Mining sector faces bright future as prices go up

Tuesday December 14 2021
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Rwanda's mining sector captains will have to address the financing difficulties miners are facing if the players are to gain from the growth in mineral prices. PHOTO | CYRIL NDEGEYA


Local mining sector is facing a bright future due to rising prices in the international market and demand.

However, access to funding has been singled out to be the best route for mining sector to remain competitive in the international market.

Riding on the growth in international prices, mining sector had a bullish year, growing by 74.5 percent in value in the first six month of the year compared with the 60.8 percent recorded in the same time last year, according to Central bank figures.

Tin, which Rwanda exported in the first half of the year, grew by 201.2 percent in value from 26.0 last year, Wolfram grew by 73.3 percent and Coltan grew by 17.5 percent.

The surge in the value of the country’s tin exports was driven by the spike in tin prices on the international market, caused by a sharp tin demand as a leading Malaysian tin smelter faced production problems and China withheld most of its tin.

“The spike in tin demand was also driven by the high consumption of IT devices during these two years when people were in lockdown,” said Jean Kalima, chairman of the Rwanda Mining Association.


“Mineral prices are difficult to project and predict, what we are telling our miners is to use this time when prices are high to maximise output in terms of production, when the Malaysian smelter resumes work prices might go back” said Mr Kalima.

It was noted to funding is still a challenge to miners and exporters as the country seeks to tap into opportunities in the international market.

Banks are still largely averse to financing mining sector, and as a way around their financing needs, miners have been benefiting from a pre-financing arrangement with their buyers.

The buyers provide mining dealers with some money before delivery, which helps to support their production processes, but since the Covid-19 pandemic struck, international buyers stopped pre-financing due to pandemic-induced uncertainties.

“Financing is a big problem for us, miners have been struggling since buyers stopped pre-financing, the banks are still not giving us money, as a sector we recently expressed our concerns to the mining board”

“The reason our banks are not giving financing is because miners don’t have long term licences, the ones they have are four or five years yet banks work with 10 year licenses and above,” said Mr Kalima.

Banks have also been reluctant to give loans to miners because they are not sure of the availability of the said mineral deposits in terms of quantities and value.

“We are also looking for a strong geological board to help us certify our mineral studies and research which would help us make a stronger case about the availability of the minerals to banks when we need financing” he noted.

The strong growth in price of the 3T’s (Tin, Tantalum and Tungsten) and gold started last year and has not relented until now.

The mining sector export revenues grew up to $730 million, against  an initial target of $600 million in 2020, according to data from the Rwanda Mines, Petroleum and Gas Board.