Eritrean mining made safer after attack-Chalice Gold

By Jeremy Clarke ASMARA, Nov 6 (Reuters) - An increase in state-provided security will help shield Eritrean mining from violent attacks, an independent analyst said on Friday. Three miners, Eritrean nationals employed by Australian company Chalice Gold Mines Limited were ambushed and executed on a remote road north-west of the capital last month. Much hope is pinned on Eritrea's minerals sector, seen on the threshold of a mining boom that may drive its agriculture-based economy. Over a dozen foreign companies are exploring or about to start in the Red Sea state. Last month's attack created fears that investors could lose their nerve and stay away. "After taking a look, we are confident it was an isolated incident and not in any way directed at the mining industry," said Kel Donovan, a risk-assessment expert brought in by the Chalice. "There were no identifiable risks on the travel routes to the mining site or on the site itself," Donovan told Reuters in Asmara, after a week-long review of the company's safety measures as well as travel and emergency procedures. "Given the presence of law enforcement we find the industry relatively safe." The managing director of Chalice, Doug Jones, welcomed the increase in security personnel provided by the government to all mining companies. "Security has been beefed-up not just for (foreign nationals working in Eritrea) but across the board for the whole industry," Jones said. Eritrea's mining potential is largely unexploited, apart from small-scale artisan mining and some minor extraction by Italians during the colonial era.

Some bigger miners were scared off by the 1998-2000 border war with Ethiopia. Gold, zinc and copper are the main interests. Chalice's Zara project is one of the largest operating in the country and is believed to hold 1 million ounces of gold. It does not expect to start production before 2011. Eritrea's most advanced project, run by Canada's Nevsun Resources Ltd, is Bisha. Its 27 million tonnes of ore are believed to contain 1 million ounces of gold. Production is expected by late 2010. (Editing by William Hardy) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/ Keywords: ERITREA MINING/ (Email: [e-mail]; tel [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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