Rwanda bans middlemen in minerals trade

Tagged minerals in sacks ready to be processed at Phoenix Metals in Kigali. PHOTO | CYRIL NDEGEYA 

By KABONA ESIARA

In Summary

According to the Rwanda Development Board:

• Contribution of the mining sector to GDP is projected to increase from 1.2 per cent to 5.27 per cent.
• The number of working people (16 years and above) with their main job in the mining sub-sector will increase from 20,000 to 60,000 .
• Total investment (cumulative) in the sector will be increased from $150 million to $500 million.
• Export earnings will increase from $ 158 million in 2011 to $400 million by 2017/2018.
• Certified mine sites with efficient water and wastes management system to increase from 20 per cent in 2011/2012 to 100 per cent.
• Percentage of the certified mine sites with safe and secure working conditions will be increased from 25 per cent in 2011/2012 to 80 per cent.

Rwanda has banned the sale of minerals to middlemen in a bid to protect local factories that process them for export.

The Rwanda Geology and Mines Authority said that the ban, backed by a ministerial order, will help to streamline the domestic mineral trade by removing price distortions and curbing hoarding.

The move is part of measures the government is putting in place to position the sector as a key foreign exchange earner from the sale of value added products. It will also increase volumes of raw material available to processors and also create jobs.

Rwanda exports the 3Ts (tin mined as cassiterite, tantalum as coltan and tungsten mined as wolframite) in raw form, because the sector has failed to attract investors for value addition.

The government believes that increasing the output of minerals will help offset the impact of falling commodity prices.

Data from the National Bank of Rwanda shows that export earnings from minerals slowed by 42.1 per cent last year from $203 million in 2014, while the volume fell by 30.5 per cent to 7.28 tonnes.

This acted as a drag on the Rwandan economy, with the International Monetary Fund projecting that GDP growth will slow to 6 per cent this year from almost 7 per cent in 2015. It is, however, expected that mineral prices will gain 5 per cent in value in 2017.

Dr Michael Biryabarema, the director of Rwanda Geology and Mines Authority said that only licensed exporters and processors will buy the minerals.

Illegal mining remains a problem in the country, and is fuelling the illegal trade in minerals.

Sources say that unauthorised buyers have agents in the mines who steal the minerals and sell them on the blackmarket at competitive prices. For example, whereas a licensed mineral concessioner would pay $5 per kg of casseterite, the blackmarket trader pays slightly more.

“Illegal mining is a big challenge especially at sites where there are no concession holders,” State Minister for Mining Evode Imena, told large exporters in Rwanda.

He said that this has made it difficult to stamp out illegal mining in Rwanda as most mines are located in remote areas that are hard to police. He added that it is particularly difficult in mines where concessions have been cancelled.

As part of measures to revamp the extractive sector, the 2016-2019 budget framework paper has identified fast-tracking the gas and oil exploration project to evaluate the full petroleum potential in Lake Kivu.

“During this fiscal year (2016/17), the government will also facilitate the Karuruma smelting plant overcome the key constraint of access to power supply and a reliable sufficient mineral supply,” the budget framework paper notes.