UN sanctions no deterrence for Eritrean mining-Bisha

By Jeremy Clarke

ASMARA (Reuters) - Eritrea's fledgling mining sector is unlikely to be affected by U.N. sanctions on the Red Sea state, the general manager of Bisha mine, run by Canada's Nevsun Resources, said on Friday.

Eritrea is seen on the threshold of a mining boom, with hopes it may boost an agriculture-based economy that has suffered from irregular rainfall.

The United Nations last month voted to punish Eritrea for its alleged support of Islamist insurgents in Somalia. The decision initially weighed on Nevsun's shares.

Stanley Rogers, the head of the Bisha project, however said the industry was not feeling the heat and all eyes were on the movement of the price of gold.

"There has been no slowdown whatsoever since the announcement, the momentum has continued. I don't expect anything to change with respect to our project. Our production start date remains the same. I would have thought it was the same at other projects," he said.

"For (investors), the international price of gold is a more decisive factor than sanctions imposed on a single country."

External perceptions of Eritrea are at odds with the internal reality, he added. "Internally, this is a stable place to do business. My view on this hasn't changed," he said.

Bisha is Eritrea's most advanced mining project. Its 27 million tonnes of ore are believed to contain 1 million ounces of gold, 700-800 million pounds of copper and 1 billion pounds of zinc. Production is expected by the end of the year.