Mining set to change economic landscape

The  mining sector has crucial and significant contribution to Tanzania’s economy, despite various internal and external challenges it is currently facing.

The Tanzania Chamber of Minerals and Energy (TCME) said in a report released in at its 18th Annual General Meeting (AGM) in Dar es Salaam over the weekend that several new major mines would be operational within the next five years. The mines are expected to significantly change the country’s economic landscape.

TCME Chairman Joseph Kahama said in the report that the new mines will result in a substantial increase in the number of Tanzanians employed in the mining sector, government revenues and improvements in the infrastructure including roads, rail networks and telecoms as well as delivery of social services such as education, health and water supply schemes.

At present the mining sector contributes about 2.3 per cent of the gross domestic product (GDP), which is projected to account 10 per cent in 2025 as stated in the National Development Vision 2025. The sector is one of the leading components in generating foreign exchange earnings within the non-traditional exports.

Further, it has great potentials for employment opportunities and spearheading for both the forward and backward linkage of the Tanzania’s economy. Tanzania is the 4th largest gold producer in Africa after South Africa, Ghana and Mali. Gold production currently stands at roughly 40 tonnes a year, copper at 2980 tonnes, silver at 10 tonnes and diamond at 112670 carats.

Business Monitor International (BMI) forecasts average annual growth in the sector of 7.7 per cent between now and 2015. BMI also predict a doubling in value of the sector to around US$1.28bn in 2015.

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

Speaking at the sidelines of the TCEM meeting, Mr Mwaipopo said that the project will provide direct and indirect cash flows in Tanzania in excess of US$640 million and will provide foreign direct investment (FDI) in excess of US$1 billion or equivalent to 4.76 per cent of Tanzania’s GDP.

Mr Kahama said one of the anticipated mines to start operations soon is the Mantra’s Mkuju River project, where he noted that there has been intense debate in the country about safety in development of uranium mines due to fears linked to the inherent radioactive nature of the mineral.

He, however, pointed out that there were many places globally where uranium is produced, processed and used for commercial and other purposes. Reports by various international organisations show that both production and demand are on the rise.

Uranium resources and production are on the rise with the security of uranium supply ensured for the long term, according to a report issued by the OECD Nuclear Energy Agency (NEA) and International Atomic Energy Agency (IAEA) last year.

Global uranium mine production increased by 25 per cent between 2008 and 2010 because of significantly increased production in Kazakhstan, currently the world’s leading producer. The increased resource base has been achieved thanks to a 22 per cent increase in uranium exploration and mine development expenditures between 2008 and 2010, which in 2010 totalled over $2 billion.

Demand for uranium is expected to continue to rise for the foreseeable future. Although the Fukushima Daiichi nuclear accident has affected nuclear power projects and policies in some countries, nuclear power remains a key part of the global energy mix.

Several governments have plans for new nuclear power plant construction, with the strongest expansion expected in China, India, the Republic of Korea and the Russian Federation. The speed and magnitude of growth in generating capacity elsewhere is still to be determined.

By the year 2035, according to the joint NEA-IAEA Secretariat, world nuclear electricity generating capacity is projected to grow from 375 GWe net (at the end of 2010) to between 540 GWe net in the low demand case and 746 GWe net in the high demand case, increases of 44 per cent and 99 per cent respectively.

Accordingly, world annual reactor- related uranium requirements are projected to rise from 63 875 tonnes of uranium metal (tU) at the end of 2010 to between 98 000 tU and 136 000 tU by 2035. The currently defined uranium resource base is more than adequate to meet high-case requirements through 2035 and well into the foreseeable future.

Although ample resources are available, meeting projected demand will require timely investments in uranium production facilities. This is because of the long lead times (typically in the order of ten years or more in most producing countries) required to develop production facilities that can turn resources into refined uranium ready for nuclear fuel production.

With uranium production ready to expand to new countries, efforts are being made to develop transparent and well-regulated operations similar to those used elsewhere to minimise potential environmental and local health impacts.

While the status of supply and demand is considered from the perspective of technologies in use today, the deployment of advanced reactors and fuel cycle technologies can also positively affect the long-term availability of uranium, conceivably extending the time horizon of the currently defined resource base to thousands of years.

“This trend presents a great opportunity for uranium developers in the country as there will be a ready market for the concentrate (yellow cake),” said Mr Kahama. In the meantime, both Mantra and Uranex have been engaged in public awareness campaigns on the impact of Uranium mining to surrounding communities and far beyond.

With these exciting developments, Tanzania will soon be joining the league of African and global uranium producing countries. Mantra’s Mkuju River project in southern Tanzania had an updated resource of 119.4 million pounds of uranium. 

According to Mantra Tanzania’s Managing Director Asa Mwaipopo, it will take a two-year period for completing construction work before they could start to produce uranium oxide, and placing Tanzania at number three in Africa in uranium production after Niger and Namibia.

Speaking at the sidelines of the TCEM meeting, Mr Mwaipopo said that the project will provide direct and indirect cash flows in Tanzania in excess of US$640 million and will provide foreign direct investment (FDI) in excess of US$1 billion or equivalent to 4.76 per cent of Tanzania’s GDP.

Statistics from the TCME report shows that between 1997 and 2011 a total of US$10.1 bn worth of minerals were sold by Chamber members, compared to only US$16.0 million in 1997. The minerals include gold, diamonds, silver, copper and tanzanite.

During 2011, US$178.6 mil was paid as royalties and statutory taxes to the government, while in the same year, community development initiatives amounted to US$1.51 mil compared to US$1.96 mil in the previous year. Employment in the formal mines increased from 1,781 in 1997 to about 15,000 in 2011 and expected to increase as potential new mines are constructed.

In 2011 TCME members spent a total of US$441.5 mil on local procurement of goods and services compared to US$440.9 mil in 2010, while salaries paid from mining operations to Tanzanian employees amounted to US$87.3 mil compared to US$91.6 mil in 2010. The statistics provide to a large extent the tangible fiscal and social benefits that accrue to the Tanzanian economy which enables government to deliver on important development projects.
Source: Daily News, reported from Dar es Salaam
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