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GOLD MINING IN TANZANIA Before you invest

GOLD MINING IN TANZANIA: Before you invest

Gold mining in Tanzania is a big thing with Tanzania being the 4th largest producer of gold in Africa.

 

Gold mining is the resource extraction of gold by mining. Mining makes up about fifty percent of the country’s total export of which majority is accounted for from gold. 

 

The country has reserves of about forty-five million ounces which generates about a billion dollars in revenue for the country. Over the past twenty-five years Tanzania gold production increased by over seven hundred percent, from 5 to 40-50 tonnes per year and over the past 5 years gold exports increased by about eighty-three percent, Tanzania mainly exports gold to South Africa, India and Switzerland.

 

Gold mining in Tanzania can be traced back to when the country was still under colonial rule and first discoveries of gold was around Lake Victoria as at then the country now referred to as Tanzania was called Tanganyika and operation of gold mines began as early as the nineteen hundred, activities of mining increased between the period surrounding the second world war.

 

The gold mining industry during its early days went through several ups and down periods whereby there would be boom at times and at other times there would be significant drop.

 

Due to the influx of foreign companies the gold mining industry began to see developments in investments and exploration of gold deposits which led to formation of mines within the country.

 

Gold mines in Tanzania

 

1.Bulyanhulu: this is an underground mine located in the shinyanga region, it is about 55 kilometres south of Lake Victoria and about 150 kilometres southwest of mwanza city. Commercial production in this mine began in 2001 and it has a reserve of about 6.1 million ounces as at the time of its formation it was the deepest mine in Tanzania.

 

The mine has safety precautions in place such as an Experienced Emergency Response Team and it was awarded a national award by the Tanzania Occupational Safety and Health Authority for its health and safety program.

 

2. Buzwagi: this is an open pit mine also located within the shinyanga region about 6 kilometres southeast from the kahama city in Tanzania.

 

It is one of the three mines run by the Acacia mining company which includes Bulyanhulu and North Mara gold mine. It is the largest single open pit mine within Tanzania, commercial production began in 2009 and has produced over 1 million ounces of gold.

 

3.North Mara: this is a combination of open pit and underground gold mine it is located within the Mara region in the tarime district in Tanzania. 

 

Commercial production commenced in 2002 and till date has produced about 2 million ounces of gold, total probable gold reserves are estimated to be about 1.7 million ounces.

 

4.Geita: this is an open pit gold mine which is situated in the north-western part of Tanzania in the geita region.Operations commenced in 2000 where it was operated as a joint venture of AngloGold and Ashanti until their merger in 2014 to form AngloGold Ashanti. It has produced over 3 million ounces of gold since its inception in 2000 and it boasts a reserve of about 13.4 tonnes of unmined gold.

 

5.Buckreef: this is located in the central north of Tanzania about 110 kilometres southwest of Mwanza. It is estimated to contain about 19.2 tonnes of gold reserves and has an estimated life span of about 16 years with an annual production of 51,000 ounces.

 

6.New Luika: this is an active mining field located in the Mbeya region in Tanzania. This is owned by Shanta gold, and gold extraction at this mine began in 2012 with gold reserves being about 3.6 tonnes with annual production at about 80,000 ounces yearly. It has both surface and underground mining operations.

 

7.Golden Pride: this is the first modern commercialised gold mining project located in Tanzania since the creation of Tanzania as a country. It is an open pit gold mine situated within the Nzega District in Tanzania region of Tabora and it is controlled by resolute mining limited. Although it has been closed now during its operation it produced about 2.2 million ounces of gold.

 

8.Sekenke: this was an underground gold mine in Tanzania region of Singida. Before the advent of the second world war it was the largest single gold producer in the colony. Exploration rights of this mine lies with the Barrick Gold company and is managed by Sekenke exploration limited.

 

9.Tulawaka: this is a combination of underground and open pit mining and it is located within the Biharamulo district in the Tanzania region of Kagera.

 

Effects of mining on the economy of Tanzania

 

gold mining in tanzania

a) The mining industry has attracted various foreign direct investment which has resulted in it being one of the major driving forces of the Tanzania economy.

 

b) This is one of the fastest growing sectors in the country with a GDP growth averaging 10.2 percent yearly.

 

c) It has become a main source of foreign exchange accounting for almost 50 percent of total exports of materials.

 

d) Tanzania is currently the third largest producer of gold in sub Saharan Africa.

 

e)  As the mining industry expands it contributes to higher economic growth and increased exports trades which is key to successful economic development.

 

f) It also contributes to the economy via second level effects such as tax and non-tax payments, the developments of infrastructure such as roads and the emerging linking with local businesses.

 

g) Over the years the mining sector has contributed about 7 percent of total government revenues collected in the fiscal revenue.

 

h) Large mining companies have been contributed to employment during their construction phases albeit for a little time or short period.

 

Challenges faced by large mining companies

 

gold mining in Tanzania

I. New laws have been passed by the Tanzania government which provide the national assembly the autonomous power to effect changes in previous agreements made by the government which can lead to it not profiting the companies

 

II.New investments in the sector are being hampered by the fact that there is significant policy uncertainty in the country due to regulatory changes.

 

 III.New laws have stripped foreign companies the right to seek international arbitration in the event of any domestic legal dispute thereby leaving them at the mercy of the government.

 

Challenges facing small scale mining in Tanzania

· Evacuation of their mining places by either governments or large cooperation’s

· Lack of access to credit and finance for small scale miners

· Lack of modern equipment and machinery

· Lack of market information and skills on the mining sector 

 

How Large and Small can overcome the challenges

 

The challenges faced by small and large-scale mining companies listed above are not fatal. This means that they can be maneuvered around. Consulting legal firms based in Tanzania.

 

This will help them understand how to navigate through the loopholes in the laws.

Also investment advisory firms can also prove helpful as they have on ground and in-market knowledge of the terrain and can point the companies in the right direction to maximise profitability.

 

Policies favouring investment in the mining sector

There have been four regulatory changes that have been enacted which relate to the country’s local content regulations. 

 

It is now required that at least 20 percent of a mining company operating within the country be owned by citizens of Tanzania compared to the 51 percent of previous years. 

 

Under the amended regulations it has reduced the stringent financial services requirement for mining companies in the country which was companies could only open an account with a bank majorly owned by Tanzanians, it now allows opening of account with banks having 20 percent Tanzanian shareholders.

 

Challenges facing the mining industry

 

 i. Access to energy: mining of gold utilises a lot of energy due to the machineries in use therefore access to a power supply is vital for the survival of this industry, getting access to adequate energy supply is very expensive thereby leaving companies reliant on rental power solutions.

 

ii. Health and safety: this is a very dangerous profession especially when mining is done underground where the mine could cave in thereby killing miners, so this is a very vital aspect because as the mines get deeper the temperature rises so adequate ventilation is required and having emergency services consistently on standby is vital.

 

  iii. Access to capital: the money required to fund a mining exploration activity is vital due to the different costs that are incurred ranging from production costs to machine upkeep costs etc. mining is a very expensive activity so requires adequate funding to keep it running

 

 iv. Volatility of commodity prices: the continuous fluctuation in commodity prices makes it difficult for companies to plan their income and expenditure which can lead to the closing down of companies or workforce cuts.

 

 v. Environmental footprint: miners are now looking at ways to reduce the environmental impact which can be achieved by monitoring energy usage, getting remote locations. So alternatively making use of renewable sources of energy which have little or no effect on the environment negatively.

 

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