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Mining: Boosting Tanzania’s economic achievements
2005-12-31 08:49:25
By Ernest C. Ambali
Tanzania Mainland celebrated its 44th Independence Anniversary on 9th December, 2005. The press, including The Guardian, published success history of various sectors of the economy.
Ernest C. Ambali, gives, in a nutshell, development in the mining sector since the German era, through the British to date.
Tanzania’s minerals boom continues to grow fast, with gold production leading, moving the country towards a place in the world league of gold producers.
This means awakening one of the economic sleeping giants in Africa, although it has ’’come lately.’’ Yet, within a period of 10 years of vigorous performance of eight large mining firms, the giant known as Tanzania, is becoming an economic power to reckon with on the continent.
It is an obvious truth that these mines are spoiling the natural beauty of areas that are producing the precious minerals like gold, diamonds leaving ’’canyons’’ or quarries.
But how else do you eat the yellow yolk of an egg if you do not break its shell? You cannot eat the nitrous yolk by singing good songs. You must, break its shell - the earth - to get the precious minerals.
For many years Tanzania has been singing good songs that ’’we have gold, diamonds and other minerals’’ yet we could not break the shell - the earth - to produce the precious minerals.
And indeed, are we not aware of the fact that the country’s flag has a diagonal strip of yellow, representing minerals?.
We forget that when we pray fervently for the rains, we should tolerate the heavy mud as said in Kiswahili ’’ukililia mvua vumilia matope’’.
Already Tanzania is placed third after Ghana with South Africa taking the first place in Africa in gold production.
Gold production in Tanzania is led by the Geita Gold Mine (GGM) nestling in Mwanza Region. The GGM has an annual production of 650,000 ounces from its open cast mine, which commenced production in the year 2000.
The GGM is rated not only as the country’s biggest gold mine but is also one of the biggest gold producers in Africa.
The runnerup in mineral production is the famous open cast Williamson Diamonds Limited in Shinyanga Region which has an annual yield of 221,000 carats of diamonds.
Some of the gold mining companies which have invested in mineral production are the underground Kahama Mining Corporation which has an annual yield of 400,000 ounces, the open cast North Mara Gold Mine producing about 300,000 ounces of gold annually; the open cast Buhemba Gold Mine with a yearly production of 80,000 ounces.
The other is the Tulawaka Gold Project which produces about 100,000 ounces every year from its open cast mine.
The world famous tanzanite gemstones are produced by the TanzaniteOne company which has an annual yield of 230,000 grammes.
In its recent report the Tanzania Chamber of Minerals and Energy to mark 10years of the mining sector in Tanzania, shows that these eight large mining companies have been increasing production since they were commissioned, after their investments of 1,306.30 million US Dollars.
As a result of this investment 1,730,000 ounces 221,000 carats of diamonds and 230,000 grammes of tanzanite gemstones were produced.
There is evidence that gold and mica were mined during the German rule (1884 – 1918), using poor technology available.
Gold was first discovered and mined in Geita, Kahama and Sekenke areas of the Lake Victoria Goldfields in 1898.
It is estimated that the total value of minerals mainly gold and mica, produced during German period, was between Shs 7.0 million and Shs 10.0 million.
During the British administration (1919 – 1961) the most significant mineral produced was diamonds which rose from Shs 10.0 million in 1950, Shs 60.0 million in 1954 to Shs 115.0 million in 1961.
The mining chamber’s report says gold declined during the 1960s. In 1967 the Arusha Declaration was implemented with the aim of establishing a policy of socialism and self-reliance to place the economy in people’s hands.
However, this move compounded the situation, causing further withdrawal of foreign investors from the mining sector in the country.
’’As a result, contribution of the mining sector to the GDP fell to less than one per cent,’’ the chambers report says.
Although the government in 1970 formed a parastatal body known as the State Mining Corporation (STAMICO) to implement state directed mineral exploitation efforts, things continued to fall apart.
’’STAMICO faced a number of difficulties which disabled it from effectively carrying out its role.
’’During this phase (1970 – 1980) the country witnessed strangulation and disintegration of the mining industry due to lack of investment capital, technology and management, the fact which relegated the mining sector into oblivion and inactivity,’’ the report says.
When the privatization ’’ship’’ docked, it welcomed aboard its long voyage privatization of the mining sector, inviting direct foreign investors with powerful economic muscle.
And indeed, they came. Hence the country has witnessed emergence of large mines which commenced production of various minerals mainly gold, significantly since 10 years ago.
Retired President Benjamin William Mkapa put it succinctly when inaugurating the GGM on 3rd August, 2000.
’’The inauguration of the Geita Mine today is part of the early fruits of a successful partnership between my government and the international mining community, he said.
It is a partnership based on trust and an extensive and continuing dialogue he began with the mining sector at Arusha on February 11, 1998 in which the two sides discussed constraints and options for their continuous improvement of the environment to attract and speed up investment operations in the country.
It was therefore fair that the government should create a policy and investment climate that ensures the mining sector to take out more than it puts in Tanzania’s ground, he argued.
’’For only then can you remain engaged with us. That, I am sure, is why the mining sector is already now one of the fastest growing sectors in our economy attaining a growth rate of 9.1 per cent last year.
’’We have a reason, therefore, to be proud when we see the mining sector assuming its rightful role in the economy of Tanzania, ’’he added.
The fact that the mining sector is ”one of the fastest growing sector in the country’s rejuvenated economy, is supported to the hilt by the mining chambers Chairman, Prof. Simon . Mbilinyi who says, in the report that ’’Tanzania’s mineral potential is still enormous and the benefits are also vast.’’
’’The country is a shining light in the global mining industry and the future shines brightly indeed.
I believe that the industry shall live to the expectations of Tanzanians,’’ Prof Mbilinyi says in his message contained in the report published in The Guardian marking 10 years of mining in Tanzania.
However, ’’the shining light’’ started flickering during the German colonial years, 1884 to 1918 when gold and mica were produced.
Then the British scratched their share of minerals.
The most significant mineral production during the British era were diamonds.
Today the prospectors have found several minerals including gold, diamonds, gemstones, energy minerals - coal, peat and uranium, iron ore; base metals such as nickel, kaolin, soda ash, gypsum, mica, phosphates, salt and limestone.
Total mineral exports (from chamber members) in the year 2003 reached US Dollars 543 million compared to just US Dollars 16.1 million in 1997.
’’Gold alone rose from US Dollars 3.33 million in 1998 to US Dollars 509.8 million in 2003, ’the Chamber’s report says.
In mining operations the government benefits directly from royalty payment on minerals produced, witholding taxes, tax on profits, employment taxes, customs duties and others.
It is estimated that returns to government in the form of royalties and other taxes are around US Dollars 45 million annually.
These are the tangible benefits.
Besides, government/private entities such as the telecommunications companies, power supply companies and railways also receive substantial cash injections as spin-offs from the mining industry.
Todate mining has created over 6,000 jobs and continues to import new skills hitherto unknown. It has also stimulated new economic activities in remote locations and is responsible for establishing new settlements.
’’Contribution of the sector to the real GDP grew from 2.3 per cent in 2000 to the present 2.7 per cent, while it was as low as 0.8 per cent in the 1980s’’, the Chamber says.
As if this was not enough, the mining sector has been and still is making substantial contribution towards community development – social corporate responsibility, hence sustainable development.
The sector has and still is making significant contribution to the local communities leading to buoyant economic activities and improved social services such as better schools, hospitals and water supply (at Nzega, Geita and Kahama), power, improved roads in places like Nzega, Ngara, Kahama, Mwanza, Tarime and elsewhere.
’’Since 1997, the mining companies have spent US Dollars 18.0 milion on these initiatives. This is because these companies see themselves as part of the community and therefore see the need to promote harmonious and mutual co-existence with the local communities,’’ the Chamber says.
These are some of the positive products of the mining sector to be proud of as we celebrated the 44th Independence anniversary of Tanzania. Let us sympathise with those who claim that Tanzania is being turned into a quarry releasing minerals for foreigners.
Let us therefore, agree with former President Mkapa who at the commissioning ceremony of the GGM said: ’’I am reinforced in my conviction that the mineral wealth with which we are abundantly endowed will only have utility for us if we team up with private investors with the requisite capital, technical know-how, and other skills necessary to extract and process the minerals.’’
And, indeed, I also agree with Chief of the Mount Isa Mines in Australia, Sir George Fisher who said 37 years ago: ’’Wealth that remains hidden in the ground is not really wealth at all.’’
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