MAC: Mines and Communities

Foreign Firms Dominate Tanzania's Mining Sector

Published by MAC on 2006-06-26
Source: The East African

Foreign firms dominate Tanzania's mining sector

The East African

26th June 2006

Part of the reason why the mining industry is currently the whipping boy of parliament is because it is dominated by multinationals.

Except for the joint venture firm Williamson Diamond Ltd, which is co-owned by the government and the South African-based De Beers Ltd, local shareholding in mining companies is minimal.

And, with Tanzania having very few companies with the capacity to undertake large-scale works projects such as drilling, mining activity has not created major opportunities for Tanzanian business.

Tanzanian banks have not participated in the financing of these activities partly because they are risk averse in the sector but mainly because of lack of capacity to fund such capital intensive projects.

Gold mining in Tanzania is largely confined to a few major mines - Geita, Tulawaka and Kabanga, as well as several small alluvial operations in Nzega. It is believed that the country has more undiscovered deposits, which, are however largely in environmentally fragile areas.

In the past five years, Tanzania has been the focus of Africa's gold exploration and development, with the gold mining industry growing by 27 per cent in 2004 compared with 17 per cent in 1999.

The mining sector contributes 2.3 per cent of GDP, which is projected to grow to 10 per cent in 2025, according to the Development Vision 2025. Currently, there are more than 20 mining companies involved in mining various types of minerals in Tanzania, with most companies focusing on gold, diamond and tanzanite.

The companies that operate in the country include Northern Mining Explorations Ltd, Albidon Ltd, Anglogold Ashanti Ltd, Barrick Gold Corporation, Goldstream Mining NL, Lonmin PLC, Resolute Mining Ltd, Uranex and Unified Resources Development Ltd.

Others are ALS Chemex Tanzania, Anmercosa Exploration, Bulk Mining Explosives (Tanzania), Corstor (Tanzania), East Africa Gold Corporation, East African Gold Mines (Tanzania) Ltd, El Hillal Minerals, Engineering Associates, Exploration and Mining Association, Gaily & Roberts Ltd, Geological Survey of Tanzania, Kabanga Nickel Company, Kilimanjaro Mines Ltd, LTA Construction Ltd, Mansons Mines Logistics, Williamson Diamond Ltd and Mgusu Mining.

Most of the gold mined is found to the east and south of Lake Victoria, and there are also some deposits in the south and southwest of the country. The base metals are found in Kagera, Kigoma, Mbeya, Ruvuma and Mtwara regions while the gemstones are found in the east, west and the areas bordering Kenya in the north and Mbeya and Rukwa regions bordering Mozambique in the south.

Tanzania has been a significant diamond producer for several decades, with the bulk of production coming from the Williamson Diamond mine at Mwadui, where commercial production began in 1925.

According to Tony Devlin, chief executive officer of Williamson Diamond Ltd, there are over 300 kimberlites known in Tanzania of which 20 per cent are diamondiferous, being mostly found in Shinyanga region with a large deposit at Mwadui District.

Mr Devlin says that some 600 dipolar magnetic anomalies with similar geophysical characteristics to known kimberlite pipes have been recorded during recent geophysical surveys.

Several world-class gold deposits have already been discovered in the Lake Victoria goldfields and are at different stages of development. Gold deposits have also been discovered in the Southwest of Tanzania.

Recent exploration in northwest Tanzania has revealed extensive nickel-cobalt-copper mineralisation in the Karagwe-Ankolean System, where Sutton Resources of Australia is evaluating the resources and where diamond drilling has outlined contained resources of 500,000 tonnes, nickel 75,000 tonnes and copper and cobalt at 45,000 tonnes.

In addition, chromium and platinum group metals (PGM) have been recorded with substantial deposits of nickel enriched with cobalt delineated over the ultramafics in the Kagera region. There is also an indication of stratiform copper-silver-uranium type mineralisation in Shinyanga region.

Iron ore deposits have been identified in Liganga in the southwest of Tanzania in close proximity to the coal resources of Ketewaka-Mchuchuma with a resource of 45 million tonnes. Tanzania is also home to titanium resources in the beach sands along its Indian Ocean coast.

Other gemstones mined in the country are ruby, rhodolite, sapphire, emerald, amethyst, chrysoprase, peridot and tormaline. Recently, a major alluvial occurrence was discovered in the southern regions of Ruvuma, Mtwara and Lindi.

Lawrence Masha, Deputy Minister for Energy and Minerals, told The EastAfrican recently that gemstone exports were worth approximately $10 million in 1996, most of which were exported uncut. Great potential exists in the establishment of lapidary and jewellery manufacturing industries.

The Mining Act of 1998 under which large and small-scale operations are regulated provides guidelines for issuing reconnaissance license for one year and renewals for a period not exceeding a year after paying a fee of $250, annual rent of $10 per square kilometre and renewal fees of $200. The license may be either exclusive or non-exclusive.

The government also issues prospecting license for a period of up to three years, renewable two times for a period up to two years each with a license preparation fee of $400, annual rental of $30 per square kilometre and renewal fee of $200.

The mining license can only be granted to the holder of a prospecting license over the area for a period of 25 years or the life of the mine and renewable for a period not exceeding 15 years.

The license preparation fee is $600, annual rent is $1,500 per square kilometre and renewal fee is $200 after submitting the feasibility report, including environmental and health safeguards, plans for local sourcing of goods and services and employment and training of Tanzanians.

The companies mining in Tanzania are also exempted from paying of import duty and VAT on equipment and essential materials up to the anniversary of start of production, whereafter a 5 per cent seal applies.

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