Rwanda: Inside a Four-Year Stalemate on Acquisition of Rutongo Mines

13 October 2020

Years of disagreement over a share purchase agreement between the government of Rwanda and a private investor has left Rutongo Mines, which owns a reserve for tin ore in Northern Province, untapped.

In September 2014, the government awarded a 25-year concession agreement to a Canadian firm Tinco to operate Rutongo and Nyakabingo mines, both of which are reserves of tin ore and tungsten.

According to the original plan, the firm would invest some $4 million in the ten-hectare Rutongo mining block in the first three years.

It would also carry out 12 months of exploration and build a mineral processing factory, all of which were to start full operations in 2016.

But years of stalemate between the investor and government has made it impossible for the mining concession to achieve its full potential.

Investors estimate the disagreement has seen them lose out on more than 2,000 tonnes in the last four years between 2016 and to date.

"We missed out on up to 2000t of production looking at the original plan," Luke Rogers, the representative of TechMet, the holding company of Tinco, told The New Times in an exclusive interview.

That means if the company had made the right investment, it would be producing 500 tonnes of minerals per year, which is an estimate of more than 40 tonnes per month.

However, until recently Tinco has only been producing 15 tonnes per month.

What went wrong?

The investor described the past relationship between the two parties as a "chicken-and-egg situation," saying there was suspicion of what either party could do without a share purchase agreement in place.

"We couldn't make the investment that we needed because we didn't have a share purchase agreement signed, so it put us in a challenging situation," Rogers said.

Originally, Tinco would control 75 per cent stake in Rutongo Mines and the government would own a minority stake of 25 per cent.

However, Rogers indicated that failure to agree on the valuation of shares also made it possible for the two parties to make any progress on implementation of the earlier agreement.

Earlier this year, the two parties resumed negotiations which Rogers said will be concluded in the near future, "perhaps before the end of this year," which would then pave way for renewed mining operations.

Efforts to get comment from government officials were futile, and Rwanda Development Board (RDB) said they "are bound by confidentiality until the deal is closed."

However, according to minutes from the cabinet meeting that was held on September 25, the cabinet was "briefed on the progress of a share purchase agreement between government and Tinco investment regarding Rutongo mines."

No further details were provided.

Meanwhile, Tinco hopes to merge with another company, Piran Resources which operates Musha Mines in Rwamagana District, to form one group of companies that would focus on 3Ts - tin, tungsten and tantalum.

That is despite the fact that Rwanda no longer enjoys the monopoly on the tin, tungsten, and tantalum on the global market as it has been for the past decade due to the changing landscape which has seen other players enter the market.

Statistics show that revenue exports of 3Ts decreased by 30.9 per cent due to the drop in international commodity prices in January and February 2020 compared to the same period in 2019.

Tinco's investment scheme will also see investors explore the potential of lithium, which preliminary studies have shown to be present in the Eastern parts of the country and other areas.

TechMet recently received the US government back up. The Government invested $25 million in the UK-based company as part of a push to boost nickel and cobalt supplies for electric cars.

TechMet has mines of nickel and cobalt - key in production of vehicles, batteries and cellphones - in Brazil.

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