Now govt blames global crisis for mining woes
By Zephania Ubwani, Arusha
The mining sector faces a bleak future due to the ongoing global financial crisis, the government says, apparently exonerating an industry that has come under severe public criticism in recent times.
It is, indeed, a matter of great concern because the crisis threatens to even wipe out the hard-won socio-economic gains by the sector in the past decade, Mr David Jairo, the permanent secretary for Energy and Minerals, warned on Wednesday.
The ministry of Energy and Minerals has predicted that the mining sector, which accounted for 52 per cent of the country’s exports in 2007, generating about $1,003 million, is suffering the consequences of the global economic crisis.
The senior government official told industry stakeholders attending a meeting here that the crisis, which had led to falling prices of minerals in the world markets, poses the greatest danger ever to the country’s mining development.
He was opening a three-day consultative meeting organised by the ministry for the stakeholders to review the draft mining law.
Mr Jairo challenged the various players in the sector to fully reflect on the impact of the global crisis for Tanzania, while discussing the proposed Mining Act.
The official’s statement comes at a time when the government is under intense public pressure to fulfil President Jakaya Kikwete’s promise that he would ensure that a major review of mining legislation was carried out before the end of his five-year term, with the General Election expected to be held next October.
This was one of the pledges he gave during campaigns for the presidential election of 2005. Mr Kikwete is expected to seek his second and final five-year tenure.
With less than a year before the next elections, the government is clearly behind schedule in putting in place a new mining law and policy.
But, on the other hand, the miners have registered their concern over the government’s lack of a clear stand on the sector’s operations.
Mining companies have said that the government’s apparent indecisiveness is a major disincentive, as their operations require “predictable and stable policies” so that they can comfortably invest.
But on Wednesday, Mr Jairo said the global economic downturn could not be ignored, as it had dealt “a massive shock to the world economy” and also affected Tanzania, despite the fact that the country is not too integrated into the world financial system.
He said the economic crisis, which originated in the United States, with the collapse of the housing sector, had led to the skyrocketing of oil and food prices.
However, the PS did not reveal, which minerals that earn the country millions of dollars annually through exports, had been particularly affected by the global recession.
However, a recent report by the Bank of Tanzania listed some of the affected minerals, as gemstones, including tanzanite, which is only found in Tanzania.
Mr Jairo said Tanzania did not only need increased sales of its mineral exports, but also the capital of more mining investors from all over the world to tap the vast potential in a sector that had grown fast in the past decade.
”Tanzania needs investors in mining and they also need Tanzania as a viable destination for their capital,” he told the stakeholders at the Arusha International Conference Centre (AICC).
The contribution of the mineral sector to the Gross Domestic Product (GDP) rose from 0.1 per cent in the 1980s to 2.7 per cent last year.
The value of mineral exports alone was 52 per cent of the total exports last year, while it was only 0.1 per cent in the 1980s.
According to the national mining sector report, a copy of which was made available to The Citizen yesterday, in the past 10 years, the average annual growth rate of the mineral sector was 13.74 per cent.
At the same time, the value of mineral exports increased from $26.66 million in 1997 (less than one per cent of the total exports) to $1.003 billion in 2007 or 52 per cent of the total exports.
A similar meeting of the players in the mining sector was held 13 years ago to review the 1997 draft mineral policy, and the subsequent Mining Act 1998.
Analysts say the policy, legal and regulatory framework that followed, attracted a number of exploration and mining companies and boosted trading in minerals in the country, especially after the liberalisation of the economy.
During the past 10 years of implementation of the policy and enforcement of the law, over $2.5 billion has been invested in the sector, with several large and medium-scale mining companies starting operations in mining gold, diamonds and other gemstones.
The stakeholders are in Arusha to go over the proposed mining guidelines, which Energy and minerals minister William Ngeleja has described as intended to create a win-win situation for the investors and the government.
Speaking in Dar es Salaam last week, Mr Ngeleja said the government was expecting a breakthrough at the Arusha meeting to beat the deadline for the Cabinet approval of the draft Bill before its expected endorsement by Parliament and the presidential assent to become the new mining law early next year.
The passage of such a law, our sister paper, the Sunday Citizen, reported last week, would also pacify government critics, who have waged a relentless campaign over the alleged plunder of the country’s natural resources by foreign investors at the expense of improving the citizens’ welfare.
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