Ethiopia is set to hit its target of more than doubling mining exports to an annual $1 billion ahead of time, the country's mining minister told Reuters, as it promotes gold extraction, but also fertilizer ingredient potash.

Ethiopia, though still reliant on commodities like coffee for revenue, is expected to earn around $500 million from mining exports in the financial year to next July, the minister said. It had targeted doubling that over five years from 2010/11.

"It looks like we are going to pass this (level) before then," Minister Sinkenesh Ejigu said on the sidelines of a London investment conference. She did not elaborate. "Exports are gold, tantalum, gemstones and a little platinum."

Exploring for potash was a key aim, Ejigu said.

The country, which expects to begin mining potash in two years' time, is targeting potash exports of 1 million tonnes a year within five years, Ejigu said. That would amount to a small, though growing, portion of global demand, estimated by Potash Corp (POT.TO: Quote) at 55 to 60 million tonnes for this year.

SCRAMBLE FOR MINERALS

Ethiopia has large and potentially lucrative deposits of gold, silver, copper, platinum, potash and tantalum, and sits on a mineral-rich belt that has begun attracting increasing numbers of investors and mining companies as they look beyond traditional producing countries in the scramble for minerals.

Chinese investors, hungry for gold, copper and other industrial metals, have begun looking for opportunities in the region, as have some of the major mining companies.

Ethiopia is part of the so-called Arabian-Nubian Shield, which stretches from Saudi Arabia and Yemen to Sudan and Egypt, and is home to rich gold and base metal deposits, though much of the rich seam is mined unofficially, by small-scale prospectors.

Ejigu said small-scale prospectors currently account from roughly 50 percent of output.

Ethiopia currently has around 80 active mining companies, but expects that to rise sharply. The only gold miner currently producing is Saudi Arabia's Midroc, but London-listed Nyota (NYO.L: Quote), now focused on Ethiopia, is set to follow.

Nyota's flagship project is Tulu Kapi, 500 km (310 miles) west of capital Addis Ababa, not far from what is purported to be the site of the fabled King Solomon's mines.

Nyota has in recent weeks filed an application for large-scale mining to begin work on Tulu Kapi, which has a total inferred resource of 1.2 million ounces of gold.

Ethiopia, like neighbouring Eritrea and even Sudan, is seeking to cash in on the boom in interest as metal prices hit record highs, assets become rarer and older mines mature, attracting investors with relatively low ownership demands.

The Ethiopian state takes a modest 5 percent of free equity, which can rise as a result of negotiations with individual companies. That compares to demands for majority stakes in countries like Egypt, Sudan and of course Zimbabwe.

It also levies 35 percent tax on taxable income generated from mining.

Eritrea, which has also laid out attractive ownership and fiscal conditions to bring in mining firms, granted an exploration licence to Chalice Gold earlier in the year. Its development is about 10 km north of Eritrea's most advanced project -- Bisha -- run by Canada's Nevsun Resources (NSU.TO: Quote). (Editing by James Jukwey)

Source: Reuters.com