 Energy and Mines:
golden Opportunities |
Tanzania's mining industry dates back to the 16th century, when Arab slave traders engaged themselves in mining activities in areas around Lake Victoria, where large gold mining projects are currently in operation. Today, with about 400 years gone by, mining has rapidly become Tanzania's vibrant sector providing employment to over half a million.
 Mining projects |
Liberalisation of the economy has enabled the private sector, especially multi-national companies, to invest in the mining sector and make it one of the fastest growing sectors in Tanzania's economy. Good examples are huge gold mining projects such as Australian Resolute Resources, whose Nzega project is expected to produce 180,000 ounces of gold when in full operation in three years time, Ashanti Goldfields , expected to produce between 400-450,000 ounces at Geita, Kahama Mining Corporation 's with expectations of 300,000 ounces at Bulyamhulu, Sutton Resources also at Bulyamhulu with production at 300,000 ounces from mid this year and Golden Pride project with capacity of 150,000 ounces at Musoma in the north western Tanzania.
Tanzania's mining sector recorded significant growth of 27.4 percent during 1998 compared with a 17.1 percent in 1997, resulting in an increase in the sector's contribution to the country's GDP from 1.7 to 2.0 percent over the same period of time. The mining industry has been growing very fast due to the Tanzanian government's decision to allow foreign investors to take part in mineral exploration and processing as part of the ongoing economic reforms. "We came up with the Mining Act and the new Mining Policy, which basically focused on the importance of the private sector in the mining business," Honorable Dr Abdallah Kigoda Minister of Energy and Minerals said. The 1997 Mining Policy and 1998 Mining Act are private sector oriented, providing land for foreign investors through a right to lease it for between 33 and 99 years in areas where their mining projects will be located. By June 1999, there were over 1,350 mining projects worth 360m dollars owned by local and foreign investors including multi-national companies. The Tanzanian Energy and Minerals Minister said that because of the 1998 Mining Act and 1997 Mining Policy, the country has became one of the highest foreign direct investment (FDI) earners in Africa with an 800m dollars for mineral exploration in 1998.
The main gemstone being extracted in Tanzania and for which the significant increase in mining sector contribution to the country's economy is attributed, is gold. Production of gold in 1998 grew by 84.1 percent to 427 kilograms compared to 232 kilograms, which were produced in 1997 due to massive foreign investment inputs and establishment of a formal local market helping to reduce smuggling. Gold production in Tanzania is expected to increase dramatically within the next five years after the five world-class projects mentioned earlier on will operate at full capacity. Among the favourable conditions of Tanzania like cheap labour, the government has put in place some additional incentives to lure foreign capital into the lucrative mining sector, for example tax exemption for capital goods for each approved project as per the 1997 Investment Act.
But the potential of Tanzania's mineral potential does not end with the gold only. There are a number of minerals such as diamond at Mwadui in Shinyanga in central Tanzania, iron ore and coal at Mchuchuma and Liganga in the south, Tanzanite at Mererani in Arusha, urenium in Ulanga and Tabora, central Tanzani, and in Lindi, southern Tanzania, and nickel deposits in Kabanga, Kigoma western Tanzania. Although the country has such a variety of mineral resources, foreign investments in areas such as Tanzanite and diamond mining have been minimal, leaving the bulk of the production to be done by local miners who employ crude mechanisms to do so. This has resulted into low production and statistically poor records, as the black market smuggles most of the gemstones to Kenya and India.
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One of the largest mining projects currently being promoted by National Development Corporation (NDC) is the over 1.2bn dollars Mchuchuma coal and Liganga iron ore mining projects of southern Tanzania. The project is aimed at an annual production capacity of 1.5m tonnes of coal, which will be used in generation of four million megawatts of power, which apart from boosting Tanzania's national power grid, will also be supplied to Mozambique, Malawi and Zambia.
| Energy generation |
In energy generation, Tanzania has also had a significant amount of money invested by multi-national companies such as British Petroleum and others, which have in the past three decades committed over 200m dollars in prospecting for oil. Such efforts have not yet had any success except for natural gas, which has been discovered in southern Tanzanian regions of Lindi and Mtwara. In Mtwara, Tanzania Petroleum Development Corporation (TPDC) conducted exploration in 1970s and discovered a natural gas reserve at the most southern tip of the country, Mnazi Bay, currently seeking foreign investment to invest in the development.
Another natural gas project was discovered at Songo Songo island of Lindi region, where since early 1990s, an over 300m dollars gas to electricity power project is being developed by Songas, a company jointly owned by Canadian investors and Tanzanian government by Tanesco and TPDC . The gas is expected to feed electricity turbines owned by state run power company TANESCO , which has a capacity to produce 60 megawatts of electricity. Further, in a bid to improve efficiency and reduce power tariffs, the Tanzanian government is privatising this giant utility company, Tanzania National Electricity Supply Company (TANESCO). "We have one utility company for the whole country and that is TANESCO. We want to restructure it, in fact we want to privatise it and encourage private capital to come in," Tanzania's Honorable Minister of Energy and Minerals Mr Kigoda Abdallah said. In July, this giant utility company added 180 megawatts to the national grid, when Tanzanian President Benjamin Mkapa commissioned a Kihansi hydro-electricity project in Iringa Region, southern highlands. According to TANESCO's Managing Director Baruany Luhanga , total installed power output is 700 megawatts of which 340 megawatts is hydro, while the remainder is thermal.
TANESCO has an annual turnover of over 120m dollars, bracing for competition after liberalisation of the power industry in 1992. "But in 1992, the monopoly was lifted so that other investors could come in, install their own power generation facilities and sell power either directly to consumers or to TANESCO," Managing director Mr Baruany Luhanga said. One such private company is Malaysian/ Tanzanian owned Independent Power Tanzania Limited (IPTL), which has brought its thermal power generators which will be run by Songo Songo gas once production starts. With such a network of power sources, the problem of power rationing occurring in early 1990s, won't happen again in Tanzania. |
