Mineral prices set to go up in Rwanda

Workers at Rutongo Mines in Rwanda’s Rulindo district. PHOTO | CYRIL NDEGEYA |  NATION MEDIA GROUP

By KABONA ESIARA

In Summary

• The price of Rwanda’s minerals is likely to rise following the entry of global technology company Fairphone, which will compete for the country’s tantalum and tungsten.
• Fairphone, a smartphone maker, will buy tungsten directly. AVX Corporation, manufacturer of electronic components and publicly traded on the New York Stock Exchange, announced this past week that it will start sourcing tantalum directly from Rwandan miners.
• Rwanda, Democratic Republic of Congo and Burundi together produce more than half of the world’s tantalum ore.

The price of Rwanda’s minerals is likely to rise following the entry of global technology company Fairphone, which will compete for the country’s tantalum and tungsten.

Currently, the price of the two minerals has fallen, affecting earnings in the sector.

Fairphone, a smartphone maker, will buy tungsten directly. AVX Corporation, manufacturer of electronic components and publicly traded on the New York Stock Exchange, announced this past week that it will start sourcing tantalum directly from Rwandan miners.

Although the exact volume of minerals and the investment has not been disclosed, hopes are high that competition will grow as there are few producers of these minerals.

“Tungsten and tantalum are not widespread in the world. Rwanda is among the few countries with these resources,” said Evode Imena, State Minister for Mining.

Data from the Department of Mines and Geology shows that Rwanda produces about 1,500 tonnes of tungsten ore per year, one of the largest producers in Africa.

Rwanda, Democratic Republic of Congo and Burundi together produce more than half of the world’s tantalum ore.

Currently, mineral prices have dropped sharply; a tonne of tungsten that cost $350 to $370 in 2014, now costs $200.

Rwanda’s mining sector has also attracted a second traceability services provider, Better Sourcing Programme.

Industry players hope that having two mineral tracing companies will increase competition and significantly bring down the costs. For its mineral tracing scheme, the country has been depending on Pact Inc, a US based NGO, which is implementing ITRI’s Tin Supply Chain Initiative (iTSCi) in the DRC, Rwanda and Burundi on behalf of ITRI.

Pact trains small-scale miners, carries out field investigations, auditing, and reporting on all due diligence aspects of iTSCi.

Latest data on traceability costs shows that exporters of tungsten ore pay 5.7 per cent of the value of exports, tin ore is charged at 3.7 per cent, and tantalum ore attracts 3.5 per cent of its value.

The fees went up 3 per cent when the scheme was introduced, which Rwanda has been pushing ITRI to revise downwards.

Last October, Rwanda tungsten miners paid $12,000 for each container in due diligence costs, much higher than the $8,330 for royalty tax.

Data from Rwanda’s Department of Mines and Geology shows that between January and August 2015, $3.2 million was spent on due diligence – four per cent of the value of minerals produced

“Better Sourcing Programme is introducing a unique business tailored for the Rwandan market. Miners have been connected to one of the global consumers of tantalum. This helps the country easily access the market,” said Mr Imena.

The government signed a memorandum of understanding with Better Sourcing to provide due diligence, and online real-time traceability and compliance services.

Dominique Kayigire, a consultant at Better Sourcing Programme Kigali, said the computerisation of the entire mineral supply chain in Rwanda is a new development on the market for the downstream and upstream markets and mining industry regulators.

“We will computerise all our operations to provide updated data and also link miners with buyers in the US,” said Mr Kayigire.