Mining companies are facing vast capital outlays and potential losses as a result of a ban on exports of unprocessed minerals by Tanzania.
Energy and Minerals Permanent Secretary Justin Ntalikwa said the ban was in line with the value addition emphasised in Tanzania’s Mineral Policy of 2009 and the Mining Act of 2010.
In addition, Prof Ntalikwa said the ban is meant to generate revenue, create jobs and promote technology transfer.
“The government will provide any necessary support to stakeholders involved in mineral beneficiation in the country, particularly smelting and refining of minerals,” he said.
A mining executive, however, said some minerals like iron ore are exported to Asia and Japan because their reserves cannot support investment in a smelting plant in Tanzania.
“A study done in 2011 showed a smelting plant in Tanzania will cost $500 million. Raising the money will be difficult as smelting cannot be profitable in the country,” the executive said, adding that a steady supply of power from the national grid is also a challenge.
The Ministry of Energy and Minerals on March 2 banned the export of concentrates with ores of metallic minerals such as gold, copper, nickel and silver in order to promote value addition in the country.
But analysts at Investec warned that the ban could scare away investors.
Tanzania Chamber of Mines and Energy (TCME) director general Gerald Mturi said the organisation will share with government and stakeholders the results of an ongoing assessment of the ban on exporting metallic ores.
TCME is expected to engage the government and industry stakeholders to address concerns as extractives firms favour a phased approach to a ban on the export of concentrates with metallic ores while developing local smelting capacity.
Tanzania’s move comes after Uganda in August last year lifted its ban on exporting of minerals ores, including copper, tungsten, coltan, phosphates and iron. The Uganda Chamber of Mines and Petroleum (UCMP) had, been lobbying for lifting of the ban, saying it had caused job losses.
Tanzania in November last year, banned imports of gypsum used for making cement and coal to boost the use of domestic resources in the sector.
Acacia Mining Plc, which owns the North Mara, Bulyanhulu and Buzwagi mines in northwest Tanzania, has stopped export of metallic mineral concentrates due to a directive by President John Magufuli.
“In 2016, gold or copper concentrate amounted to approximately 30 per cent of group revenues. Acacia has ceased exports of concentrate and is seeking clarification,’’ said Acacia’s investor relations manager Giles Blackham.
Gold and copper concentrate generated $316 million of Acacia’s revenue of $1.05 billion in 2016. The ban immediately caused prices of Acacia’s shares on the London Stock Exchange to drop.
The company is Tanzania’s largest gold miner and has a secondary listing on Dar es Salaam Stock Exchange.
The ban may delay Acacia’s ongoing discussions on a merger with Endeavour Mining Corporation of Canada.
Strandline Resources Ltd, which is developing the Fungoni heavy mineral sands project near Dar es Salaam, however, said mineral sands were not included in the ban.
“While there may be some speculation, our enquiries to the Ministry indicate that the ban does not extend to mineral sands,” said Strandline’s managing director Luke Graham.
TheEastAfrican
