Rwanda: More Mining Investments After Introduction of Mineral Certification?
Wednesday, 24 August 2011
Rwanda’s mining sector contributed 14.9% of all exports in 2010. With the tagging of minerals to comply with US regulations that seek to reduce the trade in conflict minerals, Rwanda hopes that the mining sector will help the country’s much needed diversification. Ruth Kangongoi looks at the status quo.

Mining in Rwanda has continued to gain more significance as a source of export revenues. In 2010, the country earned about USD67.8m from mineral exports which now constitute 14.9% of total exports:
  • Cassiterite (tin ore) had the largest production and export volume at about 3,874 tons valued at USD42.2m in 2010 (although this was a reduction in volumes from 4,269 tons in 2009);
  • It was followed by coltan with 749 tons in 2010 valued at USD18.48m (949 tons in 2009), and wolfram (tungsten ore) with 843 tons in 2010 valued at USD7.1m, down from 874 tons in 2009.
  • The country produces about 9% of the world’s tantalum, used in electronics manufacturing, and about 4% of global tungsten.

In 2010, mining revenues were bolstered by strong commodity prices, offsetting the declining volumes: According to the Quarterly Bulletin for the fourth quarter of 2010 released by the National Bank of Rwanda: “The mining sector performed better as its exports value increased by 22.3% despite a decrease in volume by 11.4% on average in 2010 compared to 2009.” In the first quarter of 2011, the country earned USD35.5m.

Artisanal Mining
The informal mining sector plays a key role: Mainly comprising artisanal and small-scale miners, it employs about 35,000 people, according to a 2010 report by German Federal Institute for Geosciences and Natural Resources (BGR). It is dominated by a mixture of artisanal and semi-industrious methods: In a concession, a dedicated group of artisanal miners, usually between 10 and 200 and under a sub-contractor, are given a specific mining area. They extract the minerals, which may be in-situ (hard rock) or alluvial (loose matter), by hammer, chisel and pick-axes, with technical equipment like jack hammers or by drilling and blasting. The latter is done or supervised by qualified company staff.

The miners use methods like panning, sluicing and hand picking to obtain the pre-concentrates. These small amounts are collected daily by the company whose concession they work on – miners cannot sell to other companies. Depending on the company size, daily, weekly or monthly upgrades are done on them in the company's mechanised processing plants. These higher-grade concentrates are then transported, usually in 50kg bags, to mineral hubs who handle the subsequent export logistics and documentation.

Industry Structure
The industry is formally divided into concessions and mines, although a concession is essentially a big mine. Mines can take the name of a concession: for example, Rutongo Mines Ltd is a registered company which received a permit to develop mining activities within Rutongo concession which includes six mines.

A big concession may be economically exploited for at least 30 years, and the permit is renewable. The area of a concession may not be less than 100ha or larger than 400ha, except when it is a concession resulting from the merging of adjacent concessions. Today, Rwanda has 22 big concessions held by 12 companies, of which only one, ROKA Rwanda Company, is locally owned.

In addition, the country has about 103 small and medium mines. A small mine, Rwanda’s regulatory mining framework says, is characterised by its reserves, investments, production and mechanization level, but it does not provide specific data. Permits are given for five years and are renewable if deemed necessary.

Among the older companies are New Bugarama Mining, Gatumba Mining Concessions, Natural Resources Development, Wolfram and Mineral Processing, Bay View Group, Eurotrade International, Rwanda Metals, Rwanda Allied Partner, Pyramid International, and Rogi Mining.

Government Focus on Promoting Investment
The government has put a lot of effort in the development of the mining sector, and new companies have entered the market. Rwanda’s Minister for Natural Resources Mr. Stanislas Kamanzi said that the sector is rapidly growing: “Many companies are seeking extra concessions and widely expanding: For example Rutongo Mines, currently producing 130 tons of tin per month, targets a production of 300 tons at the end of 2011 through increased investment in technology and equipment.”

Today, the government mostly focuses on providing leadership for the sector, promoting research and quantification of mineral reserves, and maintains only minimal stakes in the mining companies. Mining parastatal Régie d’Exploitation et de Dévelopement des Mines (REDEMI) was abrogated and its concessions were competitively granted to other companies. However, Kamanzi admitted that the government continued to hold a 50% stake in Rutongo Mines and a 49% stake in Gatumba Mining Concessions. The remaining 51% are held by the Metal Processing Association.

The projected earnings per annum amount to about USD256m by 2015 and the government is keen to attract investors especially to the new 21 potential mineral zones recently identified throughout the country. In an effort to increase investments in the sector, the government offers some incentives such as tax exemptions on imported mining equipment, taxes on benefits only, low royalties, and investment in research, among others. The government hopes that investors will also consider a co-operation with the artisanal mining sector: “New investors are also welcome to organize small scale individual miners into cooperatives for more industrial mining.” However, he noted that although there are local investors in the sector, there is no single registered mining company from an East African Community country other than Rwanda.

Amongst the newer entrants who have responded to the government’s efforts to attract more investors Rutongo Mines, Rwanda Mining and Minerals, Kivu Gold Rwanda, Precious Minerals, Sapphire Miners, Caracal International, and Mining Research Company.

The industry, however, still suffers from low investment in mining equipments, processing for small miners and refinery for value addition. Smelting of cassiterite and chemical processing of wolframite and coltan are not done in the country. There is also a lack of qualified human resources: Rwanda does not have enough geologists, mining analysts and mining engineers. Tagging of minerals to comply with the regulatory requirements that they must not come from conflict area is has also been made more difficult as the staff are graduates who have only had a quick training.

Global Legislative Changes: Banning Conflict Minerals
The Dodd-Frank Act of the US Securities and Exchange now requires minerals from DRC and the neighbouring Great Lakes countries to be certified as conflict–free. These measures are meant to ensure that sales proceeds from these minerals are not used to fuel or sustain armed conflict and violence against civilians in the DRC.

Rwanda initiated the mineral traceability project in September 2008 in response to calls from the UN, the International Conference on the Great Lakes and the G8 for a mineral certification system that would help resolve the problem of “conflict minerals” (tin, coltan, tungsten and gold) in the Great Lakes Region.

Rwanda had been accused of selling conflict minerals from Congo, but, Kamanzi says, the country has established measures to deter conflict-minerals trade. He added that besides tagging and certification, the government has issued regulations on purchasing, selling and exporting minerals. “Trade in minerals is restricted to Kigali City, Rusizi, Rubavu, Musanze Nyagatare, Ngoma, Muhanga and Huye towns. Additionally, traders are required to submit monthly reports of total purchases and sales to all relevant ministries and OGMR,” he said. These measures are used to prevent local mineral smuggling and provide statistical data respectively.

According to the BGR report, there are audits to analyze the plausibility of production figures for a given mine based on a review of mining methods, number of miners and mineral processing capacity. This is cross-verified by site inspections and the exercise would thus identify 'laundering' of illegitimate minerals.

Earlier on in the year, the Director General of the Rwanda Geology and Mines Authority (OGMR), Dr. Michael Biryabarema, initiated the country’s mineral tagging and sealing scheme. Internationally recognized as the iTSCi project, it aims at imposing an embargo on four key minerals that are untagged, i.e. tin, gold, tantalum and tantalite.

According to the minister, minerals are tagged daily by OGMR staff deployed at each mine site. “The process consists in tagging every mineral produced on the site, in packing mineral bags of each site, in sealing and labeling that bag with information on the following: site, quantity, quality, date of operation and production.”

Dr. Mbiryabarema said: “"All the four minerals identified as conflict minerals from Congo are also mined in Rwanda. They therefore need a clear passage throughout the world. The iTSCi project will ensure that they are tagged and traceable to make sure that they are not coming from Congo." According to Kamanzi, the embargo has been in force from 1 April 2011 and at the time of the interview, Rwanda had achieved about 92%, aiming for 100% tagging by the end of June 2011.


Rwanda’s export receipts from minerals slid by USD2m to USD32m between April and June 2011 occasioned by low production, according to a top official. “Due to the looming embargo on conflict minerals, traders rushed and exported almost everything before the 1 April 2011 deadline to avoid being affected by the ban,” Michael Biryabarema, the Deputy Director General of Rwanda National Resources Authority (RNRA) told Business Times in an interview. According to official statistics, in April 2011, Rwanda did not export a single kilogram of coltan—one of the minerals that fetches more export revenue—although it had exported over 114,000 kilograms in March. The trend indicates that coltan stocks had been sold out, RNRA said.

“The last quarter of 2010-2011 began with a small stock of minerals which could not make the industry as profitable as it had been in the previous quarter,” Biryabarema noted. He said that the country’s minerals were, however, not hit by the embargo after fulfilling the traceability requirements and production had stabilized since then: “In May and June, mining activities were spurred by steadily high prices for minerals on the international market and production was boosted once again.”

In principle, the mining sector could add an important avenue for the country’s economic diversification: Land for agricultural use is very overstretched already, manufacturing for anything but the local market is hamstrung by high costs and in particular high transport costs, and the services industry like ICT and banking, in which the government seeks to attract more FDI, still suffers from a lack of qualified human resources. With its compliance with US legislation on track, Rwanda hopes that more companies will consider an investment in its mining industry: “We still face a challenge in having enough capable investors to push the sector to a level expected to make it more profitable”, Biryabarema says.

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Comments (4)Add Comment
written by GemmaF, September 22, 2011
This article is both informative and somewhat concerning. If countries wish to export these minerals from Rwanda then "The industry, however, still suffers from low investment in mining equipments, processing for small miners and refinery for value addition", should not be happening. These people should be taken care of for taking care of the world.

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