligations of Holders of Small and Large Scale Mining Licenses
1/ The holder of a small scale or large scale mining license shall have the
rights to market and sell minerals produced.
2/ The holder of a small scale or large scale mining license shall:
a) commence mining operations within one year from the date on
which the license becomes effective; and
b) comply with the terms and conditions of the license.
The law is vague, as far as the marketing by artisanal mines are concerned, which leaves them at the mercy of irresponsible political cadres.
The problem here is not the absence of laws; but the absence of institutional capacities, which has become convenient for corrupt officials.
Profile of Ethiopian gemstone mining: Who is who and what is the revenue strength?
There is no up to date data to show who is operating in the gemstone mining in Ethiopia. The Ministry of Mines has a webpage, whose defining characteristic is its emptiness – especially its being of no use to information seekers.
Therefore, whatever we know about the mining sector in Ethiopia come from what the minister accidentally throws to the media, especially the foreign media on rare occasions, and subjecting that to rigorous analyses to get a better picture.
From that, for instance, she informed Canada’s Mining Weekly Online in March 2013 that right at this point there are 135 foreign companies, working on 245 licences and across mine fields – gold, tantalite, platinum, coal, opal, phosphate, potash, many more. At no time are Ethiopians provided with specific information and the breakdowns.
Similarly, in terms of who is working on opal, there hardly is data to the public outside those skeletal ones relating to the period 1998 and 2007. Obviously, since then the numbers and the pictures must have changed dramatically.
For instance, during the above-mentioned period, the names of seven companies are provided; they are engaged in the exploration and production of gemstones, opal included. Six of these are joint venture companies between Ethiopians and foreigners – three Swiss, one Dutch and two French investors.
The first of these to be established is the Abay Natural Resources Development Plc, established in 1998 only for opal exploration and production. A year later, it established another company, mixing opal Nodule. Today, in this age of information being part of the value in the business, there is little information for Ethiopians forcing dependence on foreign sources.
In 2001, the US Geological Survey reported that Abay Natural Resources Development Plc produced fire opal in North Shoa. It continued its business, selling its products at the Hong Kong Jewellery and Watch Fair.
In the early days, the company was planning to market some of its products through such international auction houses as Christie’s and Sotheby’s, according to this same report. Today, that company’s whereabouts has become thin air in the cloud. The questions, therefore, are:
☒ Has it dissolved the businesses?
☒ Was it acquired by another one and the name changed its name, to be known only by its beneficiaries?
☒ Or has it now been transformed into a subsidiary to anyone of those in the TPLF business empire, having in the first place been the usual TPLF’s concoction?
There certainly has been any answer to date to these questions. The same questions apply to the other five companies!
In terms of exports volume and earnings, in 2012 it is reported that Ethiopia exported over 16,500Kg of opal and earned $7 million, inclusive of the period in the first quarter in 2013. While this beats the amount for all gemstones Ethiopia planned to export by 2015 by four to one, as per the growth and transformation plan (GTP) of 4,000 kgs, still the revenue is pittance, compared to the quality of the country’s opal and what it fetches in today’s market.
This is being said not in denial of the huge increase over the previous years. In 2003, Ethiopia produced only 187 kgs of opal. By 2010, it had reached 10,104kgs of unpolished and uncut opals, which means it has not been earning value for the gemstone. This is a textbook case of Ethiopia, as many developing countries, passing its natural resources for use by foreign businesses, unable to add value to its natural resources.
The fact that the country received only $7 million in the past year from opal, speaks how much it has so far been reliant on the export of the unpolished semi-precious stone. This has all along been an evidence of a country theoretically haranguing everyone about value addition, starting from manufacturing that has been given a great deal of attention, although the playing field for businesses is rough and uneven, with the ruling party businesses taking advantage over everyone else.
There is also the other area, where the state exhibited its weaknesses, especially regarding the producers. Reports show that over 2,000 individual artisans are organized in 17 associations in Wollo region alone. They face two problems. The fist is the government has not done enough to help them acquire some skills. Secondly, there are immense dangers that have resulted in substantial deaths, about which the government media did not show interest in covering. When the private media covers it, they are considered as people with spotlights on the country’s weaknesses. Recall that, there have been recent occasions when 80 people were killed in a single day.
In an April 8, 2012 article Opal Trade Transforms North Wollo, Addis Fortune rightly observed that in the cliff not only the miners “find precious gemstones but [also] the skeletons of miners.” This speaks to the fact that the safety and security of the miners must be given equal attention, as the foreign exchanges, to which the TPLF government attaches more importance.
The other problem has already been touched upon. But African Business in its May 2012 issue has done some justice to it. It states:
“[T]he cooperatives are not aware of the requirements and tastes of international [gem] markets. So they keep producing stones cut according to a limited number of classic templates, such as a heart shape, a cabochon or a semi-sphere shape, but overall, they are too isolated from the market. Another issue is the lack of knowledge in setting and mounting the stones to make attractive finished products such as jewellery or decorative items.”
Without doing what is needed to help the miners, in January 2013 the government suddenly announced to ban the export of opal possibly as of the coming summer. The idea is to start processing it, before they are exported.
Surely, it would add value and it is a positive step. Interestingly, however, the government already has identified 20 investors to take the business to a new level. As usual, the allegations are that (since there is no confidence in the government’s integrity) most of those individuals have connections with the ruling party (through the local partners). The only requirement on these investors is that they train the miners, with verification of meeting this requirements left to local officials, not the miners’ association or other government agencies.
The intention here is not to entertain wild accusations. It is only to encourage with sensible indications that Ethiopia and its people need to become front and center in benefitting from all the digging, exploration for natural resources. That is the only way to help the country prevail over its shocking and humiliating poverty. The current arrangements do not allow any confidence in the system.
The experiences of other countries to date also show that Ethiopia need not in the end become a country left with the consequent environmental damages. This cannot be sufficiently emphasized, especially when one thinks of the poor earnings of those that work hard with bare hands and produce the gems and deliver them at the mouth of the mine-holes to re-exporters to markets around the world. They need to be educated all the time and enticed into savings, instead of transformation being assessed on the basis of tin-roofed houses, as the article by Addis Fortune implied.
Corruption is endangering Ethiopia’s future
From what we learn from Ethiopian and foreign sources, there is huge corruption that works against all Ethiopians, including the poor gemstone miners. Actually, it is said that there is huge line up of corrupt local and federal politicians that are put in place to nibble from every angle every little gain the miners make – eventually harming the country’s prospects to rid itself of poverty.
For instance, in its Diagnosing Corruption in Ethiopia in the mining sector, the World Bank not long ago stated that three major areas of corruption have been analyzed and mapped. These are:
◙ “License issuing. Licensing authority officials may extort or be offered bribes by mining companies in return for issuing licenses, for issuing licenses more quickly, or for specifying less-onerous license conditions.
◙ License operation. Mining companies may deliberately breach mining conditions (for example, environmental, health, and safety regulations, as well as the extent or area of mining permitted).
◙ Mining revenue. Mining companies may deliberately understate output and profit and overstate costs to reduce royalties and profit taxes.”
The main problem here is not local and international companies doing these things, the collusion of ruling party politicians.
The purpose of this review has been to see if Ethiopia has been benefitting from its natural resources. As far as integrity of Ethiopian state and federal officials are concerned, precedents to date, government’s openly backhanded operations, by which it has been mixing politics and business, the indications dictate that there is more than meets the eye. It should not come as surprise, when consistently it is the government that has become the cheer leader of the campaign against bad governance and corruptions. Of this, Meles used to ride over popular complaint, agreeing that there are thieves on his side of the wall!
Speaking the specific cases of opals, it means that they are fattening veiled political pockets, especially after they gems attained international brand name status. The opal narrative in Ethiopia is that of political pilferers enjoying their freedom and liberty to appropriate piece by piece whatever is in front of them.
In so stating, however, it should be emphasized that this paper is not against the importance of attracting businesses to a poor country such as Ethiopia. In that respect, I raise my hat to Minister of Mines Sinkinesh Ejigu, where in one of her comments she emphasized the need for shared interests between Ethiopia and foreign businesses, i.e., if her words mean much in the Ethiopian political reality.
I was especially pleased with what she said in March 2013 to Mining Weekly Online:
“We are seeking development partners [in the mining sector], and want to work with them to deliver mutual benefits and profits… The extractive industry deals with nonrenewables and we want to get things right. This includes keeping a careful eye on the environmental impact. We want to take a twenty-first-century approach; we want to engage with communities affected [by mining projects] and show them the benefits available, while we also want companies to understand their responsibilities from a socioeconomic perspective.”
Unfortunately, this is not sufficient of indication commitment on the part of the Ethiopia leadership for transparent and honest undertaking with international companies. That is why it still is in the interest of Ethiopia for its leaders to seriously consider once again the need for creating the necessary conditions for the country to be accepted into membership of the Extractive Industries Transparency Initiative (EITI).
Efforts in this direction in 2009 and 2010 were scuttled, when Ethiopia’s application was rejected twice. The EITI board strongly flet that the country’s laws are too repressive, especially citizens not being free to organize themselves in civil society organizations – prerequisite for citizens to protect and defend their national resources – and the media not being free to to inform what is happening in the country, including exposing corruption.
If steps are taken towards meeting the EITI conditions, Ethiopia would be the beneficiary. This would only enhance the confidence of citizens in their government’s integrity. The whole idea of the EITI is to ensure that there is accountability as far as the management of national resources are concerned. It also means that monies received from international companies from transactions in Ethiopia’s natural resources oil and gas (in future), gold, strategic minerals and gemstones at the moment could be looked into and verified that they are flowing into the country.
What EITI does is help the nation set up mechanism by which what companies pay is exactly what governments say they have received. This goes a long way in improving confidence in the nation’s politicians and their integrity, which in these past two decades have simply been zilch – at level zero.
Changing this is very important for Ethiopia. Let us face it that there is huge distrust between government and the people. Because of this, Ethiopian politics has been getting harder and more complicated with every passing day. The origin is the TPLF’s commitment to promote narrower group interests at the expense of the nation’s, although the frontline beneficiaries are those in power, who arealdy have assumed multifront benefits- from the state as well as their business empire in which those less than 80 persons are the only shareholders in EFFORT.
From day one, the TPLF started mixing politics and financial interests. Because of this, in power it has kept tight reigns in defense of the business interests and power. Thus, they kept on getting wetter by the weight of shady business practices. By their very nature, these would not allow or recognize the borderline between state properties that belong to all citizens and their individual earnings. The final texture and narrative of Ethiopian politics and policy is not patriotism and neutrality, but how to elaborate policies that serve these interests and utilize to the benefit of narrower interests groups, instead of the nation as a whole.
The reminder here is that EITI is an obligation especially for Africa, which it has willingly taken upon itself at international meetings. This has been reinforced by the latest compact between G-8 and Africa. By this, both sides have supported its full implementation with a view to ensuring greater transparency in the transaction of natural resources from developing countries in exchange for case.
The compact stressed the need to ensure that at all efforts are exerted to increase revenue transparency, and commit to setting in place transparency laws and regulations or to promoting voluntary standards that require or encouraging oil, gas, and mining companies to disclose the payments they make to governments.
In that respect, the EU this month took a strong positon of requiring EU companies to disclose all tax payments. This would clearly show what payments mining and logging companies are making to those countries such as Ethiopia that transact with their natural resources with European companies. Of this measure, EITI board chairperson Claire Short said:
“The EU’s move to require EU extractive companies to disclose taxes will complement the work of EITI and its 37 member countries that are committed to transparent reporting of company payments and government receipts in country. International transparency is a very good development but it will only lead to better accountability if the figures are made available to the people of the countries concerned.”
Opal is not as precious as gold nor more valuable than the strategic minerals the country exports. The fact that Opal is picked by this article should be taken as indication nothing is safe, or free from nibbling. What is happening to opal in a way is also the story of all other Ethiopian resources. Therefore, it would help if this article is read in that sense.
Underlying the problems discussed in here is the fact that in today’s Ethiopia, accountability and transparency are terribly lacking. That is why it has become essential for everyone to do what is possible to educate Ethiopians to see and understand what is being done to the country by TPLF companies. It is an injustice and crime of those in power, unelected and assuming power with a gun are appropriating everything in the nation to themselves. Front companies in that are state owned business enterprises and EFFORT’s entities, such as Mesfin Engineering, Sur Construction, the TPLF’s military industrial complex – Metal and Engineering Corporation (MetEC) – etc. I would skip the few in the agricultural sector siphoning the the country’s resources.
What Ethiopian need to fight is the secretive ways the TPLF has been enriching itself with the nation’s resources. Before our eyes, having made politics, policy and power its tools to serve its interests, the Front’s leadership has even openly been channelling the bulk of the nation’s annual capital budget and foreign aid combined into their coffers. Lately, some little known individuals from abroad are coming, claiming to be investors, only to put where it pays most putting TPLF’s monies!
Consequently, above ground – almost many immediate return economic activities – and below the ground – the exploration of oil and gas and the mining fields – are enriching those that have climbed from rags of the liberation struggle to riches in state power. There they design policies and make laws for all citizens, which do not affect them. Therefore, what is evident is that there is no law or ethics in Ethiopia that is capable of stopping both their systematic and naked robbery of a poor nation’s resources.
Obviously, operating from such heights has required the Front operating from safer grounds, with no outsiders having any say in politics, economics, or security matters. The impossibility of such an undertaking has forced heavy-handedness, because of which Ethiopia has become interms of the rights of citizens another North Korea.
Let any of their supporters say clearly to the world, how a colonel or a general with a soldier’s salary could raise billions of birr to build a factories, revoltingly rich villas and apartments to rent them for fortunes? Or where do those nouveau riche, who belong to the same ruling party and just salaried officials and functionaries become owners of a bundle of investments in different companies openly registered in their names, their wives and children?
The only hiccup these days is that the anti-corruption commission at the end of December 2012 announced that it would put into the public domain the information on wealths of party and government officials throughout the country within a month. Now three months are gone and the commission has gone mum! We tried to remind the commission of its pledge to the public and there is no response! Who is stopping it, or blackmailing it?
In the circumstances, should anyone doubt the implications of the staggering level of resources a poor country such as Ethiopia is suffering the losses with every passing year, then we are in a serious problem going forward. On this, the facts and the data came from a neutral body of experts, people with sincere cause and supported by some governments. It is the Task Force on Financial Integrity and Economic Development and the UNDP too.
The task force made public that poor aid dependent Ethiopia has lost $11.7 billion in illegal financial capital flight from 2000 to 2009 alone.
*Updated on April 24, 2013.