Chinese Miner to Start Copper Output in Eritrea by Next Year

(Bloomberg) -- A unit of Sichuan Road & Bridge Co. will start producing copper, zinc, gold and silver at a mine in Eritrea by early next year, helping diversify the country’s agrarian economy, a mines ministry official said.

The project will add to two operating mines in the Horn of Africa nation, which is reemerging as an investor destination after a rapprochement with neighboring Ethiopia last month ended two decades of political tensions.

Sichuan Road & Bridge Mining Investment Development Corp. bought 60 percent of the Asmara Mining Share Co. for $65 million from Sunridge Gold Corp. in 2016. Eritrea’s government owns the remaining 40 percent of AMSC, which plans to mine four deposits outside the capital, Asmara, known as Emba Derho, Adi Nefas, Gupo and Debarwa.

“We expect by the first quarter of 2019 it will start,” Alem Kibreab, director-general of mines in the Energy and Mines Ministry, said in an interview in Asmara. “Operations will be in phases: the first phase will be direct shipments of high-grade copper ore.”

The mine is expected to have a life of 17 years, producing an estimated 381,000 metric tons of copper, 850,000 tons of zinc, 436,000 ounces of gold and 11 million ounces of silver, according to a ministry presentation provided by Alem.

Eritrea has two producing mines -- Bisha, which produces gold, copper and zinc and is 60 percent owned by Nevsun Resources Ltd., and the Zara gold mine 60 percent owned by Shanghai Sfeco Group of China. Construction of another mine, the Colluli potash mine jointly owned by Australia’s Danakali Ltd. and the government, is expected to start later this year.

Mines and quarrying employ 15,330 in Eritrea, about 1.1 percent of its labor force, according government data. The government is studying other ways to diversify the economy, with “potential areas of intervention” including natural resources, agro-industry, fisheries and infrastructure development, Labor and Human Welfare Minister Luul Gebreab said in a separate interview.

“We are an agricultural state,” Luul said. “The public sector is the second-largest employer. We have to change this status quo.”

©2018 Bloomberg L.P.