Financial Times article:
To: Jimsy (197 )
From: salva Monday, Apr 5 1999 12:16AM ET
Reply # of 218
FINANCIAL TIMES OF LONDON WRITE UP ON TANZANIA.
Jimsy, Found this interesting writeup on TANZANIA: Here it is - will chat about contents tomorrow.
{{{SURVEY - TANZANIA: Another time, another gold rush: MINING by Mark Turner: In spite of the decline in gold prices, in the medium-term the Tanzanian sector is on a roll
96% match; Financial Times ; 31-Mar-1999 03:28:53 am ; 891 words}}}
At the Tilapia hotel bar, Mwanza, on any Saturday night there are grizzled faces, Australian, South African and Canadian accents, grumbles about the uncertainty of gold prices, and bouts of raucous laughter.
The vibe is unmistakable - this is gold town, Tanzania, a modern-day Klondyke where only the satellite sport channel and recycled pop music betray the late 1990s setting. Mwanza, situated on the southern shore of Lake Victoria and a natural point of entry for mining equipment shipped via Kenya, is the de facto capital of an industry that has seen a remarkable take-off over the past two years.
With more money spent on non-ferrous minerals exploration last year than any other African country, the first commercial gold mine starting operations in November, and the prospect of another four to seven projects coming on-stream over the next year and half, Tan zania is undoubtedly flavour of the month in African mining circles.
Exploration spending this year is expected to drop below the Dollars 58m of 1998, to around Dollars 45m, but mine development spending could soar from around Dollars 50m in 1998 to Dollars 400m over the next two years. The first project to start operations - Golden Pride, operated by Australia's Resolute in joint venture with Ashanti (which bought out Samax Resources last year) - boasts an estimated resources of 2.4m ounces and is expected to produce 180,000 troy ounces a year.
The Dollars 350m Bulyanhulu project, now owned by Barrick which recently bought out Sutton Resources, is a world class deposit with 9m ounces, and - although underground - boasts a highly attractive grade of 12-13 grammes/tonne, and should start operations over the next year.
Ashanti Goldfields, East Africa Mines and Anglo-American are all exploring and developing another contained 9m odd estimated resources around the Geita and Ramagaza Greenstone belts, and Afrika Mashariki - once a legal dispute over land is settled - is expected to press ahead with the Tarime gold project in northern Tanzania, with well over a million troy ounces. Anglo-American's nickel project in Kabanga, which also contains copper and cobalt, is also expected to start operations over the next two years, reflecting a general move towards diversification.
Total estimated gold deposits now stand at around 30m ounces - with 8m discovered last year. Given the attractive geology of the region, which is not unlike that of western Australia, industry pundits believe that further exploration will reveal considerably more.
"The gold rush seen in Tanzania by both artisinal miners and modern mining companies over the past two years parallels those seen in Canada, Australia and South Africa around the turn of the century," says Mike Skead, the chairman of the Tanzania Exploration and Mining Association. Over the next three years, Tanzania expects mining to boost foreign exchange earnings by 50 per cent.
Of late, however, the seeming terminal decline of gold prices to around Dollars 285/ounce has injected a note of caution into previous unfettered optimism. A number of projects have been delayed, and many of the service contractor which thronged the Tilapia at this time last year have gone home.
In the medium-term, however, there appears to be little doubt that Tanzanian mining is on a roll. A recent investment act, which crucially allowed the repatriation of profits, and the government's decision to allow duty-free and VAT free imports of equipment has created an investment environment that competes with anywhere in the world.
In fact, the huge incentives granted to mining companies - which have not been replicated in other sectors - has prompted some debate within government circles as to whether Tanzania should not do more to capitalise on an activity which accounts for somewhere between 1 and 4 per cent of GDP. Local governments are pressing to reap more benefit from regional activity.
We've been asked to do some analysis to see how much we should take," says Patrick Rutabanzibwa, permanent secretary in the ministry of energy and minerals.
As things stand, the government will take royalties of 3 per cent once production comes on-line, plus 35 per cent corporation tax (after a 100 per cent capital write-off allowance). A new Mining Act, expected to be completed this year, should increase transparency in the sector, and also clarify health and safety issues. In the longer-term, Mr Rutabanzibwa is convinced that the real benefits will be more indirect, especially once Tanzanian entrepreneurs become involved in service operations.
"Our strategy is to encourage joint ventures, and to build up the service industry," says Mr Rutabanzibwa. "That's really the secret." Mining is also attracting investment in power lines, water and roads (which are poor, but improving), and Ashanti's processing plant in Geita is expected to act as a hub for the whole region.
Recognising that some public relations work is in order, Tanzanian Chamber of Mines, with the help of TEMA, hope to hold a two to three-day Mining Awareness workshop in early May to introduce Tanzanian Government officials, artisinal miners and other interested parties to large scale mechanised mining, and the benefits it brings to both the mining operators and the Tanzanian populace at large.
In the long-term, Mr Rutabanzibwa is very upbeat about prospects. "The whole place is very underdeveloped: we are at a similar stage to Kalgoorlie one hundred years ago," he says.
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