“It is the one East African country which will continue to dominate in terms of attracting new investments in mining in east Africa, due to its mineral endowment and progressive and rational mining policies,” he says. “Very few projects do exist in the other east African counties like Kenya and Uganda, and these countries have only just promulgated their new mineral policy and mining laws, without which attraction of investment is well-nigh impossible,” Jengo contends.
“Tanzania, on the other hand, has a very bright future in terms of mining, and can be expected to attract further investment in the sector because of its government’s competitive and stable mineral policy and mining law,” he points out. “The government is also working closely with the private sector in ensuring that the crucial element of infrastructure is improved to cater for the growing mining industry,” Jengo adds.
This is not just the opinion of the Chamber, but of some of its prominent members as well. Barrick Gold Corporation’s executive general manager: operations in Tanzania, Gareth Taylor, sees the situation for mining improving.
“I think that what we are starting to see now is a real understanding from government that, if it wants real benefit from the mining industry, it has to put a lot of effort into improving the infrastructure of the country,” he explains. “It seems to be happening,” he enthuses, “and I believe that attitudes will continue to change — it’s going to get better”.
AngloGold Ashanti is also positive about the future in east Africa — particularly in Tanzania. “This does not mean there are not challenges,” says company executive officer: Africa open pit mines, Fritz Neethling. “There are many industry challenges which stem from the challenges the countries themselves are facing. Lots of the African countries have gone through political change from socialism to capitalism and democracy,” he adds, “and in the process they have found it necessary to incentivise potential investors.”
“The main factors which will ensure the success and growth of the mining industry in Tanzania and the rest of east Africa,” Jengo contends, “are: competitive mineral policies, geological prospectivity, fiscal stability, good governance, political stability, and an educated workforce.”
A major challenge facing the mining industry in Tanzania is the stated Mineral Sector Vision target of a 10% contribution to the GDP by the mineral sector by 2025. “The current contribution is less than 4%,” he admits, “and the main challenge I see for Tanzania is to maintain the current investment momentum so that we can achieve that vision and ensure that the mining industry does play an effective pivotal role in alleviating poverty,” he insists.
“The only way to tackle and overcome these challenges is for chambers and governments to work together in ensuring that the country continues to maintain its competitiveness,” Jengo states. “We must attract investments in exploration and mining by ensuring continuation of a stable, predictable and transparent fiscal regime which will enhance confidence for new investors and add comfort to existing ones,” he proposes.
It must be realised and appreciated that the east African mining industry has not yet reached maturity” Jengo points out. “The chamber is doing all it can to promote awareness and educate society on mining and how it contributes to the economy of Tanzania,” he says. “Hopefully the facts surrounding the mining industry will be understood gradually, leading to even better relations between the public and private sectors.”
Getting down to statistics, and looking at Tanzania as the undisputed mining leader in East Africa, mineral exports in 2006 were estimated at around US$790 million (more than R5.5 billion), which reflects a US$97 million (R680 million) increase on the 2005 level. The mineral export performance for 2007 is expected to remain well above the US$700 million (close to R5 billion) level as mines continue to de-bottleneck some of their current problems, such as moving from contractor to owner mining.
In terms of volumes, gold exports this year are expected to rise almost 25% from 1.3 million ounces in 2006 to 1.6 million ounces. Diamond production for 2007 has been projected at 300 000 carats.
The mining sector’s contribution to GDP rose sharply from 3.5% in 2005/6 to 3.8% in 2006/07, and taxes and royalties paid to the government last year amounted to US$73.8 million (almost R520 million).
The mining industry currently employs close to 10 000 Tanzanians. It is heavily involved in a special project which addresses the shortage in artisan level mine-related skills currently facing the industry in Tanzania.