First gold mine raises hope for Tanzanian economy
09:44 a.m. Aug 26, 1998 Eastern
By Wambui Chege
LUSU VILLAGE, Tanzania, Aug 26 (Reuters) - In an isolated village in rural northwestern Tanzania, a giant excavator moves huge piles of earth in preparation for the first of several goldmines that may bring economic hope to this impoverished East African country.
The opening of the $50-million joint venture between Australian Resolute Mining and Canadian Samax Resources later this year will throw an economic lifeline to a country that has struggled virtually since independence from Britain in 1961.
Authorities have pinned hopes for economic renaissance on a gold-led boom, with the opening of four medium to large-scale mines. All are due to begin production by end-2000.
After five years of exploration and prospecting, digging at the Golden Pride Project in Lusu, 750 km (466 miles) northwest of the capital Dar es Salaam and 200 km (124 miles) south of the Lake Victoria port of Mwanza began on Sunday.
Lusu is a semi-arid sparcely-populated plateau.
''This is a new experience for this country. It's a massive operation by any African standards,'' Zachary Wood, a civil engineer at the project, told Reuters on Tuesday.
The mine sits on an estimated 2.7 million troy ounce gold deposit and will be a single open-pit spanning 2.7 km (1.67 miles) long, 160 metres (yards) deep and about 400 metres wide.
A kilometre from the open pit will be the mine's processing plant, which includes seven carbon-in-leach tanks, a five-tonne gold extraction circuit and a run-of-mine crusher.
''The project is on schedule. Commissioning for gold production is expected to be around end of October,'' project coordinator Paul Hughes told Reuters in an interview.
''All going well, we'll be ready to start exporting at the end of January,'' Hughes added.
Annual production is forecast at 150,000 ounces.
Tanzania's mining sector, dominated by gold, currently accounts for about two percent of the country's gross domestic product, with the bulk of gold production undertaken by thousands of small-scale miners.
These miners produce one to two tonnes of gold per month worth between $10 million and $20 million, government statistics show.
Economic analysts said Tanzania's virgin territory -- untouched by modern exploration techniques -- is Africa's best prospective exploration destination after Ghana, for its geological potential and political stability.
''In the long-term, mining is going to be the mainstay of this country's economy,'' said Salim Bashir, a consultant with business advisory firm KPMG Peat Marwick.
''The only problem right now is that if gold prices continue downwards, then it becomes difficult to justify production costs of $200 an ounce,'' Bashir added.
Gold was quoted at around $282 an ounce on Wednesday.
Tanzania aims to be a gold producer of note with annual exports totalling 26 tonnes by the year 2001.
Tanzanian officials said investments by other mining concerns including Australian-owned Africa Mashariki (East Africa Gold) and Ghana-based Ashanti Goldfields, were also close to production.
''Golden Pride is the biggest of all the mines. If it succeeds, I reckon the next five years will see more foreign investors coming into mining,'' said civil engineer Wood.
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