Sunday, September 9, 2012

Challenges in the Mining Sector-and Solutions?

 Low level of integration of the mining industry to the rest of the economy, rendering the mining industry as enclave of its own;
ii.        Low and slow growing contribution of the sector to the GDP as compared to the growth rate of the sector (sector growth from 7.7% in 1997 to 10.7% in 2007 while sector contribution grew from 1.4 % in 1997 to 2.7% in 2007). The current sector contribution to GDP is 3.3% (2011);
  1. Low level of mineral value addition activities as minerals mined were exported in raw form;
iv.        Slow development of small scale mining;
v.        Low capacity to administer mineral sector;
vi.        Growing conflicts between mining projects and communities living around these projects that are mainly centred on insufficient compensation, relocation and resettlement schemes of communities that were originally artisanal and small scale mining communities before start of the large scale mining projects; and
2. Growing negative public perception on mining, because of high expectation by the people that mining would provide direct benefits from the development of the mining venture in a shortest possible time

To respond to the above listed challenges, the Government reviewed the Mineral Policy of 1997 which resulted into the establishment of Mineral Policy of 2009, followed by the enactment of the Mining Act 2010. This process was performed by making sure that the international competitiveness in attracting more investment to our country is maintained, the interests of private sector investment that was already established over this period is safeguarded on the other hand addressing the general public concerns over the management of the nation’s mineral wealth.
Apart from the Government remaining as regulator, facilitator, service provider and promoter of private sector investment in the mineral sector it is now made possible under the same policy and legal regime the Government to participate in mining projects. Due to this, efforts are being made to strengthen the State Mining Corporation (STAMICO) to actively engage in mining sector on behalf of the Government.
Currently, STAMICO owns various exploration projects either at 100% ownership (potential for partnership) or under joint venture agreements. Some of the projects are at an advanced stage such as the Buckreef Gold Project located in Geita Region whereby STAMICO owns 45% stake and the balance is owned by private company, Tanzania American International Development Corporation 2000 Limited. Also, STAMICO provides consultancy services and drilling services after acquiring two new drill rigs.
As already mentioned small scale mining is another area that has been emphasized in mineral policy of 2009. The Government has been trying to address the main challenges hindering the development of small scale mining. Small scale miners are faced by lack of skills, technology, financial resources and modern equipment. The government is establishing a loan scheme under coordination of STAMICO for small scale miners that will involve Tanzania Investment Bank (TIB) and other stakeholders where necessary. This will be a revolving fund in order to be sustainable and allow more small scale miners to access the loan in the long run.
Furthermore, the government will continue to demarcate areas suitable for small scale mining from relinquished areas during renewal of Prospecting Licenses as stipulated under section 15 of the Mining Act 2010. The aim is to formalize small scale operations so that they can easily be financed. However, small scale miners are encouraged to form groups so that they can easily qualify to access financial support from financial institutions or from capital market. We encourage the financial institutions and other stakeholders to support and collaborate with the Government in development of small scale mining.
The Government will continue increasing its effort in supporting small and medium mining enterprises to make sure that the local content in mining increases. This will increase local participation, local beneficiation and value added as well as strengthening economic linkages. The Government is working proactively to ensure a win-win situation. Benefits from mining should not always be seen in terms of royalties or taxes, but in a wider socio-economic spectrum in which local content (economic linkages) brings more benefits than tax based benefits, which can results into the so called Dutch disease.
The Ministry is implementing the Sustainable Management of Mineral Resources Project, whose main objective is to strengthen the countries capacity to manage the mineral sector through various interventions as stated earlier. Tanzania Extractive Industries Transparency Initiative is also being implemented at the ministry to ensure more transparency and good governance in the mining and petroleum sectors.


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