This article provides a comprehensive summary of the key themes and essential provisions derived from various directives issued by the Ethiopian Ministry of Mines and Petroleum (MoMP) and the Ethiopian Investment Commission (EIC). These directives collectively establish the regulatory framework for Ethiopia’s mining sector, encompassing aspects such as licensing, operational standards, and foreign participation. Additionally, they address the procedures for issuing work permits to expatriates involved in investment projects, with a strong emphasis on knowledge and skill transfer to local professionals.
I. Mining Sector Regulations
The Ministry of Mines and Petroleum has promulgated several directives that delineate the procedures and conditions governing various facets of mining operations. These regulations are designed to ensure effective oversight, maximize benefits for the state and the public, and uphold environmental and social responsibility within the sector.
A. Directive No. 271/2013: Determining the Ceiling of the License Area for Mining Operations
Issued on Hamle 1, 2011 E.C. (Ethiopian Calendar), this directive, officially titled “Determining The Ceiling Of The License Area For Mining Operations Directive No. 271/2013,” establishes the maximum allowable area for mining licenses. Its primary objective is to regulate the spatial extent of mining concessions to ensure equitable distribution and sustainable resource management.
B. Directive No. 272/2013: Internal Procedure Prepared for Processing Mining Operation License Applications
Dated Megabit 1, 2011 E.C., this directive, “Internal Procedure Prepared for Processing Mining Operation License Applications (Directive No. 272/2013),” outlines the internal protocols within the Ministry of Mines and Petroleum for managing applications for mining operation licenses. It aims to streamline and standardize the processing of these applications, enhancing efficiency and consistency.
C. Directive No. 273/2013: Directive Issued Regarding the Issuance of Mining Operation Licenses
Also issued on Megabit 1, 2011 E.C., this directive, “Directive Issued Regarding the Issuance of Mining Operation Licenses (Directive No. 273/2013),” provides specific guidelines and regulations pertaining to the actual issuance of mining operation licenses. It details the conditions and processes that must be followed for a license to be granted.
D. Directive No. 274/2013: Directive Issued to Determine the Prerequisites Required For Obtaining A Mining Operation License
This directive, effective from Megabit 1, 2011 E.C., is titled “Directive Issued To Determine The Prerequisites Required For Obtaining A Mining Operation License (Directive No. 274/2013).” It meticulously specifies the mandatory preconditions that applicants must satisfy to qualify for a mining operation license, ensuring that only capable and compliant entities receive permits.
E. Directive No. 277/2013: Directive on Professional Competency Certification Requirements For Applicants Seeking Consulting Service Licenses In The Mining Sector
Issued on Nehasie 8, 1990 E.C., this directive, “Directive on Professional Competency Certification Requirements For Applicants Seeking Consulting Service Licenses In The Mining Sector (Directive No. 277/2013),” establishes the professional competency certification standards for individuals or organizations seeking licenses to offer consulting services within the Ethiopian mining sector. This ensures a high standard of expertise in advisory roles.
F. Directive No. 278/2013: Opal Waste Product Directive
Dated Miazia 1, 2007 E.C., the “Opal Waste Product Directive No. 278/2013” specifically addresses the management and disposal of waste products generated from opal mining activities. This directive highlights the Ministry’s commitment to environmental protection and responsible waste management in specialized mining operations.
G. Directive No. 279/2013: Directive Issued To Determine The Manner In Which Foreign Nationals Participate In Mining Production And Precious Mineral Trade Activities
This crucial directive, effective from Meserkerem 1, 2010 E.C., is titled “Directive Issued To Determine The Manner In Which Foreign Nationals Participate In Mining Production And Precious Mineral Trade Activities (Directive No. 279/2013).” It sets forth the regulations governing the involvement of foreign citizens in mining production and the trade of precious minerals within Ethiopia, aiming to balance foreign investment with national interests and control.
H. Directive No. 809/2013: Guidelines Issued to Determine the Manner in Which Decisions to Grant and Terminate Mining Licenses Will Be Reviewed
Effective from Tahesas 17, 2015 E.C., this directive establishes comprehensive guidelines for reviewing decisions related to the granting and termination of mining licenses. It introduces a formal “Mining Operations License Granting Process Review Committee” to ensure transparency, accountability, and adherence to legal and technical standards.
Key Themes and Ideas from Directive No. 809/2013:
- Rationale for the Directive: The directive’s introduction underscores its necessity in ensuring the proper execution of license granting by the relevant directorate. It aims to facilitate corrections before issuance, verify the knowledge, experience, and financial capacity of mining investors, ensure fair licensing practices, involve relevant professionals in the process, properly evaluate documents against mining law, and promote environmentally and socially responsible mining that benefits both the government and the public.
- Objective: The primary objective is to ensure that the licensing process incorporates diverse professional expertise, that government and public benefits are appropriately secured in accordance with mining laws prior to license issuance, and that the entire process is transparent, accountable, collaborative, and participatory.
- Scope of Application: This directive exclusively applies to mining operation licenses granted by the Ministry of Mines and Petroleum.
- Licensing Process: A multi-stage process is outlined, commencing with environmental and social impact assessments. This is followed by a review of work plans by the Mining License Directorate, further review by the License Team Coordinator, and subsequent scrutiny by the Director of the Mining License Directorate. Finally, the application is referred to the Review Committee for thorough examination and a recommendation to higher management.
- Mining Operations License Granting Process Review Committee (The Committee):
- Composition: The committee comprises seven members appointed by higher management, including experts in licensing, two experienced geologists, a mineral economist, a representative from the Legal Affairs Directorate, the Mining License Directorate Director Assistant, and a non-voting secretary. Only five members (licensing expert, two geologists, mineral economist) possess voting rights.
- Functions and Responsibilities: The committee is tasked with reviewing license application documents, which have been vetted by the Mining License Directorate, against mining laws and technical requirements, utilizing a comprehensive checklist. It then provides a decision recommendation to higher management.
- Specific Review Areas: The directive details precise points the committee must verify for different types of licenses, including exploration, exploration renewal, production, production renewal, retention, and transfer. These checks encompass company profiles, work plans, cadastral registration, budget adequacy, public announcement and resolution of objections, regional licensing status, environmental and social impact assessments, adherence to area limits, applicant scoring, and specific requirements for various mineral types (e.g., alluvial gold).
- License Transfer: For license transfer applications, the committee is mandated to verify the transfer agreement, the financial and technical capacity of the transferee, their legal standing, tax compliance on the transfer value, the transferor’s fulfillment of obligations, the transferee’s commitment to the existing work program, and the acceptability of the proposed work program.
- License Termination: Recommendations for license termination, submitted by the License Directorate to higher management, must include comprehensive details on the license history (issuance date, current status, warnings issued), a summary of poor performance during the operating period, the licensee’s fulfillment of obligations to the government and society, and their performance regarding environmental protection and public health and safety.
- Meeting Procedures: The committee’s meeting schedule is determined by its members, with the chairperson required to convene a meeting within seven working days of receiving a license review request from higher management. A majority of members constitutes a quorum, and decisions are made by majority vote (excluding non-voting members). The chairperson holds the deciding vote in the event of a tie.
- Decision Recommendation: The committee must promptly submit its decision recommendation to higher management (within five working days for exploration licenses, with timelines for production licenses determined by mineral type and specific situation). The recommendation must be documented in a signed minute of the meeting.
- Repealed Directive: Directive No. 4/2011, which previously governed internal procedures for handling mining license applications, is explicitly repealed and superseded by this directive.
- Effective Date: This directive became effective upon being signed by the Minister of Mines and Petroleum on August 12, 2021.
II. Investment and Expatriate Work Permit Regulations (Directives from EIC)
The Ethiopian Investment Commission (EIC) plays a pivotal role in regulating investment activities, including the crucial aspect of foreign employment. One significant directive from the EIC focuses on the issuance of work permits to foreign employees in investment projects, underscoring the importance of knowledge and skill transfer.
A. Directive No. 772/2013: A Directive Regulating the Issuance Of Work Permit To Expats Employed In Investments And The Implementation Of Knowledge And Skill Transfer From Expats To Ethiopians
Issued on December 31, 2020, this directive outlines the procedures for issuing work permits to foreign nationals engaged in investment projects approved by the Ethiopian Investment Commission. It places significant emphasis on the mandatory transfer of knowledge and skills from expatriate employees to Ethiopian nationals, fostering local capacity building.
Key Themes and Ideas from Directive No. 772/2021:
- Context and Legal Basis: The directive is issued by the EIC in accordance with Investment Proclamation No. 1180/2020 and Investment Regulation No. 474/2020. These legal instruments mandate the EIC to provide comprehensive one-stop services to investors, including facilitating work permits for foreign employees and overseeing knowledge transfer initiatives. The directive also highlights collaboration and consultation with the Ministry of Trade and Industry and the Ministry of Labor and Social Affairs.
- Scope of Application: This directive applies to foreign employees in investments administered by the EIC, encompassing wholly foreign-owned enterprises, joint ventures, investments by foreign nationals treated as domestic investors, and investments by domestic investors in incentivized sectors requiring a federal business license. It also extends to recognized refugees with valid identification engaged in waged employment (with specific exclusions for certain joint rural/urban projects). Notably, work permits for expatriates in air transport, power generation/transmission/distribution, and communication services remain under the purview of the Ministry of Labor and Social Affairs based on delegated authority. Other categories of foreign employees outside this scope are governed by directives issued by the Ministry of Labor and Social Affairs.
- Requirement of Obtaining Work Permit: Any investor falling within the directive’s scope must obtain a work permit from the Commission to employ foreign nationals in higher management, supervisory, training, technical, and related roles. Work permits may also be issued to spouses of investors or expatriate employees if their relevance and qualification for the investment are duly verified.
- Issuance of Work Permit for Top Management: Investors are permitted to employ necessary foreign top management personnel, including CEO, COO, CFO, and Board Chairman. The number of such positions is restricted, particularly during the project construction phase (Project Manager, Deputy Project Manager) and the implementation phase (CEO/General Manager, Deputy, COO/Deputy, CFO, Marketing Manager, and potentially Board Chairman). Other managerial roles are not considered top management for the purposes of this directive. Work permits for top management are issued and renewed annually based on employer request, without requiring preconditions related to Ethiopian substitutability or knowledge transfer. If an enterprise in the implementation phase fills at least one-third of its management positions with Ethiopians, the work permit for foreign management can be valid for two years.
- Procedure to Determine the Number of Expats in Non-Management Positions: The directive sets limits on the number of foreign employees in non-management roles, contingent on the project phase and the number of Ethiopian employees. During construction, the number of foreign hires (excluding Project Manager/Deputy) cannot exceed 10% of permanent Ethiopian project staff (with a potential increase to 15% for expansions utilizing retained earnings). Machinery installation permits are typically granted for one year and are non-renewable, with exceptions for delays beyond the company’s control, highly complex technology, or significant capital investment. Commissioning phase permits are also for one year and are non-renewable. During the operation phase, the total number of foreign non-management employees generally cannot exceed 10% of Ethiopian employees (with a potential increase to 12% in highly labor-intensive sectors, subject to Commission approval based on a detailed study). Exemptions from these limits may be granted by the Commission based on studies for high-tech, consultancy, and high-skill agricultural investments that do not require intensive labor. Existing companies exceeding the 10% limit must develop a clear action plan to achieve compliance within one year. For temporary roles such as repair, maintenance, training, and audit, work permits are issued for three months and are generally non-renewable, with a possible one-time extension in cases of force majeure. Companies experiencing operational disruptions due to machinery maintenance can request new or renewed permits up to two times per year.
- Submission of Work Permit Application and Use of Work Permit: Work permits are issued solely upon the request of the employing enterprise. Employers are required to complete the prescribed application form. The work permit is valid only for the specific position and the requesting enterprise. Employees are prohibited from working in different roles or for other organizations. Any change in role necessitates a new application and work permit. Foreign nationals can apply for new permits for new roles without departing the country. Employers hiring foreign nationals in health, education, or similar specialized fields requiring professional qualifications must attach authenticated credentials, verified by relevant government bodies and Ethiopian embassies/Ministry of Foreign Affairs.
- Requirements to Obtain a New Work Permit: A comprehensive list of required documents includes a completed application form, curriculum vitae (CV), authenticated educational/professional/experience credentials (original and copy), a passport valid for at least three months, passport-size photographs, relevant visas (WV or BV) or an existing work permit, professional competency verification (if applicable), an employment contract, an investment/business license, proof of service fee payment, evidence of Ethiopian replacement employee hiring and assignment plans, and a detailed training/knowledge transfer program for replacements.
- Training and Knowledge and Skills Transfer: The directive strongly emphasizes the obligation of enterprises hiring foreign nationals (excluding those in management and temporary roles) to make diligent efforts to ascertain the unavailability of qualified Ethiopians for the position. Furthermore, employers are mandated to establish and provide on-the-job training to facilitate the development of Ethiopian replacements within a defined timeframe.
- Type of Training and Supervision Procedure: Employers must prepare and submit a comprehensive training and knowledge transfer program and report, including timelines for replacement, types and schedules of training, and quarterly performance details. The report should include the foreign employee’s details, the Ethiopian trainees’ details, specific training content, and explanations if trainees do not acquire the necessary skills. Initial program details must be submitted within one week of the foreign employee’s hiring. Quarterly progress reports are mandatory according to a schedule set by the Commission. The Commission will conduct field monitoring every three months to assess the implementation and effectiveness of the training programs.
- Validity of Work Permit: Unless explicitly specified otherwise (as in Articles 5 and 6), work permits are generally valid for one year and can be renewed annually for a maximum of three years, contingent upon satisfactory progress in training Ethiopian replacements. The work permit validity commences from the issuance date. Applications submitted more than 30 working days after the foreign national’s entry into Ethiopia are not accepted unless the delay is attributable to reasons beyond the company’s or the professional’s fault. The three-year renewal limit is generally not extended, except under special circumstances approved by the Commission (e.g., investment capital exceeding $40 million or employing over 1500 workers). Re-hiring another foreign national in the same position after the three-year limit is generally not permitted unless knowledge/skill transfer failed due to reasons beyond the company’s control, trained Ethiopians voluntarily left, or the trainee’s employment contract was terminated due to their fault.
- Conditions for Renewal of Work Permit: Renewal is contingent upon the satisfactory progress of training Ethiopian replacements. Renewal may be denied if the employer’s efforts are deemed insufficient, the reasons provided are unconvincing, the Commission believes an Ethiopian replacement can fill the role based on current preparation, or if similarly skilled Ethiopians are readily available, rendering the foreign national unnecessary. Work permits can be renewed if the foreign national remains essential for the job and the work is continuous.
- Documents Required for Renewal: Applications for renewal must be submitted within one month before expiry, accompanied by a completed renewal form, a passport valid for three months, the work permit book, a residence permit (if applicable), a support letter from relevant institutions (if in health/education), the employment contract, a complete annual performance report on knowledge transfer, proof of service fee payment, and a renewed investment/business license. Late renewals are subject to penalty fees (50% for the first month, 75% for the second, and 100% for the third month after expiry).
- Conditions for Revocation of Work Permit: Work permits are subject to revocation upon expiry (if not renewed), if the foreign national is no longer required (even if the permit is valid), if the foreign national works for a different employer or in a different role, upon completion or redundancy of the job or company closure, if not renewed for over three months, if the foreign national’s presence is deemed a national security threat, upon resignation, if issued based on incorrect information, or due to non-compliance with employer/employee obligations. Upon revocation, the work permit book must be returned to the Commission.
- Employer’s Obligations: In addition to obligations under the Labor Proclamation, employers must ensure the foreign national works only in the approved role, notify the Commission within five working days if an employee is absent for over five days, facilitate the employee’s appearance if requested by the Commission, notify the Commission and return the work permit book within five days of contract termination, inform the Commission of any change in the employee’s workplace address within five days, maintain the employee’s residence address record, request cancellation of the work permit if the employee violates criminal laws (excluding minor traffic offenses), not employ anyone without a work permit, not involve them in illegal or immoral activities, and facilitate and verify knowledge/skill transfer to Ethiopian replacements.
- Expat Employee’s Obligations: Beyond duties under the Labor Proclamation, foreign employees must possess their work permit at the workplace, work only for the specified employer and in the registered profession, transfer knowledge and skills to Ethiopian replacements as per the established schedule, refrain from illegal/immoral activities, and report to the Commission when requested.
- Appointment of Liaison Officer: Employers are required to appoint a liaison officer to handle work permit requests. The requirements for the liaison officer’s identification and authorization vary depending on whether they are an employee of the company or a third party. The company’s General Manager can also process the request with proof of their position.
- Monitoring and Supervision of Expat Employees: The Commission will actively monitor and supervise to ensure compliance with the Proclamation, Regulations, and Directives related to expatriate employment.
- Replacement of Work Permit Book: Employers must immediately report the loss of a work permit book to the Commission with a signed explanation and provide a police report. A replacement will be issued after verification and payment of the service fee.
- Work Permit Clearance: Employers seeking clearance for a foreign national must submit a completed clearance application and return the work permit book. Even if the company closes, the foreign national can obtain clearance by providing proof of closure from the relevant Commission department. Clearance requests submitted more than one month after the work permit expiry require payment of the renewal fee for the lapsed period.
- Service Charge: A schedule of service fees is outlined for new work permit issuance (ETB 2000), renewal (ETB 1500), and replacement of the work permit book (ETB 1200), in accordance with Council of Ministers Regulation No. 394/2016.
- Penalty: Employers failing to meet their obligations are subject to penalties under the Labor Proclamation and other relevant laws. The Commission will initiate legal action against foreign nationals working without a valid work permit.
- Duty to Implement: All individuals and entities are obligated to cooperate in the implementation of this Directive.
- Transitory Provisions: The administration of work permits issued by the Commission or the Ministry of Labor and Social Affairs prior to this directive, for investments falling within its scope, will now be governed by this new directive. The Ministry of Labor and Social Affairs is mandated to transfer all active relevant work permit dossiers and supporting software to the Commission within six months of the directive’s effective date.
- Effective Date: This Directive became effective upon its registration and numbering by the Office of the Federal Attorney General and its subsequent publication on the Commission’s official website.
B. Directive No. 275/2013: Amending the Conditions for Allowing the Importation of Vehicles Free of Customs Duties and Taxes
Issued on Megabit 1, 2011 E.C. by the Ministry of Finance, this directive focuses on modifying the conditions under which vehicles can be imported into Ethiopia without incurring customs duties and taxes. While this directive has broader implications for investment, its direct and specific connection to the mining-specific directives is not explicitly detailed in the provided excerpts. Nevertheless, it represents a significant policy instrument impacting the operational costs and logistics for investors across various sectors, including mining.
III. Conclusion
The directives summarized in this chapter collectively establish a robust and comprehensive regulatory framework for the mining sector in Ethiopia. They cover a wide array of critical aspects, including detailed licensing procedures, operational guidelines, environmental and social considerations, and the structured participation of foreign nationals. Specifically, Directive No. 772/2021 from the Ethiopian Investment Commission meticulously addresses the employment of expatriates in investment projects, underscoring the paramount importance of work permits and the mandatory transfer of knowledge and skills to Ethiopian counterparts. Furthermore, Directive No. 809/2013 introduces a vital review mechanism for mining license decisions, designed to enhance transparency, accountability, and ensure strict adherence to established regulations and the broader national interests. A thorough understanding of these directives is indispensable for all stakeholders, including investors, mining companies, consultants, and foreign employees, who intend to operate or are currently operating within the Ethiopian business landscape.