Rwanda's revenue from rare minerals drops by half as production slows.
Rwanda’s principal minerals — cassiterite, wolfram and coltan — fetched $31.6 million in revenues in the first half of 2020, down from $56.6 million in the same period last year, largely due to disruption in the sector occasioned by the coronavirus pandemic.
Sector players say mineral buyers, particularly electronic companies, halted the purchase of minerals used in the manufacture of devices for much of this year as production slowed down worldwide on account of the Covid-19 pandemic.
The fall in revenue earnings, as released by the National Bank of Rwanda, means less money for the government that has for a long time banked on the mining sector as a major contributor of foreign exchange, second only to tourism.
However, even before the coronavirus pandemic hit, Rwanda’s principal minerals were being sold at reduced prices on the international market.
They fetched $99 million in 2019, down from $143 million in 2018 – which was the sector’s best performing period in five years.
Mining and quarrying activities dropped by 53 per cent this year due to Covid-19 restrictions, according to the National Institute of Statistics.
“The prices for coltan and wolframite are not conducive at the moment, and this has been ongoing for the whole year. Tin (cassiterite) is fetching a relatively good price, but it is not strong enough,” Jean Malic Kalima, chairperson of the Rwanda Mining Association told The EastAfrican.
“On top of the low demand for our minerals, the local companies are not producing enough quantities because of the disruptions brought about by the coronavirus pandemic. But we are optimistic about the future, particularly because of the investments that have been made in mineral value addition.”
The government plans to revive the sector and has projected that it will bounce back to grow at a rate of 11.5 per cent in 2021, up from 0.1 per cent this year.
In order to achieve this, Rwanda has invested heavily in reopening a tin smelting plant in order to fetch better prices on the international market.
The plant, in Kigali, which reopened in 2018, is run by Polish company Luna Smelter through a joint venture with Rwandan parastatal Ngali Holdings, which owns a 25 per cent stake.
However, the coronavirus pandemic has affected the plant’s operations, which mainly relies on supply from local mining companies like Rutongo Mines, one of the country’s largest cassiterite producers, for its minerals.
The plant’s production capacity is 1,800 tonnes of pure tin metal per year but the company has been operating at half the capacity.
The government is banking on plans by Luna to reconstruct and renovate the plant’s second furnace to multiply its production capacity to 5,400 tonnes of pure tin per year.
On Wednesday, mining concession owners held talks with the government, requesting for a doubling of the duration of mining licences from a minimum of five years to 10 years.
The owners say the five-year contracts are rejected by banks, denying them loans to expand their operations.