3 September 2012

Rwanda's Surging Mining Sector

Rwanda's mineral exports have increased over the past few years, with the sector emerging as a major foreign exchange earner with even much brighter prospects.

The country's economy was, traditionally, centred on coffee, tea and tourism but the mining sector has increasingly attracted attention following investment in various mines across the country

Last year, the sector fetched $164 million up from $ 94 million the previous year.

Jean de Dieu Mutunzi, a veteran minerals dealer and employee at Phoenix Ltd, a mineral exporting company in Kigali, says that Rwanda's huge cassiterite deposits, especially the Rutongo Mines located just 20km north of Kigali, are among the sites that have become profitable for the surrounding communities, investors and the country as a whole.

Rwanda ranks number eighth in the world for un-melted tin which translates into 1.5 percent of global tin production.

It produces about 8,000 to 9,000 tonnes of mineral compounds combined every year, and according to Dr. Michael Biryabarema from the Rwanda Natural Resources Authority, this production can increase fivefold if structural bottlenecks are addressed.

The government has prioritised addressing the challenges.

"At policy level we are addressing issues of geosciences knowledge, capacity building, mines cycle management," Stanislas Kamazi, the Minister of Natural Resources, told The New Times in an interview.

The minister pointed out that there is a programme to enhance human capacity through training in earth sciences.

The government is also working on recruitment of a firm to build a mineral rights management system to assist with transparency, management and regulation.

The system would cover all transactions that take place during the mining cycle.

The minerals that rank high on Rwanda's mineral export receipt include tantalum, tungsten, gold and tin.

The country has since last year adopted a mineral tagging and sealing scheme, internationally recognised as the iTSCi project. The system aims to ensure that the origin of all minerals can be traced.

The exercise gained currency after Dodd-Frank Act was signed into law by the US president in 2009. The act aims at barring "conflict minerals" from gaining access to the US market.

iTSCi is an international tin supply chain initiative which aims at ensuring traceability of tin.

Dr Biryabarema told The New Times that the tagging process has ensured that all minerals from Rwanda "are traceable 100 percent."

"Tagging minerals ensures traceability. If there are leakages from outside, our job is to stop them," he said.

Rwanda is the only country within the East African region implementing the traceability and tagging schemes to guarantee transparency and ethical trading in minerals.

Kamanzi said government hired a German firm to carry out a seismic survey on an array of mineral elements and the findings will help attract more investors into the sector.

The targeted areas are Nyagatare, Kirehe, Muhanga and Nyamagabe where the prospects of minerals are high.

"The survey is on 45 elements of mineral compounds," Kamanzi said.

Biryabarema told The New Times that there is a lot of focus in including Minerals studies at local universities and also encouraging students to pursue the programme in other universities.

Bob McMullan, a special envoy of the Australian Prime Minister, who was in the country last month, said his country is supporting Rwanda by providing key skills training to improve income, employment and enterprise opportunities through mining.

Experts from the London-based International Tin Research Institute (ITRI) involved in traceability of the minerals, told The New Times that there was evidence of vast mineral potential in Rwanda.

There are even muted hopes that Rwanda could strike significant oil and gold deposits in the future although the government has been cautious not to raise public expectation.

In May this year, Biryabarema disclosed that the government was nearing an oil sharing deal with Vanoil, a Canadian company that has been prospecting oil in Lake Kivu since 2007.

An official at Vanoil told this newspaper that the company had finished reconnaissance seismic stage and was embarking on the prospective seismic.

"Prospective seismic is an expensive and crucial stage in oil exploration. That is why we need a contract [oil sharing contract] to secure our position in an event of discovery," the official said on condition of anonymity.

There have been oil and gas findings in the East Africa Great Rift Valley stretch, and Lake Kivu lies in the same geographical stretch.

With or without oil, the lake still constitutes a critical resource for Rwanda, with around 55 billion cubic metres of methane gas reserves. Any significant exploitation of the gas would not only solve this country's power problems, but Rwanda could easily become an energy-exporting nation. For now, the government is considering the best way to make the most out of this resource, with funding among the main challenges.

At the moment, extraction of the gas is on a small-scale basis, with the extracted gas used to run boilers at Bralirwa, the country's leading brewer, in Rubavu, with production of around 3MW at a government owned pilot plant.

And, last July, an official at Rogi Mining Rwanda, one of the country's largest gold explorers, announced that it is in the final stages of fieldworks in Northern Province to ascertain whether the gold deposits there merit commercial production. The company is prospecting gold on 2,937 hectare under Miyove Gold Project in Gicumbi district.

The assumption that Rwanda is resource poor could prove to be false after all as the sector's potential comes into the limelight.

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