East African nation plans to diversify mining sector, increase production as earnings nosedive
Rwanda plans to diversify minerals sector and increase output to mitigate the effects of unpredictable commodity prices on the international market.
The East African nation, whose economy is hugely dependent on the mining sector, contends that diversifying and increasing production will ensure stable earnings.
The move comes at a time when Rwanda is projecting a massive drop in earnings from the minerals sector, owing to a significant decrease in commodity prices on the international market.
“One way of dealing with low international prices is to increase the volume of production and to diversify mineral products in order to supplement the existing ones,” says Rwanda’s Mining Minister, Evode Imena.
He adds that the mining sector is currently operating at only 20% of full potential and that the country would be capable of increasing production fivefold, with an increased number of mining operations and proper management.
Rwanda estimates that minerals sector earn- ings in 2015 plunged by at least 50% to $145- million, compared with a target of $290-million.
This is a significant drop, considering that the sector grew by 11% in 2014 and generated about $210.6-million in revenue. In 2015, the sector is believed to have posted negative yearly growth of 11.1%, mainly as a result of weak global commodity prices, which saw the value of Rwanda’s mineral exports drop by 43.3% between January and November.
The major minerals exported by Rwanda are metal stones like casseterite, coltan and wolframite.
Last year, the casseterite price plummeted by 40% on the international market, while the prices of wolframite and coltan dropped by between 40% and 50% , and 25% respectively.
Others minerals produced by Rwanda are tantalum, tin, gold and tungsten, of which it is the world’s fourth-biggest producer, accounting for about 12% of global production.
Mining is Rwanda’s second-largest foreign exchange earner and currently accounts for 1.4% of the country’s gross domestic product (GDP).
A recent World Bank report noted that the increase in Rwanda’s mining-sector export earn-ings over the past few years was largely due to favourable international commodity prices and not a progressive expansion of the sector’s produc- tive base.
In an effort to increase minerals production and exports, the Rwanda government has been reviewing its mineral laws and policies to attract more investors, particularly foreign firms. Currently, the sector is largely dominated by artisanal and small-scale miners.
Rwanda has also developed an ambitious master plan to ensure the mining sector becomes a critical pillar of the economy over the next two years.
Over that period, the country targets to increase the sector’s contribution to GDP to 5.2%, the number of people directly employed by the sector from 35 000 to 60 000, total investments from $150-million to $400-million, and earnings to $400-million.
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