23 September 2012

Tanzania: Mining At 4.6 Percent of GDP

Dar es Salaam — The Tanzanian Chamber of Minerals and Energy (TCME) has said the contribution of the mining sector to the Tanzanian economy has now reached 4.6%, thanks to an increase in the export of gold.

Speaking to East African Business Week in Dar es Salaam last week during the launch of the television series on mining in Tanzania, the TCME's Chairman Mr. Joseph Kahama said that although mining is a long-term, high-risk investment which demands long term fiscal and regulatory stability the sector will continue attracting further investment.

"In total the mining sector contributes 4.6% to GDP each year but this could rise considerably in future years. We are optimistic to reach the targeted goal of contributing at least 10% of GDP by 2025," Kahama said.

Kahama said in order to achieve Vision 2025, where the mining sector target is to contribute at least 10% of GDP and help Tanzania to become a middle income economy, the country needs to secure significant investment.

According to Bank of Tanzania's Monthly Economic Review of August 2012, the value of non-traditional exports was $4,137.7m, compared to $3,627.7m recorded during the year ending July 2011, with gold and manufactured goods being dominant.

The Monthly Economic Review said that the value of gold exports increased by 21.9% to $2,260.3m in the year ending July 2012, due to an increase in world market prices.

The world market price for gold was $1,672.6 per troy ounce, an increase of 19.2% from the level recorded in July 2011. The volume of gold exports also increased to 39.8 tons from 37.0 tons recorded during the year ending July 2011.

"The price of gold increased mainly due to high demand for gold as a safe investment following the uncertainty in the global financial markets amid the Euro zones crisis," the report said.

According to the central bank the value of export of goods and services was $8,083.5m during the year ending July 2012 compared with $7,130.4m recorded during the year ending July 2011, owing to the increase in receipts from travel, traditional and gold exports.

Mining investments are proven to create quality jobs, catalyze secondary industries, increase tax payments and build infrastructure, all of which are much needed to alleviate poverty and promote economic growth.

Tanzania is the 4th largest gold producer in Africa after South Africa, Ghana and Mali. Gold production currently stands at roughly 40 tons a year, copper at 2,980 tons, silver at 10 tons and diamond at 11,2670 carats.

The Business Monitor International (BMI) forecasts average annual growth in the sector of 7.7% between 2011 and 2015. BMI also predict a doubling in value of the sector between 2010 and 2015, from $0.64bn to $1.28bn.

Minerals that have been identified in Tanzania include gold, iron ore, nickel, copper, cobalt, silver, diamond, tanzanite, ruby, garnet, limestone, soda ash, gypsum, salt, phosphate, coal, uranium, gravel, sand and dimension stones.

Elaborating the launch of the television series on mining, Kahama said the TCME aimed to build understanding of the sector, its impacts on communities, environment and the technology.

"This is the beginning, over the next year, we will roll out several initiatives aimed at driving deeper understanding of the mining sector to inform the national debate on how best to enhance its benefits," Kahama said.

He added that mining as an industry in Tanzania has brought the biggest Foreign Direct Investment (FDI) into Tanzania to effectively extract resources in a manner that benefits investors, the national economy and host communities.

In Tanzania, mining companies operate in rural and often underdeveloped regions, in order to ensure sustainable benefit for host communities around mining areas.

Copyright © 2012 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.