The government will not ban export of raw minerals, despite pressure from mining firms.
A section of industrial players who talked to Rwanda Today say the country could create more jobs and boost export earnings if it started exporting processed minerals.
However, government officials say the ban will attract more investors as they will be assured of a steady supply of raw minerals.
Policymakers prefer traders and investors compete for the minerals.
“The government does not have any reason to impose any export restrictions on minerals, and the tin smelter does not require this to operate either,” said Francis Gatare, CEO Rwanda Mining Board (RMB), the regulator of the petroleum and mineral industry in the country.
But industrial players warn that not having a ban on export of raw minerals could jeopardise the government’s 25 per cent stake in the Karuruma smelter through the army firm Ngali Holding.
It’s understood that Phoenix Metals, a firm which used to run the smelter closed business partly due to tough competition for cassiterite, a tin ore for smelting.
The country has 40 licenced exporters, some with pre-financing agreements wand mineral processors based in Asia, Europe and America, so industrial players say most of the minerals from Rwanda are exported in raw form.
“Luna, a special purpose vehicle formed by Ngali Holding and Luma, is likely to face competition from exporters for cassiterite to supply its plant,” a mining sector player said.
Luma Investment — a Polish-based venture firm — controls a 75 per cent stake in the Karuruma tin smelting plant, which was formerly owned by Phoenix Metals.
The biggest competition for the casitterite will be from two exporters: African Panthers Resources and Boss Mining.
Industrial players advise Luna to come up with an appealing pricing structure to attract exporters with global smelters.
According to trading statistics from National Bank of Rwanda, the average price per kilo of cassiterite for the first six months ending June was $10.75 (Rwf9,358).
“It is expensive to deliver the minerals to markets outside Africa, as the exporter pays transport costs, refining charges, insurance and it takes at least two months before the minerals are delivered,” said an industrial player who asked that the imposes an embargo on exportation of raw minerals.
Competitive prices could also attract minerals from neighbouring Burundi and Democratic Republic of Congo.
Rwanda Today has learnt that Luna is expected to start test runs of the smelter next month, after getting a conflict-free smelter clearance. After certification, it is expected that the plant will produce 12 tonnes of tin ingots per day in the first year of operations. Production is set to increase to 30 tonnes per day.
If tantalum is processed, industrial players say the country could earn $500 million from the mineral.
Despite the challenges, Rwanda projects the minerals sector to rake in $800 million in earnings this fiscal year, up from $399 million in 2017/2018, partly driven by the high global prices and increasing volumes of mineral exports.
Trading data from The National Bank of Rwanda shows the mining sector performed well in the first half of the year ending June 2018, with revenues from coltan, cassiterite and wolfram increasing by 51.9 per cent, from $48.34 million (Rwf42 billion) recorded in the first six months ending June 2017 to $73.43 million (Rwf64 billion) in the first half of the year ending June 2018.