Tuesday, 19 March 2013

Govt targets Rwf268b from mineral exports


An official displays cassiterite ore. Rwanda is looking to strengthen its mining industry to improve earnings. 
The mining sector is steadily becoming one of Rwanda’s biggest foreign exchange earners, fetching $136.6m (about Rwf86.7b) last year, only bettered by tourism.
The government targets $407m (Rwf268.6b) from mineral exports by 2017. Evode Imena, the Mines State Minister, explained to Business Times’ Ivan R. Mugisha, how this will be achieved.

Question: This is a new portfolio in Cabinet; what is your mandate?

Answer: My mandate is simple, I am part of the government and our goal is to achieve the targets set by the President. As a member of the team, I will be focusing on ensuring that Rwanda’s mineral wealth is efficiently, optimally and sustainably used to generate wealth for this country.

How do you plan to achieve this?

As the Minister of State for Mines, my strategies will be oriented towards achieving two goals; increasing production and revenue from the mining sector and, secondly, promoting sustainable, standardised and formalised mining activities that do not endanger the environment.
To achieve these goals, we will, among other things, raise awareness among the global community about Rwanda’s huge mineral potential. I will also strengthen the legal and regulatory framework to make the sector more attractive to private investors.

I will endeavour to strengthen the geology and mines department by transforming it into an entity that can fully prepare and conduct mineral exploration projects and efficiently monitor and regulate mining activities.

What are some of the main challenges still plaguing the mining sector?

One of the biggest challenges is the wrong impression that has been created by some individuals, stating that Rwanda is a not a mining country. This has recently led to constant pressures on market access and puts us at a risk of seeing downstream companies stopping sourcing from the region because of the punitive nature of laws from other countries.

There is the problem of limited knowledge and skills in geology and mining-related disciplines, we also don’t have enough data on the national mineral reserves, which affects long-term planning.

The government has been working on new contracts for investors. But some investors are complaining that it is taking long. Where is the problem?

The cabinet has approved a model mining contract, which is currently used as the basis for negotiations with private mining companies. This model will ensure balanced agreements that will bring maximum benefit to the economy and also ensure sustainability.
So far, negotiations under the new scheme were successfully closed with two companies, Wolfram Processing and Mining and New Bugarama Mining company. Negotiations with three other companies, including Eurotrade International and Rutongo Mines, are ongoing.

How do you plan to attract new investors in the sector? 

Our strategy is based on conducting mineral exploration and geology mapping works in selected high-mineral prospective areas. This creates what we call “brownfields” or ”target areas” which are areas with a defined potential in a known type of minerals. Delimiting “brownfields” is an expensive task for the government, however, they are good means to attract credible investors.

The issue of who pays tag officials has been met with mixed reactions; why does the government want to increase the salaries of these officials despite contention from the miners?

Since the iTSCi Scheme started early 2011, RNRA/GMD and mineral traders-exporters (locally known as comptoirs) agreed on a levy of $200 (about Rwf132,000) and $300 (about Rwf198,000) per exported tonne of cassiterite/wolfram and coltan respectively.
The purpose of this levy is to pay monthly salaries of 117 tag managers (but currently they are 97), and other traceability expenses, including communication fees, field visit and clearing of tags when shipped. As it was so arranged, currently, these officials fully rely on mine operators to transport them from the nearest main roads to the mines, where they serve. However, this is not allowing them to perform according to our expectations and it encourages absenteeism because many of them only go to sites when bags of minerals are ready to be tagged rather than permanently following up mineral extracting and processing activities.

We recently discussed with the Rwanda Mining Association how to increase the salary of tag managers to solve the issue of transporting tag managers when they are serving miners at mine sites as government employees. This could also enable us to forestall any unnecessary relationship between our employees and mine operators.

Has illegal mining affected Rwandan minerals on the international market?

Illegal mining is very limited in our country. Besides, it is an offence. Unfortunately, as other criminals, some thieves try to sell minerals from mines for which they don’t have licences. Thanks to the collaboration of security forces, most of illegally-mined minerals are seized and handed back to owners of the concessions.

To answer your question, illegal mining has not yet affected the credibility of our minerals on international markets as the buyers of our minerals and our partners recognise the efficiency of security measures that were put in place by the government to curb this problem.

How is the mineral tagging scheme going on?

Currently, the tagging scheme is performing well since all (100 per cent) of the minerals exported from Rwanda are fully traceable. We regularly conduct due diligence of our mineral supply chain. We faced some challenges in the implementation of the scheme, but are planning to increase the number of tag managers from 97 to 200 for more efficiency. We are also planning to reduce paperwork and minimise errors by introducing digital recording systems and we are strengthening our relationship with industry bodies.

Rwanda endorsed the International Conference on Great Lakes Region Mineral Certification mechanism. How do you expect this to benefit the sector?

As updates on the implementation progress of key features of the ICGLR mineral certification mechanism, we now have since March 2012 Ministerial Regulations on the Regional Certification Mechanism for Minerals in Rwanda.

The inspection of four biggest mining companies have been completed, and the exercise continues for other mine sites. a database for the regional certification mechanism has been set up and is updated regularly. 

Additionally, a mineral certification unit was formed by the natural Resources Authority and the Rwanda Bureau of Standards and will be responsible for issuing mineral export certificates.

The Rwandan mineral supply chain will be evaluated soon by an independent auditor. A campaign to raise the awareness of ICGLR Regional Certification Mechanism is scheduled to start in all provinces by March 18 (yesterday).

Our objective is to start issuing ICGLR mineral export certificates, but we are still waiting for the ICGLR secretariat to accredit a regional audit committee.

Looking at the discovery of oil reserves in neighbouring countries, Uganda and Kenya, what is the prospect that there is oil in Rwanda? What level of priority has the government attached to oil exploration?

Over the last five years, different studies have confirmed the existence of a potential sedimentary basin under Lake Kivu. That basin is currently undergoing some basic petroleum exploration activities and all results are promising.

Consequently, the government is very keen on this, and we are committed to seeing different petroleum upstream activities start in Rwanda. 

In terms of petroleum exploration, I think there is no reason why we should lag behind other countries in the region with which we share the same geology; being in the East African Rift Valley system.

Importantly, the airborne gravity and magnetic survey that was completed in 2009 revealed the existence of a sedimentary basin with depth that can reach 3,000 metres under Lake Kivu.

Also, the Reconnaissance 2D Seismic survey, completed last year, showed some interesting and promising features within the same basin. We plan to conduct a detailed 2D seismic programme in the near future by drilling an exploratory well, if the results remain positive.

Mining firms complain of lack of funding as banks are not willing to give them loans. How can the situation change to improve investment in the sector?

Essentially, banks provide loans to mining companies based on two key criteria; a demonstration of the profitability and feasibility of the mining project and the type of mining rights acquired by the company.

The existing mining code was not providing for licence duration that would enable the miner to reimburse the loan. We have, however, proposed an amendment to the mining code to solve this problem.

The next step is to raise awareness among local financial institutions so that they understand how the mining sector works and the business opportunity that it represents. On the other hand, we will train mine managers and operators on how to prepare bankable projects.


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