The African Union Commission (AUC) and the African Minerals Development Center has urged miners to embrace strong partnerships to enhance competiveness on the continent.
Frank Mugyenyi, the senior Industry Advisor for the Department of Trade and Industry of the AUC, said strong linkages and modern infrastructure will keep the mining sector resilient amidst global commodity price turbulences.
Mugyenyi was speaking during the African Union commission consultative workshop held in Kigali, yesterday.The two-day workshop brought together more than 100 mining companies from Africa, policy makers and experts who deliberated on a strategic plan to boost the mining industry on the continent.
Unstable commodity prices on the world markets, particularly for metals, have significantly affected one of Africa’s leading foreign exchange earners. To be precise, prices for major minerals have continued to decline by almost 50 per cent.
However, according to Mugyengyi, sector players should emphasize value addition and joint ventures to keep the industry afloat.
“Africa cannot afford to have it wrong this time and the only way to have it right is by broadening partnerships in the mining sector while bringing the private sector on board in policy planning and implementation,” Mugyenyi said.
He emphasized the importance of proper engagement of the private Sector and all the stakeholders along the value chain.
Jean Malic Kalima, the Chairman, Rwanda Mining Association (RMA), said the mining sector in Rwanda like most of the other African countries still face numerous challenges including low technical capacities and access to finance, among others.
“However, through the Rwanda Mining Association in partnership with other stakeholders, we have managed to establish initiatives including working with relevant government institutions, and other associations to promote investments in smelting of Cassiterite and industrialization of tin for purposes of value addition,” Kalima said.
African Mining Vision
Meanwhile, sector players are working around the clock to turn the African Mining Vision which was adopted in 2009 into a practical reality.
The miners are optimistic the vision has the potential to transform the sector into a productive industry thus enhancing its contribution to the continent’s economic growth.
The AMV targets mining companies including oil and gas, Chambers of Mines and other mineral sectors and it is based on principles that can be aligned with corporate core values, policies, strategic plans and mission statements of companies in the extractive sector
In Rwanda for example, the mining sector is currently the second foreign exchange earner employing more than 35,000 people. Government is counting on the sector to earn at least $400 million and employ around 60,000 people by 2017.
However sector players have their fingers crossed for now as price fluctuations, low production, and rejection of loan applications by commercial banks, continue to bite. For example, in 2015, the mining sector had the highest loan rejection rate by local banks among other sectors. According to Central Bank statistics, almost 96 per cent of the total loan applications in the mining sector were rejected in 2015 up from 68 per cent in 2014.
The biggest loan request rejected from the sector was about Rwf4.5 billion owing to lack of tangible security and the business being a start up with no track record.
To address the problem, the government is currently in discussions with the World Bank on how to set up a guarantee fund that will facilitate access to finance for the sector.
As part of a strategy to boost competiveness and innovation, government has recently been issuing new licences and signing contracts with more than 20 mining firms. The idea is to be able to attract more companies with the financial and technical capacity to boost the industry.
The strategy is expected to help local mining companies especially the small-scale miners and artisans gain more skills that will help professionalise the sector.
Last year, contracts were signed between the Ministry of Natural Resources, Rwanda Development Board (RDB) and the investors aiming at bolstering exports by at least 28 per cent.
This has however not yet paid off because statistics indicate that the revenues from the sector dipped to $149 million last year, from about $210 million in 2014 largely due to fall in international metal prices.
Several mining companies are expected to invest Rwf6.5 billion in the next five years to extract 3,300 tonnes of mixed tantalum, tin and tungsten ores from 10 blocks of the former Gatumba Mining Concession in Ngororero and Muhanga Districts.
Recently, State Minister for Mining, Evode Imena, urged miners to diversify into other minerals that are still attracting competitive prices worldwide.
According to Imena, such minerals include gold and iron ore, among others.