New law will help drive investor appetite for mining – Gatare

Gatare during the interview. Eddie Nsabimana.

The new law governing mining and quarry operations was gazetted last month. It seeks to promote professionalism and growth of the mining sector while giving a new lease of life to the mineworkers whose safety at work has been the cause for concern. For instance, in 2017 alone more than 90 miners lost their lives while others were left disabled due to unconducive working conditions. The law also tackles a wide-range of other issues in the sector, including licensing, illegal mining and the safety of the communities that surround mines. Among other things, it stipulates heavy penalties, including jail terms and fines, to mining companies or individuals who illegally operate the business.

The New Times’Eddie Nsabimanasat down with Francis Gatare, the chief executive of Rwanda Mining, Petroleum and Gas Board (RMB), who shed light on how the new law will help streamline the country’s mining sector.

Below are excerpts:

What informed the review of the law governing mining and quarry operations?

This new law came up as a result of two processes. The first is that we have been undertaking reforms in the mining sector, which started with the establishment of Rwanda Mines, Petroleum and Gas Board as part of Government’s efforts to inject new momentum into the sector. And since its establishment, we were given a mandate to carry out transformational change in the sector. That required us to review our regulatory framework.

The second process is informed by the 2015 review of the constitution. When the constitution was reviewed it necessitated a review of the penal code as there was need to put sectoral offences, breaches and penalties in sectoral laws.

These two things necessitated changes in the mining law; because there were offences and penalties associated with the mining sector that were previously in the penal code that needed to be removed and be added to the law on mining.

It also coincided with the ongoing review of the mining sector policies.

The relationship between government revenue generated from mining and economic growth were also put into consideration. The creation of employment opportunities and contribution to the country’s industrialisation process needed to be emphasised so mining can take place for a purpose, to contribute to the development of the country.

But there also has to be a balance between benefits to the investors who put in their money to carry out mining and the benefit the economy. We must therefore make the law the instrument for the institution to be able to manage the sector.

Mineworkers are always the victim of accidents at the workplace. How will the law ensure miners’ safety?

In the mining sector, the starting point has to be prevention because many of the accidents in mining activities are preventable. The starting point is on the requirement of the mining operators to put in place standards that would make it rear for an accident to happen.

Last year alone we had more than 90 deaths in the mining sector in the country. In some countries, a year can go without a single death happening. This does not mean that Rwandan mineworkers are more unlucky compared to their counterparts elsewhere but because in places where accidents are rare there are investments that have been put in place for the health and safety of the workers, thereby making it difficult for accidents to occur.

Here, the law requires mining companies to put in place prevention measures by constructing their working environment properly, giving sufficient safety facilities to workers and training them on how to handle the environment in which such accidents could potentially happen.

And when the accident happens, there has to be measures to adequately help workers who have sustained injuries and illness associated with the accident.

The requirement is that all mining companies should have insurance for all their workers, both medical and compensation-related insurance.

The law provides sufficient ground for regulation to take pace, and, as an institution responsible for regulation, we now have tools to be able to follow up on compliance. There are sanctions and costs, whether financial cost or suspension of the activities, to those who fail to comply. We will work with them (mining firms) to make sure there is a progressive change.

The Government is encouraging banks to work with mining firms but banks are unwilling to fund mining-related projects because they do not have sufficient information about the sector. What is being done to reverse the trend?

It is difficult in an environment of artisanal mining economy to raise funding because the only way to have access (commercial bank) to financing is by having supporting collateral. Which means it is not actually the financing for the (mining) project but financing borrowed against an existing asset because the mines they are operating are not in themselves bankable assets.

Companies that operate mining professionally don’t have problems with getting finance because you can generate geo information that can make financing possible.

However, the long-term solution lies in transforming the mining sector so that companies can raise initial capital to carry out the exploration to ascertain their existing reserves.

Many of our small mining companies don’t carry out feasibility studies to determine how much they have in their concessions. Instead, when they discover minerals, they start to mine without knowing how much they have in that concession and for how long can those minerals be able to repay the debt.

We will have to professionalise exploration to be able to collect enough geo-information that can be bankable.

And he Government is coming in to help. The first thing we have done is to start with collection of top level geo information so that we can help companies to have an understanding of what resources exist in their concessions.

Every year, we commit money into exploration so that we continue to gather information. We are repatriating information that the Belgians had collected (during the colonial era) and kept in Royal Museum Central Africa. We have now finished to capture all of it, there is scanning that is ongoing, we are developing a digital database for all of this information for people to access it so that it becomes easier for whoever wants to do a feasibility study on their concession.

We are helping companies to develop partnerships with other companies, whether it’s trading companies that will give financing or companies that can become equity holders.

On the basis of your revenue projections for this year, what is the progress against the target so far?

In our projections, we have given ourselves the target of $600 million this year, $800 million by 2020 and $1.5 billion by 2024.

But we continue to be cautiously optimistic. We are seeing a number of things working on our side. One is that the prices for our mineral exports on the international market are good. Two, we are seeing the diversification of our minerals beginning to pay off, particularly the gemstones. This year we are optimistic that we are getting closer to our target. We can’t tell at this stage how far we have gone, whether we fall short or if we’ll surpass the target, but we will review the numbers and communicate officially.

There are some things which we see may perhaps impact on our projections. One is that we have been working with a company called Mauridi that has been doing exploration in Nyanza District. They have sufficient explorations but delayed their mining operations and we hope that this will impact on our numbers significantly. We continue to work with them to see how they can expedite their operations.

There are some projects that had stalled because the companies were not sure of how the new law would look like. Now we are going to kick off and this will have a major and positive impact in the coming months.

How is the sector creating jobs?

One of the companies, Piran Resources, which operates in Musha-Ntunga Concession, has increased its operations lately. They will have a major impact on our export volumes by the end of this year and therefor continue to recruit workers as their operations continue to grow. There are new investments in smelting, in processing and also in the service sector, which are creating job opportunities. There is no slowing down in job creation.

Your have previously stated that you were doing mining exploratory studies. What’s the outcome?

This year we have done a number of detailed explorations. There is a UK-based company called SRK that we have worked with in the exploration of seven areas. We have not licensed them yet because this exploration continues. So far, of the seven concessions, six of them are looking very good but it is still an ongoing exploration until they end of this year.

By the end of this year we will have sufficient knowledge on these seven concessions and we will definitely license them and will hopefully have impact because they are focusing on some key minerals in the 3Ts (Tin-Tungsten and Tantalum) which we want to optimise, then concessions on Gold, Gemstone and Lithium, which we are very excited will contribute to the diversification to the 3Ts.

The new law allows the Government to acquire equity stake in the mining sector. Why is the Government interested in investing in the sector rather than leave it to private players?

The decision to privatise the mining sector was taken ten years ago. In this new law, we use the cautious word ‘may’ because it is deliberate. In some circumstances, the Government may find an important mineral, an important mining asset or a strategic investment which may prompt the Government to want to partner with an investor to take it forward. In those circumstances, the Government retains the right to participate.

This provision is informed by the Public-Private Partnership (PPP) law which defines how the Government can engage public partnership into investment.

There have been efforts to attract more investors in mining, exploration and trading of minerals. How attractive is the sector now?

The new law will help promote investment mobilisation. We believe that the law will bring stability in the sector. We want to make sure that regulation is stable for a long time because that is very important for our investors.

Part of the process is to streamline licensing so that we have licenses across different streams of business in the mining sector, including exploration licence, mining licence, processing licence, trading licence and now we have also introduced a new business venture, which is in mining services for those who want to go into the service sector not necessarily to the operations but to support the mining sector.

And we’re beginning to see a lot of interest in contract mining where companies are able to bring in their equipment and work with owners of licences to provide equipment on leasing.

We are having discussions with companies to invest in manufacturing mining equipment, we are also discussing with companies that want to establish consultancy services specialised in mining, whether in environment social-impact studies or feasibility studies.

In mining operations, we are also promoting a lot of concessions that we see have potential and have a number of applications that are on file from companies – local, regional and international ones.

But what is exciting is the processing sector. We have a new investor, Luna Smelter, that has taken over Tin smelter in Karuruma (Gasabo District).

editorial@newtimes.co.rw

 

 

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