1 August 2016

Tanzania: JPM Imposes Ban On Mineral Sands Export

Kahama and Dar es Salaam — Economists commended President John Magufuli's yesterday ban on transporting mineral sands from gold mines for smelting outside the country.

Speaking to The Citizen in separate interviews, they said the ban was long overdue because the government was losing the much deserved revenue due to poor follow-up on the amount and value of minerals recovered from the sands.

President Magufuli said at a public rally yesterday in Kahama that gold miners should invest in smelters right here in Tanzania instead of "exporting" sands to recover minerals in them that include tin, copper and silver.

The President, who is on a tour of the Lake Regions, said among all the countries blessed with minerals, it was only Tanzania that airlifted its valuable sands abroad. He affirmed that his government would not allow that to continue.

"It is very surprising that these investors have been air-lifting mineral sands to other countries. So, I'm saying this: they must now build processing plants right here in Tanzania to purify the mineral sands. This is because when they export the sands, the government loses some revenue," Dr Magufuli said.

But the economists, in addition to commending President Magufuli's ban, said care should be taken to ensure maximum benefit from domestic investments in the smelters. Prof Semboja Haji from the Economics Department of the University of Dar es Salaam said even as the government welcomes investors to invest in smelting, it should also work diligently to establish markets for the minerals that are recovered from the sands to ensure investors recover the costs of their undertakings.

"It is crucial that the issue of markets for the minerals, mostly tin, silver and copper, is considered well in advance to ensure the investments become sustainable," Prof Haji said.

Prof Samuel Wangwe said smelting the sands within Tanzania is possible so long as there is enough political will.

"If we cannot build the smelters immediately, then there must be an agreement with the gold miners on the value of the minerals contained in the sand so as to ensure the government gets its fair share of the tax when the smelting is done outside the country," Prof Wangwe, a renowned industrial economist noted.

Dr Jehovaness Aikaeli, a senior lecturer in Economics at the University of Dar es Salaam, said smelting the sands in the country would reduce unnecessary costs of transporting them to far off countries.

"I believe those who afford to export the sands have the financial capacity to invest in smelters in Tanzania," Dr Aikaeli said.

He added that President Magufuli's move was actually overdue, one that previous administrations ought to have taken a long time ago.

Prof Haji added that in the past, when investors opened the gold mines, smelting technology seemed too expensive and was feared it could have added to operational costs, but now a new technology called mobile minerals processing plant has come into the market.

This one, he said, is relatively cheap and well advanced.

"What is needed is for the government to look for investors who can invest in that area," he noted.

He cautioned, however, that investing in smelting gold sand in the country needs reliable electricity. Investors would incur untold loss if electricity will be erratic. Marketing channels should also be found to sell the minerals so that investors can be assured of where to sell and get returns for their investors.

He noted that the government has been incurring huge losses because there was no evidence whether the Bank of Tanzania was following up on the amount and value of minerals recovered from smelting gold sands abroad to enable the government to collect taxes.

"Lack of coordination between ministries of Industries, Trade and Investment as well as that of Minerals and Energy could have complicated matters. While mining was under MEM, the export of the sands was under the ministry of MITI," he said.

Meanwhile, President Magufuli ordered yesterday the National Environment Management Council to remove gold residual in the Geita Gold Mine and give it to wananchi.

He warned leaders in the region from dividing the residuals among themselves. The Head of State also touched on the issue of mineral discoveries by residents, who found themselves being removed, saying from now on procedures would be followed and those residents would stay put in the area where the minerals have been discovered on the basis laws and procedures.

More on This

Tax Regime for Extractive Industry

The Finance Act, 2016 has introduced a new income tax regime for the extractive industry. The Income Tax has been… Read more »

See What Everyone is Watching

Copyright © 2016 The Citizen. 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 800 reports a day from more than 140 news organizations and over 500 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.