By: African mining

For decades, the narrative surrounding Ethiopia’s mining sector has been one of immense geological promise stifled by bureaucratic inertia, infrastructure deficits and security concerns, writes Dr Nicolaas C Steenkamp, for African Mining, incorporating Mining Mirror.

However, the 2024–2026 period marks a definitive pivot. With gold recently overtaking coffee as the nation’s top export earner, generating approximately USD3.5-billion in the 2024/25 fiscal year, the sector is transitioning from an artisanal-dominated landscape to one defined by large- scale industrial development.

Ethiopia sits atop the Arabian-Nubian Shield, a geological formation that hosts some of the world’s most significant deposits of gold, copper and base metals. Despite this, the country has historically lagged behind its East African neighbours in industrial output.

The climate in early 2026, however, is one of cautious but accelerating optimism. The Ethiopian government, under the Ministry of Mines, has aggressively pursued reforms to attract foreign direct investment (FDI). Key among these was the liberalisation of the foreign exchange market in mid-2024, a move designed to eliminate the crippling hard-currency shortages that had previously made repatriating profits and importing machinery nearly impossible for miners.

While the “first mover” disadvantage has long plagued Ethiopian mining, the ice has been broken. The graduation of exploration projects into the construction and production phases signals to the global market that Ethiopia is open for business. The entry of mining majors underscored by the massive acquisition of Allied

Gold by Chinese giant Zijin Mining in January 2026, validates the geological thesis that Ethiopia is the next frontier for African gold.

KEFI Gold and Copper’s Tulu Kapi

For years, KEFI Gold and Copper’s Tulu Kapi Gold Project was the bellwether for the sector, a litmus test for whether a Western-listed company could successfully build a modern mine in Ethiopia. In late 2025, KEFI passed that test.

Located in the Oromia Region, Tulu Kapi has finalised its USD340-million financing package, a complex syndicate involving the Eastern and Southern African Trade and Development Bank (TDB), the Africa Finance Corporation (AFC), and equity partners.

Early works have commenced. The resettlement of local communities is underway, housing construction for resettled families has begun, and the grid connection work at the Ghimbi zonal centre is active. Full-scale construction is ramping up, with the first gold pour targeted for mid-2026. The project is designed to produce approximately 140 000 ounces of gold per year at an All-In Sustaining Cost (AISC) of roughly USD800–900/oz, making it a high- margin operation in the current gold price environment.

KEFI’s perseverance has established a blueprint for financing and community engagement (including the launch of the Tulu Kapi Charitable Endowment Fund) that other juniors are now following.

Akobo Minerals’ Segele Mine

Akobo Minerals has demonstrated the viability of high-grade, boutique underground mining. Operating in the Gambella region, Akobo Minerals achieved a historic milestone in October 2024 by producing its first gold bar, officially becoming Ethiopia’s newest industrial gold producer.

The Segele mine is operational, with production ramping up. In October 2025 alone, the mine produced approximately 7kg of gold doré, exceeding monthly targets. The company is currently sinking a vertical shaft to access deeper, high-grade ore bodies. This will allow them to phase out the initial winzes (inclined shafts) and increase throughput. The project received a strategic vote of confidence from the state via Ethiopian Investment Holdings, which has invested in the company to ensure financial stability and support expansion.

Akobo’s success is critical because it proves that smaller, high-grade deposits can be monetised effectively in Ethiopia’s remote regions, providing a quick route to cash flow that funds further exploration.

Allied Gold’s Kurmuk Project

The most significant news of early 2026 is the acquisition of Allied Gold by Zijin Mining Group for approximately USD4-billion. While Allied Gold holds assets across Africa, the Kurmuk Gold Project in western Ethiopia is considered a “crown jewel” of the portfolio.

Kurmuk is a massive undertaking with a planned production profile of over 240 000 ounces per year for an initial 10-year mine life. The transition to Zijin ownership brings deep pockets and technical expertise, likely accelerating the development timeline. Zijin has a track record of rapidly constructing mines in complex jurisdictions (such as DRC and Serbia). Extensive drilling at targets such as

Dish Mountain and Ashashire has confirmed the continuity of mineralisation, validating the project’s world-class status.

This acquisition effectively de-risks the project financially and signals the arrival of Chinese majors into Ethiopian gold mining at a tier-one level.

Exploration: The next wave

Beyond the “Big Three,” a healthy pipeline of exploration projects is advancing, driven by junior miners encouraged by the success of their predecessors.

Australian-listed Askari Metals is actively exploring the Nejo Gold Project in the Wollega zone. Recent updates indicate they are well- funded to execute their exploration strategy. The Nejo project sits within a prolific gold district, and early sampling has shown high- grade potential like the geology seen at Tulu Kapi.

While gold grabs the headlines, the Ethiopian government is keenly focused on diversifying into industrial minerals to support its import-substitution strategy. Projects in the Danakil Depression continue to be evaluated. With Ethiopia’s massive agricultural needs, domestic fertiliser production is a national security priority.

The Kenticha belt remains a focal point for critical minerals. Exploration is ongoing to define lithium resources that could feed into the global battery supply chain, although this sector is still in the early exploration/definition stage compared to gold.

Processing capacity and infrastructure

A major bottleneck for Ethiopian mining has historically been the lack of in-country processing. This is changing rapidly.

At Tulu Kapi, the construction of the processing plant is a central component of the current USD340-million development. The plant is designed for high recovery rates using standard Carbon-in-Leach (CIL) technology. Akobo Minerals commissioned their processing plant in mid-2024. It is a compact, modular facility designed for the specific metallurgy of the Segele high-grade ore.

Ethiopia’s “green mining” pitch is gaining traction. The Grand Ethiopian Renaissance Dam (GERD) has come online, providing a surplus of renewable hydroelectric power. Projects like Tulu Kapi are connecting directly to the national grid. This provides a significant cost advantage over mines in other African jurisdictions that rely on expensive diesel generation.

The Ethiopian government has sanctioned cryptocurrency mining as a way to monetise excess electricity and generate foreign exchange. While not “mining” in the geological sense, this sector competes for power allocation but also drives investment in substation and transmission infrastructure that benefits the broader industrial base.

Factors negatively impacting the sector

Despite the bullish outlook, significant risks remain. Investors must navigate a complex landscape of security and economic challenges. Regional instability remains the single biggest risk factor. Ongoing clashes between federal forces and regional militias (such as the Fano in Amhara and OLA in Oromia) create a volatile security environment. This impacts logistics, specifically the transport of fuel, equipment, and personnel to remote sites. While most mine sites like Tulu Kapi have dedicated security protocols and government protection, the perception of risk keeps the cost of capital high for Ethiopian projects.

Foreign Exchange and Economics remain challenging, although the birr was floated in 2024 to close the gap between official and parallel rates, hard currency remains scarce. The parallel market premium persists (albeit narrower), and companies often face delays in accessing forex for imports. The currency devaluation has spiked local inflation, increasing the cost of local labour, cement and consumables.

Bureaucracy and Transparency remain a key concern, while federal laws are improving, enforcement at the regional (Woreda) level can be inconsistent. Land access rights often require lengthy negotiation with local administrations that may not always align with federal directives. Foreign investors have occasionally reported aggressive tax assessments and retroactive claims, leading to disputes that can drag on for years.

The upside potential

The case for Ethiopia remains its undeniable geological endowment and the “ground floor” opportunity. The Arabian- Nubian Shield is one of the last under-explored mineral districts on Earth. It is the same formation that hosts the massive Sukari mine in Egypt and Ma’aden’s operations in Saudi Arabia. Ethiopia holds the southern tip of this shield. The potential for a tier-one discovery (5 million+ ounces) is statistically high.

Ethiopia’s strategic location and logistics is obvious for the region, with the Addis Ababa-Djibouti railway providing a bulk freight corridor to the port of Djibouti, which is crucial for the future export of bulk commodities like potash or lithium concentrates.

The Ethiopian government views mining as the “second pillar” of the economy after agriculture. This political will is translating into tangible support, such as the direct equity investment in Akobo Minerals and the sovereign backing of the Tulu Kapi financing.

Conclusion

Ethiopia’s mining sector has graduated from a “potential” narrative to a “production” reality. The commencement of gold pours at Segele, the imminent construction of Tulu Kapi, and the entry of global major Zijin Mining via the Kurmuk project act as a powerful tripod of stability for the sector.

While security and foreign exchange challenges persist, the successful financial close of major projects suggests that the risk- reward ratio has shifted in favour of the investor. For the first time in modern history, Ethiopia is not just exploring; it is mining.