4th June 2016
By Ivan R. Mugisha
Mineral experts from East Africa have proposed the formation of a continental mineral body to promote the sector and systematically break away from the “overtly exploitative” international mineral market.
They argue that prices for the so-called conflict minerals – including gold and the “3Ts” (tin, tantalum and tungsten) – are manipulated by powerful players in the developed world, leading to low prices.
These minerals are essential in manufacturing electronics and are in high demand by the international telecom companies like Samsung, Apple and Microsoft.
“It is no secret that international mineral prices are controlled and global due diligence mechanisms are stringent on minerals from Africa. The laws don’t favour us but favour mineral consumers and suppliers in the developed world. That is why you see this unfavourable cyclical price fluctuation, which I believe, is highly controlled,” Frank Mugenyi, senior industry advisor at the African Union Commission said.
“Africa needs to pull out of this exploitation and strategically reposition itself to negotiate its own minerals and be at the centre of the boom that will be created by Africa’s own demand for manufactured and industrial products.”
The World Bank projected that sub-Saharan Africa’s growth will slow in 2015 amid falling commodity prices, a realisation that has already been felt across the continent.
The effects of low prices have been worse on countries adjacent to the Democratic Republic of the Congo, which rely heavily on production of the so-called “conflict minerals” — a term most used in the West, but deemed derogatory and isolative by African sector players.
In Rwanda, GDP growth in mining has been on a downward spiral, slowing from 11 per cent in 2014 to settle at -9 per cent, according to the Ministry of Finance.
Investment in the sector has also stalled and many artisanal miners have given up the trade, much as there is hope that the curve will start to rise in the next year.
“Things will begin to improve with time. Currently, the sector has more than 480 companies. We intend to develop the mining business to a sustainable level because it is one of the prime sectors that contribute to the economy greatly. It is currently the second biggest foreign exchange earner in the country,” Jean Malic Kalima, president of Rwanda Mining Association said.
Many mining companies in the region are counting losses. For example in Kenya, the leading soda ash miner — Fluorspar Company — suspended its operations in June last year owing to sustained low global prices for its produces.
Breaking away from the international market is however seen as a radical move by some experts, who insist Africa cannot escape the global market.
“Some international mining frameworks put Africa in a disadvantaged position and make it extremely difficult to compete with mineral producers in China, the US and Europe. Much as that is true, breaking away from the international market is not practical. What we can do is lobby for stronger continental and regional laws that guarantee equality on the negotiating table,” Majala Mlagui, CEO of Thamani Group said.
Mining investors from the region met in Kigali Wednesday under the auspices of the African Union Commission, to discuss schemes to catapult countries from over reliance on unreliable international prices.
They also proposed the fast-tracking of the long-term Africa Mining Vision, which was developed by the African Union in 2009 to promote regionalism in empowering the African extractive industry, among other goals.