ECONOMY: Rwanda’s mineral sector in a hasty growth

If mineral export earnings reach Rwf55.4 b as projected by the minister, government will have achieved its three year projection in just 12 months Government is targeting mining as a priority sector that will help diversify Rwanda’s exports, because of its current export value earning at 35 percent. This will be achieved through massive investment and liberalisation of the sector that will allow in more private players. In 2003, export earnings from minerals were $12 million (Rwf6.7 b), compared to $70 million (Rwf38.8 b) last year, an 82.9 percent increase in five years, thanks to the innovations in the sector. The sector beat Coffee, Tea and Tourism in terms of export earnings, becoming the highest export earner for the first time in history. And, in just nine months this year, minerals have earned $70 million (Rwf38.8 b) in export value, the equivalent of last year, which indicates a deficiency of only $7 million (Rwf3.9 b) to achieve this year’s government target of $77 million (Rwf42.6 b). As of August this year, mining industry has only been out competed by the tourism sector which earned $137.7 million (Rwf76.3 b). These steady earnings from minerals are attributed to deposits of cassiterite (tin), colombo-tantalite (coltan), wolfram, gold and sapphires. Wolfram export volume alone has grown by 22 times in the last five years. Rwanda also produces cement (about 120 000 tonnes per year) and small quantities of natural gas. Information from the mining taskforce, in the last two years also indicates that metal prices have shown a significant increase and in some cases, prices doubled, partly driven by industrialisation in some countries like China, Brazil and India that are becoming a big market for Rwanda. Vincent Karega, State Minister of Environment and Mining, said the steady growth of the sectors earnings is due to the liberalisation of the economy by government, which attracts private investors. “Government has always advocated for economic liberalisation as a way for development. In Vision 2020, government identified mining as a priority sector that would enable Rwanda diversify its exports,” he said. Today, government is injecting Frw12.5 billion in the sector for 2008-2010, in order to strengthen its regulation, avail new data to interested investors, support value addition to metallic ores and quarries, and into the sector consolidation and sensitisation programme. Karega explained that this has attracted massive foreign direct investments in different sectors worth Rwf520 billion, as of 2007. The value is Rwf53.6 billion above last year’s local investments. According to statistics from the Ministry of Natural Resources, there are 12 foreign investors in the mining industry today, of which three where granted exploration permits this year. Some of these include Wolfram Bergbau, Metal Processing Association (MPA), Natural Resources Development Rwanda Ltd, Bay View Group, Sinotrade, Rwanda Metals, Rwanda Allied Partners and Africa Tangsten. Transafrika Resources, an international exploration company, was awarded three exploration permits to explore gold on 97,090 hectares in Gicumbi District, Northern Province. Karega is even optimistic these companies will contribute to this year’s expected mineral earnings and probably fetch of $100 m (Rwf55 .4b). If mineral export earnings reach Rwf55.4 b as projected by the minister, government will have achieved its projection of three years in just 12 months. Karega added that there are also 181 individual artisan miners and cooperatives contributing to the development of the mining industrial. These produce mainly ores and concentrates from scattered locations generally in a zone about 30 km wide that extends east-west through Kigali. Pyramid International, a mineral exploring company is also expected to set up a plant in Rwanda soon. The plant to be located in Kicukiro district will deal in wolfram. As part of the efforts to realise further growth, the Ministry of Natural Resource with the investment promotion agency are campaigning to attract more investors in the sector. A mining law is also yet to be passed by government but the concerned ministry is also strengthening mining regulations and inspections. The ministry is also supporting incentives to attract investors while also engaging in capacity building, especially for small scale miners to help develop the sector and fully exploit the sector professionally. Despite tremendously contributing to the Gross Domestic Product (GDP), the industry is believed to be directly employing over 30, 000 people. Meanwhile, there are reports that minerals are being affected by the global financial meltdown. Some metals are reported to have been affected. For example, tin prices have dropped to their lowest level from $16,000 (Rwf8.9m) to $11,500(Rwf6.4 m) per tonne in over a year as the global financial crisis continues. In order to address this, local mineral exporters have warned and urged to put to hold the export of minerals as the country monitors global prices. Ends