Eritrea’s ‘Mining Friendly Environment’ Attracts More Investors

Investor and analysts December tour to Eritrea - Overlooking Bisha Main pit
Investors and analysts December tour to Eritrea – Overlooking Bisha Main pit

By Sam B.,

In late 2013, Sichuan Road and Bridge Group (‘SRBG’) announced that it has entered into a long-term agreement with the Eritrean National Mining Corporation (‘ENAMCO’) with respect to the development of a mining and exploration project, located in Eritrea.

Pursuant to the terms of the agreement, it is expected that SRBG will own 60% of a newly formed joint venture Company and ENAMCO will hold 40% interest.

The framework agreement allows SRBG to co-developed an exploration area comprising ​​1000 square kilometers of gold and base metals exploration, in an area between Bisha and Zara gold mining projects.

SRBG is expected to invest approximately US$ 33 million in the first phase of the exploration program that is anticipated to last at least three years.

Additionally, in late November 2013 a number of investors, mining industry analysts, investment bankers and company CEOs visited Eritrea. Their aim was to conduct a site visit of mining and exploration projects in Eritrea and to inspect the projects as well as the infrastructures in the country. One of the visitors was Adam Low, CFA Analyst with Raymond James Ltd. Mr. Low visited Bisha Mining and also Massawa. In regards to Eritrea he writes:

“Eritrea is a more favourable mining investment jurisdiction than it is given credit – A visit to Eritrea defies many of the preconceived notions and stereotypes surrounding the country. We believe that Eritrea is a more favourable destination for foreign investment in mining than it is given credit.”

In reference to the Port of Massawa he notes that:

“The port operations and the Rotainer transport system were very impressive, and stood out for their efficiency and simplicity.”

Craig Hutchison, P. Eng. a TD Bank’s investments arm, TD Waterhouse, was also on the same trip. Following his trip to Eritrea Hutchison writes:

“Earlier this week, we had an opportunity to visit Nevsun’s Bisha project (60% ownership) in Eritrea. Our site visit included a tour of the company’s new copper plant along with its port facilities in Massawa.”

He goes on to add,

“Following the trip, we have an increased level of comfort with Eritrea as a mining jurisdiction having seen the operation and transportation logistics firsthand…We have raised … our target price calculation to … reflect our increased confidence in the performance of the copper plant and our lower perceived risk associated with operating in Eritrea.”

Eritrea through its progressive mining legislation and mining supportive and friendly government has been developing a positive investment climate for mining companies and other investors. The commentator known as the  Investment Doctor, earlier this year wrote,

“I have the impression Eritrea is a very mining-friendly country (its mining code is actually based on Ghana’s mining laws).”

As Lawrence Williams underscored earlier,

“Eritrea, which has proved to be a mining friendly environment with virtually no corruption (almost unique for Africa) is only sparsely explored and has huge precious and base metals potential.”

The examples above represent a sample of the many first hand accounts from companies and individuals engaged in doing business in Eritrea. Stefan Ioannou, PhD, Analyst with Haywood Securites who has been to Eritrea several times and closely followed Eritrea for many years writes:

“In time, we anticipate the country will emerge as a world-class mining district, and Nevsun offers the best entrance point to this potential with its Bisha mine and a number of other very good exploration targets. Eritrea’s world-class potential has not gone unnoticed by the majors, as is evidenced by investments from Lundin Mining, Antofagasta, and Newmont.”

Some already place Eritrea, the relatively newcomer to the game: “amongst other African nations such as Tanzania, South Africa, Ghana and Eritrea, who have a robust, active mining friendly environment.”

Overall, in a short period of time, Eritrea has firmly established itself as an investment and mining friendly jurisdiction by those who matter – individuals and companies who invest and work there.
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