An untapped resource

Ethiopia has marble deposits in several regional states, including Harrar, Tigrai, Oromia, and Benishangul-Gumuz. Though the country is blessed with abundant marble resource, it is not fully tapping them. The present demand for the mineral product is estimated at 211,252 sq.m per annum. The demand is expected to reach 729,299 sq.m by the year 2020. Marble – a rock composed of granular limestone or dolomite – is mainly used for exterior building works to provide lasting strength to walls. Having high quality marble, the country imports marble products with hard-earned foreign currency. An Indian-Ethiopian joint venture company, Alisha Mining PLC, is a new entrant into the thriving Ethiopian marble industry. Kaleyesus Bekele of The Reporter spoke to the general manager of Alisha Mining, Ahan Shailesh Hingarh. Excerpts:

The Reporter: How was Alisha Mining established?

Ahan Shailesh Hingarh: We first started our mining activity in the Benishangul-Gumuz regional state. We saw an opportunity in processing marble in Ethiopia. The majority of marble in Ethiopia is imported. To reduce the imported marble we set up a marble processing plant in Burayu Tatek industrial zone. There was no modern technology that processes marble in Ethiopia some years back. Most of the plants have single cutters which do not give high quality product, size and delivery time as desired by the market. The new growing Ethiopia needs high quality marble. There is a construction boom in this country and high quality marble is needed for the magnificent buildings that are under construction in Addis Ababa and elsewhere. But there was no modern marble processing plant in the country that supports the growing construction sector. That is why we decided to set up a modern marble processing plant in Ethiopia.

Two and a half years ago we got land from the Oromia Regional State in the Burayu Tatek industrial zone. We established a joint venture with a local businessperson who was engaged in the production of marble. We acquired 20,000 sq.m. of land in Burayu and built the processing plant.

Tell us about the marble quarry in Benishangul.

We acquired the marble quarry three years ago. It is near Mendi town. The marble is of high quality. It is pure white marble. The quarry area covers approximately 2.4 sq. km. We opened two pits in the marble quarry. We have a capacity to produce 250-300 cu.m of marble. We bought all the required machineries like excavator, cranes etc. Previously, only jack hammer was used in marble quarries. That does not give you the required quality. We use modern machineries like wiresaw that enable us to produce high quality marble. We have also trained our local staff on the use of the modern machineries so that technology transfer is taking place.  

Tell us about the marble processing plant you built in Burayu.

We started building this plant some two years ago. We have invested 45 million birr to build the marble processing plant and to import new machineries. We bought the latest machineries in marble industry. We have modern dressing machine, gang saw (90 blades cutting machine), a 16 head polishing machine and a bridge cutting machine. We also have heavy-duty crane machines. These modern machines enable us to produce high quality product. We produce marble slab, tread, riser, all size tiles, kitchen top and skirting. We produce according to the customer’s demand. We are committed to change the face of the marble market in Ethiopia. We provide big-size marble slabs which are not available in the local market. It was difficult to find a marble slab and what were found were all imported at a very high price. Now we can produce and supply 60 by 60 cm tile and larger size stair cases in huge quantity within a short period of time. Now with our latest machine we can produce 100cm by 100cm also.  We can also produce higher size which was previously impossible to find in the local market. We supply stair cases with 2m by 32 cm. We can adjust the size based on customer demand.

How much did you invest in the marble quarry in Benishangul region?

So far we have invested 20 million birr in the marble quarry. We spent the money on buying and importing the machines. It is a fully-mechanized quarry. Our processing plant is also fully automated.

When did you finalize the construction of the marble processing plant?

We finalized construction on the processing plant two months ago. We had a test running. We have started production and supplying different marble products to the local market.  I can confidently tell you that right now we are producing the best marble product in terms of size, color and strength.

So have you started channeling your product to the local market?

We have started sales to the local market. We have diversified the market into two terms: one we are focusing on the contactors and second we want to be a source of raw materials for small marble manufacturers. We want them to stay in business. We are directly supplying to them the marble slabs. They have the small cutting machines. But we want to focus on big construction companies that give us big orders.

Who are your target customers?

As I said, contractors are our major targeted customers. Government agencies also need marble products. The small machine owners are also our customers. We also want to reach end customers. We are in the process of opening our first showroom in Addis Ababa in front of Atlas Hotel. We want to sell our final products to end customers who want to build their houses.  There are people who make their own choices. Some need the regular sizes available in the market and some want a different size. We produce marble tiles and stair cases based on customers’ specifications.  Our main motto is to give our customers high quality product with a fair price and on short delivery time which was missing from the market.

For instance, Ethiopians coming from abroad have a taste of the western world lifestyle and they may have different demands. We are ready to fulfill their demands. We provide them with the type of products they used to in the US and European countries.

What about the export market?

The export market in Ethiopia is very lucrative. Many people do not know that Ethiopia has high-quality marble. We are the first company to introduce Ethiopian marble in India. We have sent a huge shipment to India and the response is very good. Now we want to penetrate the Middle East and European markets. We have comparative advantages. And we have the best marble quarry where we produce high quality marble blocks. We also have modern machines that produce and high quality marble products. We can compete with price, quality and delivery time.

We are already receiving big orders from local customers. As of next month we will start exporting big slabs to India and Saudi Arabia. We will also start exporting to European countries such as Spain and Italy.

How much do you plan to earn?

In the coming six month we plan to earn USD 150,000 on a monthly basis. We will substantially increase the revenue next year.

What about from the local market?

We plan to sell more to the local market because we want to substitute the marble import. Our total monthly production capacity is 30,000 sq.m. In the first period we can produce 10,000 to 20,000 sq. m. We can raise 9 to 18 million birr from the local market monthly.

If we are not supplying our product to the local market at least half of it will be imported from broad. That will be nine million dollars equivalent to USD 500,000. So we will be helping the government save USD 500,000 monthly through export substitution. Once we start our export business at full swing it will help earn huge amount of hard currency for the country. 

What challenges have you faced so far?

Land acquisition was not a challenge for us. We were given good land in the industrial zone of Burayu Tatek. We were the first to set up an industry there. We do not see major challenges. We secured our trade license within a week. The government offices have been very supportive.

Accessory industry is not available here. If we need spare-parts we have to import it. There are no readily available spare parts in the country. I hope that it will be solved through time as more marble factories are established.

The recurring power cut is a big problem. We do not have light for two and a half days in a week. And it is unpredictable. It comes and goes without any prior notice. And this happens all the time. This has a serious impact on production. We have talked to government officials and they told us that they are working to solve the problem. They are changing the old transformers and transmission lines. We hope that this will be solved soon.

Our quarry is found in a remote area and there is no electric power so we use diesel to produce marble blocks. This is expensive and we add that to our cost which in turn reflects on our selling price. If we can have access to electricity we can reduce our cost of production. That means we can reduce our selling price. The road to Mendi is rough and this has escalated the transport cost.

The other problem we are facing recently is with the immigration department. We are unable to bring expats that we need for the work. We believe in knowledge transfer. We are training local staff but this will take time. For instance, we have a total of 80 employees working at the quarry and processing plant. But we have only seven Indian workers. We are training the local staff. When the local staff are able to run the machines with the required skill we will replace the expats with Ethiopian nationals. But now we are not able to bring the expats required for the work because of visa and work permit. And as I said above marble processing and mining is an art and skill so transferring the knowledge will take us some time. Till then we will need a few expats to run our operations smoothly.  

How do you evaluate the local marble industry? Ethiopia is endowed with a huge marble resource but it is still importing marble products.

The Ethiopian marble industry started to grow five years ago. What we understand is that the modern machineries required for processing the marble are not there. You have the marble resource but you need the skill and machineries to process and market them. Mining is a big challenge. Everybody cannot get into mining marble. Some can engage in the mining industry while other process the marble block. Those of us who have the big modern machines can supply the raw materials to the small manufacturers.  

Now people are investing in the marble industry. You need to invest in the marble quarry. You have to have modern machineries to extract the marble blocks in a good manner. You also need to have modern processing machines to produce refined marble products. You also need the skill to cut and shape the marble. Marble processing and mining is like art.

There were old machines which produce poor quality products. The marble mining was also done manually. So you need to invest on machineries and skills.

Delivery time is another major problem. It takes four to six months to deliver orders. This is because of the construction boom. Suddenly, the demand for marble became so big. No one forecasted this to happen. So the local manufacturers are unable to meet the growing demand. That is why you need to wait for a long time to take delivery. Because of the extended delay people prefer to import the marble from outside. This has to change. The delivery time should be short. Now in our factory it takes only 7-20 days to deliver orders for large orders which used to take four to six month for others. 

Delivery time, quality and size of the marble are the most important things in the marble industry. Though Ethiopia is a country endowed with immense resources its marble industry was lagging behind.

What is the prospect for the Ethiopian marble industry?

With the high quality marble resource Ethiopia has, there is a huge potential for becoming a leading marble exporter in Africa. If proper investment is made in modern machineries and skills the marble industry could be developed well. High-quality marble could be supplied to the local market and it can also be exported. A substantial amount of foreign currency could be generated from marble export. People in the international market are comparing Ethiopian marble with that of Vietnam and Makrana marble in India. The Makrana marble is what was used to build the Taj Mahal. Now the Makrana marble quarries have gone so deep that the resources are not available. Ethiopian marble can substitute the Macrana marble.

The marble industry in Ethiopia can be one of the leading sectors in the mining industry. It can go parallel to the gold mining industry. It can create more jobs, generate foreign currency and get additional revenue from taxes.

What should be done to attain that? What should the government do to assist the thriving marble industry? What should the Ministry of Mines do to take the marble industry forward?

The Ministry of Mines has always been supportive. But the ministry has to focus on the marble industry as one important sector. Maybe it is not a strategic industry like gold. But still it can contribute to the development of the construction industry as well as the fast growth of the economy. There is lack of awareness on the importance of the marble industry. So I believe the Ministry of Mines has to work on awareness creation both in the country as well as abroad. Ethiopian high quality marble should be promoted in the international market. Local marble manufacturers in collaboration with the Ministry of Mines should participate in international trade fairs.

We also request the government to enter into cordial trade agreement with other governments for marble and its product to boost its exports. These trade agreements help our industry to export to those countries where there are trade barriers or higher tariff which in turn will boost export and will open doors to different markets.

We also plan to increase export in our marble industry and hope that the government will roll out some incentives which will be a great push and will give us a competitive advantage in the world market thought which we can boost export.

Does your company have plans to engage in other investments in Ethiopia?

We have a plan to invest in iron ore and coal exploration and development projects. We are also in the process to invest in the real estate sector.