Local mining sector could be destined for better days after years of slow activity as investors’ appetite for the sector goes up.
The sector has for years been dogged by challenges ranging from access to financing, and slump in global mineral prices to lack of adequate regulation which could have seen investors shy away from the sector.
The low level of technology and popularity of artisanal practices did not help the situation either as recovery rates and efficiency remained low.
However, a new dawn beckons as investors are showing increased appetite for the sector. Last week, an international mining processing firm, Power Resource Group (PRG) Plc, announced the establishment of Rwanda’s first tantalum and niobium refinery.
The firm is investing about $16 million to put in place a plant expected to begin operations before the end of 2018.
Once operational, the plant is expected to boost efficiency of operations, technology used and volume and value of exports.
Currently, Rwanda exports about 50 per cent of the global tantalum exports in the world market in spite of the reliance on artisanal methods of mining.
The chief executive of Rwanda Mines, Petroleum and Gas Board, Francis Gatare, told The New Times that in some years, Rwanda has accounted for about 70 per cent of the global supply.
Sources say the sector has also attracted interest from Canadian and Australian firms in refining
PRG, a Slovenian firm, will initially process about 10 metric tonnes of ore a month before increasing to 30 metric tonnes and later about 60 metric tonnes.
The firm will also be involved in mining activity and technology transfer to increase the recovery of minerals.
“We will work with locals on a mining project. We are also working with them on transfer of technology with an aim of increasing productivity,” he said.
Gatare said recent months have seen increased investor interest in various mining aspects, including processing, refining and extraction.
This, however, necessitated a change to see a reduction on the number of middle men as investors get close to the source of minerals, he added.
“For quite some time, we have been knocking on doors to demonstrate to them opportunities for minerals in the country, particularly tantalum,” Gatare said.
The Government has been investing in exploration studies to understand the extent of deposits in areas such as Lake Kivu before bringing the private sector on board.
“We are targeting investors to take up high value rich mineral concessions that have been identified so that we can partner with them in deploying modern mining technology to increase efficiency and productivity,” he said.
For years, most of the exports have been in raw material form. The new tantalum plant could increase the value of the ore by about 20 per cent or 30 per cent, according to Gatare.
In this aspect, Karuruma- based tin smelter, that was owned and managed by Phoenix Metals, is currently on the market. Sources say investors have showed interest in the firm.
Gatare said the Government’s involvement is designed to ensure that the best players in the sector are part of it.
He said the Government is also looking to bring on board investments that are interlinked to the sector such as inputs used in the practices.
“For example, companies that produce inputs to the mining sector, whether it is inputs that are related to the construction and safety of mining tunnels and underground infrastructure. We are also looking for firms involved in technology transfer, especially in exploration and laboratory geochemistry testing of materials in the country,” he told The New Times.
Much of the investor confidence could be hinged on a mineral traceability system initiated about six years ago following the enactment of the Dodd Frank Act.
The Act was signed into law by US President Barack Obama in 2010 with intention to safeguard stability in mineral-rich conflict-prone countries like those in the Great Lakes region, by ensuring that natural resources were not used to fund conflicts.
The Donald Trump government, though, is said to have intention to repeal the Act to increase supply for US firms.
However, Gatare said they prefer the Act remains as it has vindicated Rwanda as being mineral-resourceful.
He said that though it was super imposed, it has served as a useful tool and created confidence in the sector.
Rather than a repeal, he called for a review in regards to cost implications and efficiency.
“It is still a costly exercise for companies that are participating and so in the discussions we are having, we are focusing on how to reduce the cost and improve the efficiency of its implementation. As to whether it should be scrapped, I do not expect that should be the case,” he said.
Finance and Economic Planning minister Claver Gatete said the mining sector is expected to play a huge role in economic growth in coming years. He said ongoing exploratory studies have revealed the existence of deposits which were previously unknown.
World Bank country manager Yasser El Gammal said they have no hesitation to work with the government to further improve revenue receipts from the sector.
The sector raked in $200 million (about Rwf168 billion) in exports in 2016 and is expected to bring in over $300 (Rwf252 billion) in export receipts in 2017.
In the first quarter of 2017, the sector fetched $48 million (Rwf40 billion) into the national coffers.